Dear Brad,(posted 8757 days ago)At the top, I must say that I find dubious your argument that the emergence of digital commodities has undermined what has hitherto been an utility maximizing market system. The best short summary I know of a non-marxist theory of endemic market failures before the rise of digital commodities is Amit Bhaduri's in An Intelligent Person's Guide to Liberalization. But I'll leave that aside for now. It's even in pitched in the same kind of prose you use.
On how the need for advertising revenue given the impossibility of directly charging for programming, you argue that this biased television in favor of least common denominator, mass audience programing while niche markets in which the intensity of demand may have been stronger were ignored. Interesting point indeed. Perhaps television also had to ensure that viewers would be predisposed to be bombarded by manipulative ads by corporations to sell their products. This would seem that systematic anti-corporate messages had to be filtered out as well; else, no rational corporation would purchase ad time during such a show. At any rate, there seems to be possibility for elaboration of the effects of dependence on advertising.
On rivalry, I don't get the operational meaning of the concepts in this formulation: "Charging the ultimate consumer the good's cost of production or the free market price provides the producer with an ample reward for his or her effort. It also leads to the appropriate level of production: social surplus (measured in money) is not maximized by providing the good to anyone whose final demand for a commodity is too weak to wish to pay the cost for it that a competitive market would require."
Either this is a near tautology: money-making is not maximized by producing goods for which money cannot be paid. Or it implies that consumer welfare is maximized by producing that set of goods the sale of which maximizes monetary output. But how do we know maximum money output is equivalent to maximum consumer welfare or that it maximizes the consumers' surplus or whatever?
I don't understand the meaning of this concept of "social surplus (measured in money)". Please elaborate.
It is also true that the private substitutes for public goods may not yield as much utility though the production of the former would maximize monetary output. So in terms of utility calculus there seems to have always been a strong argument that market hegemony is less than optimal.
I don't understand how you think the tensions from prices falling potentially to zero marginal costs will be resolved in a market society. Are you saying that such digital goods will not be produced? Or that they will be produced but social waste will be expended to keep prices above costs, thereby undermining social utility?
And what do you make of Microsoft's evident ability to remain profitable?
Its monopoly position, as well as control over distribution as Robert Teitelman emphasizes, enables it to remain hyper profitable. Is your argument that their price is too far above marginal costs to maximize social utility?
Would you kindly elaborate on this; I don't get what you mean by compatibility advantage or why the dynamic below is somehow unique to digital commodities:
"Competition has been the standard way of keeping individual producers from exercising power over consumers: if you don't like the terms the producer is offering, then you can just go down the street. But this use of private economic power to check private power may come at an expensive cost if competitors spend their time duplicating one another's efforts and attempting to slow down technological development in the interest of obtaining a compatibility advantage, or creating a compatibility or usability disadvantage for the other guy."
On transparency you claim: "The market for software "goods" is almost never a market for today's tangible goods, but rather for a bundle of present goods, future goods, and future services. The initial purchase is not a complete transaction in itself, but rather a down payment on the establishment of a relationship."
This is hardly unique to software; the same problems inhere in an employer's purcase of labor power. That's not a complete transaction either; he still has to see whether he'll be able to butcher the beast for its hide. Haven't Bowles and Gintis written about the peculiarities of the labor power (initial purchase)/labor (service) exchange?
Oh, well, I haven't read sections C and D yet.