[p2p-research] User Freedom and the Purpose of Profit

[Ryan Lanham]

On 1/14/10, Samuel Rose <samuel.rose at gmail.com> wrote:
>
> Hey Patrick,
>
> On Wed, Jan 13, 2010 at 11:47 PM, Patrick Anderson <agnucius at gmail.com>
> wrote:
> > Ryan Lanham wrote:
> >> I am not against profits.  But I am against profits for the sake of
> >> profits.  We simply don't understand the world yet where they don't
> exist in
> >> a dominant way.   It is coming fairly quickly, however.
> >
> > I hope this is true, but if so, then why would anyone invest?
> >
> > My answer to that is: Let's get the end-user (or consumer) to invest
> > for "at cost" product (think of it as a pre-payment plan) since he
> > would then receive those outputs without paying profit while also
> > gaining the control he has for so long been without.
> >
> > On a related note: What would you say is the 'origin' of profit?  Why
> > does the consumer consent to paying a price above cost, and what is
> > the 'correct' treatment of that value in the better system?
> >
> > My answer is to treat that overpayment as though the consumer were
> > making a tiny investment - so he slowly gains ownership in the Means
> > of Production for the purpose of solidifying his ability to receive
> > product "at cost" while also helping him gain the control he needs to
> > finally be able to claim "User Freedom" in the physical realm.
> >
> > Treating profit as a payer's investment allows growth to occur, but
> > causes the ownership in that growth is 'distributed' to those who are
> > willing to pay for it.
> >
> >
> > Thanks,
> > Patrick Anderson
> > Social Sufficiency Coalition
> > http://SourceFreedom.BlogSpot.com
> > http://patware.FreeShell.org


In my opinion, you are both exactly on point.

The underlying issue is risk...or said another way, trust.  The problem of
capital (real capital is money not stuff) is that there are uncertain
returns.  In the past, the uncertainly is managed (by management) and the
fee for managing that risk is a percentage of profit.  Now, and with the
newly planned Internet 2.0 of post-Spam, etc. due in about 10 years, we have
almost instant access to demand and information for thousands of
non-commodity industries...

Malcolm Gladwell's little story on Popeil and Ronco was spot on this point.
It was already happening in 1950 as efficient pitchmen disintermediated
corporations.  It is now universal.

What is happening is that profit risk is less manageable and the tendency of
consumption (a consumption function) is approaching a price of zero because
people can get replacement items for free (the core of P2P theory).  The
result of these two trends is businesses like Twitter and outcomes like
co-ops.

Whether this is good or bad is of less interest to me personally than the
fact that it is happening.  I am all for morality, but moralists through the
centuries have led fairly unhappy lives of disappointment.  Now, the
momentum of history is starting to be on that side...based on
technology...not on hopes of human goodness.  The outcome is just the same.
It will be very hard...probably impossible to stop that momentum.

Corrupt university textbook practices that tie an industry to a bookstore to
a professor to a writer start to break down because technology intervenes.
Now that is a petty corruption, but that's just the point.  Petty
corruptions (market inefficiencies, really) are harder to maintain.
Disruptive disintermediation makes profit planning harder and thus projects
are not initiated through the normal credit cycle of the market economy--the
credit economy.  Credit dries up, but yet stuff happens.  How?  Because
people do projects whether they profit or not...right now they think they
are doing them prospective of profit, but I guarantee you that EZ didn't do
Facebook to become a billionaire.  Neither did the Twitter or
even the Google guys hope to profit significantly.  Maybe their VC's did,
but the VCs are a day late.  They're confused as to what is happening
because they are getting close to being disintermediated themselves.

That is very exciting.  Investment (which was meant to gain returns based on
risk assumption) is harder...because real risks cannot be managed and the
old manageable risks are being subsumed by new technologies and approaches.
The outcome is a system of abundance...including abundance of risk
sharing--a mutual or co-op model.  With minimal barriers of operations (the
things that cause mutual insurance companies to de-mutualize) there will be
more and more human needs filled by co-operative arrangements.  This is the
P2P revolution.  It is actually happening all around us.  We aren't seeing
the forest for the trees.

Who would pay for a browser if you can participate in Mozilla for minimal
cost?  Who would buy an encyclopedia if Wikipedia is trustworthy?  Who would
by a textbook if Yale or Harvard gives theirs away for free?  Who would
spend money for design and style in a car if that design is open and readily
available to a manufacturer in a low labor cost market?  As robotics drives
labor costs to zero, and as 3d printing starts doing everything from body
organs (organovo) to small mechnical parts...even the risks of production
are eliminated.

My guess is that most profit now is due to marketing risk.  Take away major
media costs (and the fastest shrinking industry in the US now is
advertising) and you will eliminate even more profit-earning risk
prospects.  Consequently, fewer and fewer investments will be logical.
Instead, people will co-op.  The last barrier is commodities.  If peak oil
makes transportation expensive, that will shatter fast.

Ryan
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