Stan Liebowitz, professor and shrewd economic analyst of technology, has written Parasite Technologies and Non-Creative Destruction (Academic Advisory Council Bulletin 1.2, March 2006).

He makes the crucial point that the uses to which some technologies are put are not destructive in the Schumpeterian sense of the creative gales of capitalist destruction that occur when new and better ways of doing things are found, but in the sense in which a parasite is destructive because it depends on draining nourishment from its host (but not so much as to actually kill the host).

A prime example is TiVo. A wonderful technology for time-shifing. But, if everyone uses it for the purpose of avoiding the commercials that nourish broadcast television, then the TV host will die.

Note that you can approve or disapprove of this -- I personally am totally cool with the idea that TV should be pay-for-view without commercials. But it is important that anyone who glories on the commercial-skipping feature of TiVo must recognize that they are dependent on not everyone doing it. Similarly with unauthorized P2P -- if everyone tries to free ride, the system collapses; so the P2Pers are dependent on having other people keep paying so they can free ride.

Stan notes that, as a general rule, one could classify as "parasitic" technologies that "break the linkage between usage and payment," and that:

destroy property rights. What is often not understood is that without property rights, civilization would come to an end. Although this statement may sound extreme, it is important to understand that without property rights there would be no cultivation of crops, no building of factories, and no trade. Why bother to invest and produce when you cannot get to enjoy the fruits of your labor?

How best to avoid parasitic threats? It is easy, even if true, to mouth platitudes like: “rules should be made to allow the productive components of these technologies to thrive, while at the same time minimizing the parasitic elements”. It is hard to put this into practice.

. . . .

But we should all, at least, be able to agree that parasitic characteristics of these technologies exist and that such characteristics should be minimized if possible. We should not get caught up in the mistaken impression that fighting parasitic technology is the same as being against productive technology. To do otherwise would be to do ourselves a disservice, since clearly we are all better off if we don’t kill the goose laying the golden eggs.

posted by James DeLong @ 2:49 PM | General

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