Information technology and the future of society

Brad De Long, in a rather lengthy post explains information technology, and how it might affect the future of our society, rather lucidly. Here are some interesting titbits from his article (The emphasis in the last quote was added by me):

… as Thomas Robert Malthus first wrote in the 1790s, rising populations had put enough pressure on scarce natural resources to offset the benefits of better technology and keep living standards nearly constant for the people if not for the elite: American President Thomas Jefferson in 1803 A.D. certainly enjoyed a higher standard of living than Roman Consul Marcus Tullius Cicero in 63 B.C. But did Jefferson’s slaves enjoy a higher standard of living than Cicero’s? A large amount of archeological evidence has not yet found significant differences.

…

In a sense, we all–from U.C. professors to chief technical officers to xerox operators, Ford Salesmen, cashiers, and parking-lot attendants–are and have long been information workers: people whose jobs are, if we examine them closely, largely concerned with determining what exactly the goods-producing sectors should make, how it should be made, where it should go, and to whom it should be distributed–and that is leaving aside the large chunk of our economy that is symbolic communication as an end in itself.

…

These three advantages–earmarking additional resources for successful and efficient production organizations, providing users with incentives for economically-efficient distribution, and decentralization of decision-making to where the knowledge was likely to be–were delivered by accident by the trade-and-market economic structure of Adam Smith.

But now as we try to realize the technological promise of information technologies, the old forms of economic organization no longer have a natural fit with the requirements of technological development and economic growth. Once an “information good” has been produced, sharing it with another person doesn’t reduce the rest of society’s resources and opportunities. So there is no efficient-distribution reason to charge a price for it. But where then does the flow of signals to assess which production organizations are efficient come from? In an earlier age we would be more inclined to rely on government funding, but these days we have a keen awareness of the advantages in applied development at least of semi-Darwinian competitive mechanisms, where investigators are responsible to investors seeking profits and not to committees seeking whatever committees seek.

Moreover, it is only with difficulty that information goods are excludable. But if their use can’t be restricted to authorized users, then the entire market-as-a-social-calculating-and-signalling mechanism simply breaks down. Unfortunately, attempts to make information goods “excludable” by various forms of use protection waste valuable time and energy: I shudder at the memory of having spent two hours on hold during three phone calls, and having spent another two hours of my time rebooting and reading installation error messages the last time I tried to upgrade one of the Adobe programs–GoLive–on this laptop. I doubt I’ll ever be able to face the prospect of buying another Adobe program again.

Take a look!