Handicapping the Carr-Benkler Wager

In a recent post entitled Getting Rich Off Free Labor, Rob highlighted a Time magazine article discussing the 'Gift Economy' and peer production. The article quoted Yale law professor Yochai Benkler, one of the leading proponents of these principles. Near the end of the article, the author noted that there were skeptics, including Nicholas Carr.

"In a critique of Benkler's work last summer, business writer Nicholas Carr speculated that Web 2.0 media sites like Digg, Flickr and YouTube are able to rely on volunteer contributions simply because a market has yet to emerge to price this "new kind of labor." He and Benkler then entered into what has come to be widely known in Web circles as the "Carr-Benkler wager": a bet on whether, by 2011, such sites will be driven primarily by volunteers or by professionals."

One interesting thing about the wager is that it actual takes place in the comments section of this Carr blog post.Benkler proposed the structure as outlined in the quote, suggesting a 2-year time frame. Carr responded that 2 years wasn't enough time:

"As to the wager, two years is much too soon. We won't even have sorted out which parts of the current "social production" movement are fads and which will actually endure. I would think 10 years would be the real test, but 5 years should be ok – at least the trend should be apparent."

The men on both sides of the wager are excellent advocates for their positions. Benkler's comment linked to his article Coase's Penguin, which is a lengthy (79 pages) discussion of the issues of structure and motivation in what Benkler calls 'commons-based peer production'. It is extremely well thought out analysis, and makes a strong case for the viability of the model. Carr, whose HBR article "IT Doesn't Matter" (serialized here) established his bona fides as a keen analyst willing to challenge well-entrenched conventional wisdom. In particular, he's good at identifying collective human misjudgment. He expressed his skepticism of the common-based peer production model by writing:

"But how convincing is Benkler's case? The string from which it hangs is his contention that we are seeing "the emergence of more effective collective action practices that are decentralized but do not rely on either the price system or a managerial structure for coordination."

In "Coase's Penguin, Benkler writes:

"The motivation problem is solved by by two distinct analytic moves. The first involves the proposition that diverse motivations animate human beings, and, more importantly, that there exist ranges of human experience in which the presence of monetary rewards is inversely related to the presence of other, social-psychological rewards…The second analytic move involves understanding that when a project of any size is broken into little pieces, each of which can be performed by an individual in a short amount of time, the motivation to get any give individual to contribute need only be very small."

Excellent points, but they lead to a mindset that I believe misses the forest for the trees.

The parallels between the positions of Carr and Benkler on this issue and Carr and the IT community with respect to IT Doesn't Matter are striking. The proponents of the new technology say "We are dealing with new and unprecedented things!", to which Carr's basic reply is "The things may be new, but the people dealing with them have dealt with other new things repeatedly in the past, with very predictable behaviors." Technology changes quickly, but our brains do not. We are running the same 'wetware' as our ancient ancestors. Certain behavior patterns have been noted consistently for thousands of years. I think one of those patterns was expressed nicely by Abraham Maslow and his hierarchy of needs. The challenge for Benkler and company is that you have to climb a good way up the hierarchy to get to the needs that common-based peer production projects can satisfy. Throughout history, people who have gotten to those levels have been very successful people. And they have been successful people who specialized in doing a small number of things extremely well and employing others to do the rest. We are fortunate to live in a time where more people than ever are at these levels, and what are some of the fastest growing sectors of the economy? Personal services! Self-actualizers are prodigious buyers of cleaning services; they buy food prepared for them by rent-a-chefs (even if it's chef Ray Kroc); they have personal trainers and life coaches. They will pay for quality services, sometimes in barter; sometimes in cash.

The paradox is that self-actualizers understand the power and value of specialization, from both a provider and consumer perspective! A recent study showed that the way people build deep expertise in a discipline is through repeated intense practice. If you ever read or saw "Little House on the Prairie", you know that Pa Ingles loved to play the fiddle. But he could never be as good as his predecessor Niccolo Paganini because Pa worked 14 hours a day on his farm, while Niccolo spent hours each day perfecting his skills. The same applies to the "Gift Economy". If (as a self-actualizing consumer) I have a choice between a free violin tutorial from Pa Ingles or a nominally priced alternative from Niccolo Paganini, which will I choose? What if I was offered an expensive one from Hillary Hahn? Time and time again throughout history, self-actualizers choose the latter.

If the way to achieve the level of expertise that allows one to build self-esteem and self-actualization requires repeated intense practice, and the way to give yourself the time for that is to get paid for it so you can pay others to handle your other lower level Maslow needs, will the commons-based peer production model scale? History would suggest that in special situations over short periods of time the answer would be yes, but that in general the answer is no. That's why Carr asked for the time extension, and why I believe he'll win the wager.

[Note: If you would like to know more about my views on these types of topics, you can look at my BusinessPundit resume.]