[Clothesline Paradox] value can be created, but sometimes cannot be measured or counted
I've been thinking a lot lately about a piece I read in Stuart Brand's, CoEvolution Quarterly back in 1975. It's called the “Clothesline Paradox.” The author, Steve Baer, was talking about alternative energy. The thesis is simple: You put your clothes in the dryer, and the energy you use gets measured and counted. You hang your clothes on the clothesline, and it “disappears” from the economy. It struck me that there are a lot of things that we're dealing with on the Internet that are subject to the Clothesline Paradox.
Value is created, but it's not measured and counted. It's captured somewhere else in the economy.
I started thinking about this first in the area of open-source software, or for that matter, the Web. You think about how much value Tim Berners-Lee (ed. English engineer and computer scientist best known as the inventor of the World Wide Web) created and how he didn't actually capture very much of it. It was captured by companies like Google, Apple, Twitter, and Facebook. You also think about the other extreme, where companies like Goldman Sachs managed to extract a great deal of value from the economy, but as the 2008 financial crisis demonstrated, they did so while actually destroying value for the overall economy. So that got me thinking about how value creation and value capture are not the same thing. Our economics tends to measure value capture. If we're going to get 21st century economic policy right, or even just correctly model what's working and why, we have to start moving to a model that measures value creation rather than value capture.
Source : The clothesline paradox, Edge, April 10, 2012
In order to gain and to hold the esteem of men it is not sufficient merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence. And not only does the evidence of wealth serve to impress one's importance on others and to keep their sense of importance alive and alert but it is scarcely less use in building up and preserving one's self-complacency.… Abstention from labor is the conventional evidence of wealth and is therefore the conventional mark of social standing; and this insistence on the meritoriousness of wealth leads to a more strenuous insistence on leisure.[...] According to well-established laws of human nature, prescription presently seizes upon this conventional evidence of wealth and fixes it in men's habits of thoughts as something that is itself substantially meritorious and ennobling.
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.
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To widen the market and to narrow the competition, is always the interest of the dealers…The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.