Most of the assumptions on which our present economic system is based are based on nothing much better than "conventional wisdom": which is a fancy way of saying "it just sounds plausible". Sometimes conventional wisdom is wrong, and that's what the first part of this book has been about: six things that ought to be impossible if conventional wisdom were correct. But if the foundational assumptions of our economy are false, then where does that leave the economy? And if it's no longer standing on a firm foundation, then what are the new rules?

"Why, sometimes I've believed as many as six impossible things before breakfast."——The White Queen, from Through the Looking Glass by Lewis Carroll.

I've presented the empirical case for debunking six major myths on which our existing model of "intellectual property" and our existing belief that free development can only be a niche phenomenon are based:

• "Free development is limited to small scale projects"
• "It is limited to less than what corporations can do"
• "It can only produce utilitarian, not aesthetic works"
• "You can't raise enough money for free projects which require capital"
• "Free development only works for pure information projects"
• "There simply aren't enough people to do free development"

Or, to invert, I've presented the empirical case for six "impossibilities" produced by peer production, in defiance of prior economic theory:

• Massive information products can be built using commons-based production
• In many cases, these products are larger than comparable corporate- or government-backed enterprises
• There is essentially no area of human endeavor that is off-limits to peer production, including software, science, technology, and art
• There are proven methods for peer communities to raise capital when it is needed
• Even for material production, design data can be developed by commons-based enterprises
• Already, peer production communities are large and powerful, but they are likely to increase by an order of magnitude in the coming decade, certainly by mid-century

Now what? If we've crossed into the looking glass world where these six impossible things can be proven possible, then what shall we have for breakfast?

We Need a New Theory

Clearly, there must be new rules to learn if we want to be able to predict the existing successes (thus validating the theory), and to succeed with new, more ambitious projects. In order to get to the bottom of this, we'll have to take a much closer look at the mechanisms that drive existing peer production communities.

If we've gone into the looking glass world where these six impossible things can be proven possible, then what shall we have for breakfast?

This is fundamentally a study of the behavior of people. In the peer production community, where the most important driving forces are volunteer and otherwise freely-contributed creative labor, the rules are much more complex than those of the proprietary economy.

Most of our existing economic theory (at least in the United States and other traditional bastions of capitalist philosophy) attempts to simplify the motivation problem by reducing the complex and subtle behavior of human psychology to that of a purely selfish and rational "economic automaton" (figure 7.1). This is, of course, an incredible oversimplification, even though, in the case of the monetary exchange economy, it is frequently predictive of broad trends, even where it is not accurate in detail.

It is precisely the step of dropping this assumption, however, which allows us to understand the workings of commons-based enterprises. They are not exclusively economic machines—at least not in the money-motivated sense we usually imagine when we talk about "economics".

It has long been appreciated that social action: political parties, volunteerism, do-it-yourselfers, religion, charity, art, craft, and other forms of "altruistic" or "irrational" behavior create holes in the "economic automaton" model. However, for most of the matter economy, in most of the world, for most of history, these "higher motivations" provide nothing more than a slight perturbation to the basic assumption of selfish, unconsidered, economic motivation (which accounts for the bulk behavior of the economy).

If we do not take the time to understand these other effects, we will continue to be blindsided

Free replication of information, however, makes this assumption fail: tiny voluntary contributions which might otherwise be negligible in the matter economy can often accumulate or even synergize to form large effects (sometimes completely outperforming the system of "rational economic behavior"). Thus, if we do not take the time to understand these other effects, we will continue to be blindsided by massive, apparently unexplainable economic phenomena.

Intellectual Freedom versus Intellectual Property

The liberation of information has been going on for a long time: one might say for all of human history, as history itself is one of the oldest forms of information sharing. There are several major landmarks dotting that course, which I might point to: the invention of spoken language, of writing, of ink and paper, of block printing, movable type printing, digital typesetting, electronic distribution, and most recently, the internet (figure 7.2).

Each of these steps has produced an opening up in the exchange of information, resulting in more efficient technological progress, followed by additional steps in increasing our communications abilities. These steps have been associated closely with massive and rapid improvements in science, health, and standard of living, for most of human history. And, post-modernist angst notwithstanding, the reality is that there aren't many of us who would genuinely trade our present lifestyle for that of our ancestors: especially if we consider the additional pressures imposed by increased population. Most of the assumptions on which our present economic system is based are based on nothing much better than "conventional wisdom": which is a fancy way of saying "no basis at all, really, it just sounds plausible". But sometimes conventional wisdom is wrong, and that's what this series has been about: six things that ought to be impossible if conventional wisdom were correct. But if the foundational assumptions of our economy are false, then where does that leave the economy? And if it's no longer standing on a firm foundation, then what are the new rules?

Each of these steps has produced an opening up in the exchange of information, resulting in more efficient technological progress

Cheap computers, electronic data storage, and of course, the internet, have produced an unparalleled ease of information sharing. Today, we do better to think in terms of a sea of information into which our work is published, from which anyone can draw, rather than in terms of specific data exchanges. Just as we would never try to simulate or predict the behavior of an ocean by modelling its individual atoms, we'd be fools to try to manage the information economy in terms of tracking every individual exchange.

Trying to intelligently predict and control the transfers within this sea of information is at least as pointless (and procrustean) as trying to control the matter marketplace. The arguments for the "free market" also work as arguments for "intellectual freedom". "Intellectual property" is, as a result, roughly as doomed an idea as the "planned economy" of twentieth century communist states.

Patents, copyrights, and other forms of "intellectual property" were created to protect certain kinds of business models, under the assumption that economic motivations are essential to production of information products. To some degree, this is no doubt true (even a perfectly altruistic creator must be fed, housed, and educated in order to continue contributing).

However, it is questionable whether the "intellectual property" model is the best method for solving the problem, especially as it carries significant social burdens, which become ever more important as the natural barriers to the mobility of information fall. From the examples of history, we know that sequestering information retards progress. What we do not yet know (or do not fully understand) is how to economically sustain the people who create intellectual works while simultaneously avoiding such obstacles to intellectual progress.

The Rules

As a society, though, we are learning—and the existing examples of commons-based peer production provide ample material to derive a basic understanding of how the commons-based enterprise must function, as well as pointing the way to problems that must be solved in order to fully enable this new form of organization and production.

In the second part of this book, I will examine how peer production works, and how to work with it to achieve your goals.