Communications companies seeking to create value should take this innovation seriously.
Communications companies seeking to create value should take this innovation seriously.
In Europe in the sixteenth and seventeenth centuries, trade rapidly expanded. An important part of that expansion was increasing articulation of trade — from producer to consumer, to producer to trader to consumer, to producer to trader to trader to consumer. Exchanges among traders seem not to have any conventional, worthy motivation. Individual traders do not produce anything. The word “commerce” began to be used in English in the sixteenth century for this sort of growing activity. Commerce described a network of exchanges among peers in trading. Commerce was a forerunner of what today is heralded as peer production.
This understanding of commerce has significant legal implications. What is commonly called the “Commerce Clause” of the U.S. Constitution shapes the U.S. federal structure of government. The Commerce Clause gives the U.S. Congress the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” A big question in constitutional law: what is the scope of this enumerated power?
Professor Natelson’s impressive recent scholarship has examined the legal meaning of commerce at the time of the writing and ratification of the U.S. Constitution. By impressive, I mean this kind of work:
I collected evidence from eighteenth century legal works at the Bodleian Library at the University of Oxford, England, with additional excursions to Oxford’s Codrington Library and the library at the Middle Temple in London, one the England’s Inns of Court. Using the Justis database of the English reports, I examined every use of the term “commerce,” both in English and in Law French, in cases reported after the Year Books and prior to 1800 [i.e. all cases reported in the sixteenth, seventeenth, and eighteenth centuries]. I also examined the use of the term in all available English dictionaries and abridgments, and in various legal treatises. (Natelson, p. 15)
Every law student should look at this research if only to gain appreciation for the smell of primary sources. Here’s the definition of merchant from Giles Jacob’s popular New Law-Dictionary (8’th edition, 1762):
the Word Merchant formerly extended to all Sorts of Traders, Buyers, and Sellers. But every one that buys and sells is not at this Day under the Denomination of a Merchant; only those who traffick in the the Way of Commerce, by Importation or Exportation, or carry on Business by Way of Emption, Vendition, Barter, Permutation or Exchange, and which make it their Living to buy and sell, by a continued Assiduity, or frequent Negotiation, in the Mystery of Merchandising, are esteemed Merchants. (quoted in Natelson, p. 27)
Merchants were thus associated with group-specific assets and a distinguished social status. That is no different from law professors or any other long-lasting human group. Peer production is a general feature of human sociality that emerges across vastly different institutional organizations and human activities.
Law professors writing about the Commerce Clause have not sufficiently acknowledged the importance of peer production. Based on his thorough examination of primary sources, Professor Natelson summarized his findings:
In legal discourse the term “commerce” was almost always a synonym for exchange, traffic, intercourse. When used economically, it referred to mercantile activities: buying, selling, and certain closely-related conduct, such as navigation and commercial finance. It rarely, if ever, encompassed all gainful economic activity. (Natelson, pp. 15-6)
One problem with this summary is that the terms “economically” and “economic” are anachronisms in the context of his sources. Economics as a stand-alone analytical term did not develop until the late nineteenth century. More significantly, commerce was added to descriptions of trade and exchange to highlight the new group-specific quality of trade. Commerce described new human relationships that emerged with the expansion of trade.
The meaning of commerce is more closely related to peer production than to distinctions among different types of activity. Consider, for example, the interpretation of the Commerce Clause that Professor Akhil Reed Amar, an eminent scholar at Yale Law School, put forward in his recent book, America’s Constitution: A Biography. With relatively little consideration of primary sources, Professor Amar noted that commerce in 1787 “had a broader meaning referring to all forms of intercourse in the affairs of life, whether or not narrowly economic or mediated by explicit markets” (p. 107). This interpretation, highly valued in modern legal scholarship, is organized with respect to distinctions concerning “economic” and “markets.” At the same time “all forms of intercourse in the affairs of life” is a remarkable inarticulate category, even if just limited to the daily life of eminent legal scholars. Scholars, as well as merchants, clearly recognize peers. That recognition affects their behavior. The category “all forms of intercourse in the affairs of life” makes persons peers at a far too abstract level to be a sensible interpretation of the meaning of commerce in the Commerce Clause.
As a matter of bureaucratic work, U.S. federal courts decide legal cases concerning the Commerce Clause. Constitutional scholars merely instruct the Supreme Court on how to decide cases correctly, grade the Supreme Court’s work, and re-argue and re-decide cases, as necessary. At least one leading constitutional scholar does, however, engage in other activities. Recent cases concerning the Commerce Clause include United States v. Lopez, United States v. Morrison, and Gonzales (Ashcroft) v. Raich.
In Rapanos v. United States, the Supreme Court decided whether certain collections of water are within the scope of the U.S. Army Corps of Engineers’ authority under the federal Clean Water Act. That Act gave the Corps authority to regulate “navigable waters” so as to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.” Deciding whether the Corps exceeded its statutory authority under the Clean Water Act is an issue of statutory law, not constitutional law.
Rapanos, however, does offer insights into federal power under the Commerce Clause. Even though, as a Rapanos dissent noted, “[the Nation’s waters] are so various and so intricately interconnected,” the Clean Water Act does not declare federal authority to regulate all use of “navigable waters.” For example, choosing between persons to get an allotment of water from a well has nothing to do with the purpose of the Act and presumably would not be authorized under the Act. No federal statute has been interpreted to authorize federal regulation of all water use in the U.S. That’s rather different from asserted federal jurisdiction for radio use.
Rapanos also highlights the difficulty of judging relationships between waters. Whatever the actual meaning of commerce as written in the Constitution, it surely concerned relations among persons. Promoting and sustaining relations among person is a central focus of innovation and entrepreneurship on the Internet today. Think of free software/open source software projects, blogs, Wikipedia, del.icio.us, MySpace, and youtube. Notwithstanding the gentle teasing of a former colonial overlord, the U.S. Constitution has probably been one of the world’s most successful pieces of social software. You would never guess that from that past decade of debate about the Commerce Clause.
Faceless bureaucrats — show your faces! I am now welcoming submissions to the new (ugh) Carnival of the Bureaucrats.
Don’t go looking for funny in the funny category,
funny is everywhere but where you look for it.
Funniest. Video. Ever. And its production quality is probably better than what Hollywood was doing twenty-five years ago. Web junk is quality entertainment.
P.S. – It’s got about 500,000 views. Makes me proud to be an economist!
The brainpower of all human being around the earth is vastly underutilized. Organizing production to give more persons more opportunities to use their brains can make a huge contribution to the common good.
“Crowdsourcing” describes some new production arrangements. An interesting example of crowdsourcing is InnoCentive. InnoCentive mediates between companies seeking solutions to R&D problems and persons around the world interested in solving problems. All kinds of persons with all kinds of training have succeeded in solving problems that have been difficult and costly for rigidly structured research organizations to solve.
This shouldn’t be surprising, notes Karim Lakhani, a lecturer in technology and innovation at MIT, who has studied InnoCentive. “The strength of a network like InnoCentive’s is exactly the diversity of intellectual background,” he says. Lakhani and his three coauthors surveyed 166 problems posted to InnoCentive from 26 different firms. “We actually found the odds of a solver’s success increased in fields in which they had no formal expertise,” Lakhani says. He has put his finger on a central tenet of network theory, what pioneering sociologist Mark Granovetter describes as “the strength of weak ties.” The most efficient networks are those that link to the broadest range of information, knowledge, and experience.
Academic disciplines are largely cartels for dividing up the knowledge market, lessening intellectual competition, and facilitating symbolic claims to authority. Broader, more fluid organizations of intelligence can make a major contribution to creating replicable, instrumental solutions to practical problems.
This kind of production arrangement has some important limitations. In many cases, persons and organizations don’t recognize the most important problems that they need to solve. Defining the problem is nine-tenths of the solution. That’s a cliché. It’s also true. If you don’t understand what the key problem is, you can’t get someone to solve it. This situation is pervasive in the communications industry.
In addition, for many business problems, solutions are quite difficult to evaluate. Solutions to the generic problem, “how to make a lot money quickly,” can be intelligently dismissed with little effort. Recognizing neglected, decision-relevant knowledge for narrower problems of mundane human behavior (economics) can be simply a matter of logic. But recognizing such knowledge can also require wisdom. Crowdsourcing cannot solve the problem of distinguishing between wisdom of crowds, and folly of crowds.
Bell Labs, one of the world’s premiere research institutions, was promoting the development of the PicturePhone by 1969. The first article documenting that the sight of lips annunciating sounds affects hearing (the McGurk Effect) was published in Nature, a leading scientific journal, in 1976. The authors of the article, Harry McGurk and John McDonald, were affiliated with the Department of Psychology, University of Surrey, UK. Did researchers at Bell Labs know about the McGurk Effect by 1969?
At least this is clear: good science, whether known or yet to be discovered, is not sufficient to produce a profitable new product.
The PicturePhone was a spectacular failure in the U.S. in the early 1970s. Many factors contributed to the PicturePhone’s flop. It required significant up-front equipment expenditure coordinated across users. It was expensive to use. It was bulky. It highly constrained the bodily position of users: compared to the PicturePhone, the fixed line phone of that time was a “mobile” phone. Because of these and other weaknesses, the PicturePhone became the communications industry’s Edsel.
The massive, money-losing investment in PicturePhone shouldn’t be understood to indicate that voice is all that most persons want in most personal communication. The PicturePhone had the technical capability to combine voice and images. That is not sufficient to create economic value in communication. Economic value in communication depends on broader sensory circumstances and more specific behavioral goals of users.
Good sensory design of communication services requires understanding behavioral goals. Consider, for example, voice quality. High voice quality might mean transmitting the full audible range of a person’s voice, and nothing else (no “noise”). Research indicates, however, that persons are able to identify locations based on their acoustic qualities. If the goal of a voice conversation is to transmit specific information in speech, then ambient sound is “noise”. But if the goal of a voice conversation is to make sense of the other’s circumstances, then ambient sound might enhance communication, particularly for a mobile device.
Identifying specific persons, while often taken for granted, is an important goal in communication. Factors relevant to identifying persons by sight are not just pixel resolution and color depth. For example, the orientation of a face affects the amount of time to detect whether the face is smiling or frowning (please do future frowning upside-down). Moreover, the sound of a person’s voice creates a sense of what the person looks like speaking. The value of a communication service depends on the sensory affordances it provides in relation to the multimodal human perceptual routines for identifying persons.
Another goal in communication, one that is probably overvalued in theory, is understanding what a specific person is saying. Seeing lips annunciating sounds affects what sounds are heard. Moreover, the orientation of a face affects the integration of the sight of lip movements and the sounds that are heard (check out this amazing demonstration). Recognizing a face, seeing lip movements, and hearing sounds are all sensory dimensions that contribute to understanding, or misunderstanding, what a specific person is saying.
Google has integrated visual identity in Google Talk and Gmail. Visual identity doesn’t generate any additional constraints on the use of the service. The cost to users is image acquisition and set-up costs. All in all, it’s a minor innovation. But, unlike the PicturePhone, it enlarges sensory circumstances to serve a specific behavioral goal in communication. That’s a major way to create value.
It seems that The Structures of Letters and Symbols throughout Human History Are Selected to Match Those Found in Objects in Natural Scenes. This is a large-scale example of ecology shaping communications technology.
This sort of effect also occurs at a much smaller scale. Compare the geometric patterns in the paintings in the Morgan Picture Bible of Louis IX to those in the Marc Chagall Bible Series. The artists that produced the Morgan Bible primarily illuminated books. Marc Chagall primarily produced individual paintings. Not surprisingly, the Morgan Bible’s paintings look a lot like text, while Chagall’s don’t.