Can Capitalism Continue? (Part 5) “Creating Scarcity by Limiting Access”

This is part five of a multi-part series that seeks to answer the question: what resources will remain scarce in the future? Since economic activity is based on scarcity, by answering this question, we may be able to locate future areas of employment, if they exist…

SCARCE RESOURCE #4: ACCESS

In the previous article, I articulated some of the challenges involved in monetizing digital content. Technology has the capacity to create an abundance of all things digital. Thus, content creators must contend not only with piracy but with knock-offs and free competitors.

But even though technology enables an abundance of copies, people will not necessarily have access to those copies. If you can find a way to lock up your content, then you can charge people to access it.

This is the concept of artificial scarcity. It’s easy to imagine situations where the content in question doesn’t have to be scarce, but the creators have chosen to make it scarce in order to preserve the value. A good example is an eBook. Currently the technology exists for all of the world’s books to be scanned and available for free on the web. However, due to the demands of authors and the publishing industry, books today remain artificially scarce. This enables traditional business models (and associated jobs) to survive (at least for a bit longer than they otherwise would).

Is artificial scarcity a good idea? That is highly debatable. Making things artificially scarce seems somewhat counterproductive from the standpoint of promoting human knowledge and wellbeing. Also artificial scarcity causes a great deal of collateral damage. Our broken intellectual property system is a prime example. Exploring all of the problems with intellectual property is beyond the scope of this article, but suffice it to say that the list of gripes one might have is rather long: stifling of innovation, distorting of markets, privileging of wealthy elites who can afford to hire lawyers, and so on.

Perhaps a more relevant question to our discussion is whether artificial scarcity is even feasible over the long term. After all, content companies have been largely unsuccessful at stopping piracy. Both the legal system and digital rights management have failed to control the spread of illicit copies.

However, content creators have (slowly) begun to figure out that if they architect a friendly platform for legal content delivery and keep prices reasonable, people will still pay for digital content in relatively large numbers. The trick appears to be convenience. When the legal option is more convenient than the illegal option, many people choose the path of least resistance.

In addition, we cannot dismiss the possibility that a successful crackdown will still occur. Content creators have been putting a great deal of pressure on governments and platform developers to do something about unlicensed copying. This pressure is only going to increase as more industries become vulnerable to piracy. Who’s to say that the forces favoring artificial scarcity and IP maximalist policies won’t eventually get their way?

And so we arrive at a plausible (if perhaps undesirable) scenario for how capitalism and traditional jobs might continue. If capitalism needs scarcity to survive, then perhaps we can just continue to create that scarcity artificially. It doesn’t seem that far-fetched to imagine a future where many people are gainfully employed in the design and sale of artificially scarce information products. If anything, current social norms might lean in that direction.

In addition there are business models based around selling “access” that may be viable whether or not strong mechanisms of artificial scarcity are even in place. Up until now, I have focused on access to content. What about access to spaces (both physical and virtual)?

Let’s say instead of selling access to static information (which can be copied and distributed against my will), I am selling access to a dynamic community (which is constantly evolving and therefore cannot be easily duplicated). An easy contemporary example would be a pay dating site. You can’t pirate a dating site the same way you can pirate a television show. And yet the business model in both cases is somewhat similar, in that they both revolve around the sale of access to information. It’s possible we will see an ever increasing shift towards community-based information products. Massive multiplayer games. Collaborative storytelling projects. Virtual playgrounds. It would be impossible to list all the possibilities here.

In conclusion, as we consider the future of the economy it’s important to remember that creating new scarcities could be as easy as just deciding to lock certain things up.

Next Up: Positive Feelings

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