Free and Cheaper: The World’s Best News

by Andrew McAfee on April 17, 2012

The speed with which our economies and societies are digitizing continues to astonish. I think Marc Andreesen was only about one third right when he wrote recently that “software is eating the world.” Data and devices are, too. The growth in hardware, software, and data is interdependent, complementary, and self-reinforcing, and emphasizing only one trend misses the broader point. As Google’s Peter Norvig points out about the interplay between software and information, for example, “We don’t have better algorithms. We just have more data.”

This growth is occurring because of two happy phenomena inherent to the techonomy. I call them ‘free and cheaper.’

Digital content – code and information – is free in that it has essentially zero marginal cost of replication and (in the Network Era) distribution. The importance of this fact was stressed by Carl Shapiro and Hal Varian in their landmark 1999 book Information Rules, and in the years since it came out we’ve seen just how right they were. Free software makes businesses like Google and Facebook possible (they would have been uneconomical, at least in their early days, if they had to pay someone a license for the operating system on every one of their servers), fills up our smartphones with apps, and generally conditions us to expect to get a tremendous amount of value from the online world without getting out our credit cards.*

This applies not only to code, by also to many kinds of information, from Wikipedia articles to Twitter updates to blog posts like this one. Ray Kurzweil recently stated that “Kids in Africa have more information today than the President of the United States did 15 years ago.” If this is an overstatement, it’s not much of one.

Free code and information are wonderful, but their value would be limited if they could only be accessed via expensive devices. Thanks to the relentless awesomeness of Moore’s Law, however, that’s not the case. Roughly speaking, digital hardware drops in price by half every 18 months. So manufacturers can either offer us twice as much for the same price every year and a half, or offer us the same thing at 50% off. The only way they can really get away with not offering us one of these choices is if they’re a monopolist, protected by government regulation or some other barrier. Otherwise, competition and Moore’s Law are going to guarantee ever-cheaper devices over time.

The dynamic of free and cheaper is not by itself going to solve all the world’s problems, but it is the best news in the world today. The research is piling up, and it’s confirming World Bank economist Christine Zhen-Wei Qiang‘s assertion that mobile phones (which are themselves only one element of free and cheaper) “…have made a bigger difference to the lives of more people, more quickly, than any previous technology. They have…become the single most transformative tool for development.”

Digital progress is not an unalloyed good; it brings along privacy concerns, labor force disruptions, and other side effects we need to be mindful of. But nothing is an alloyed good, and to concentrate on these side effects as if they were the main story of the techonomy is something between a disservice and a bad joke. It makes about as much sense to me as highlighting the plight of arms dealers if world peace were to suddenly arrive.

In another landmark book, 1995’s Being Digital, Nicholas Negroponte made a confident prediction:

The information superhighway may be mostly hype today, but it is an understatement about tomorrow. It will exist beyond people’s wildest predictions.

He was right, and he teaches me to stop being so circumspect about the power, impact, and benefit of digital technologies.

So here’s what I think when I’m not being circumspect: that the dynamic of free and cheaper is going to be a greater good for humanity than anything since the Industrial Revolution, which was itself a development so profoundly beneficial that in the words of historian Ian Morris, it “made mockery of all that had gone before.” I can’t begin to guess all the ramifications of this dynamic, but I’m confident that it’s going to make us healthier, wealthier, and happier, and allow us to be better stewards of our planet. It will also cause increases in human freedom and self-expression, even if progress here is slow and spotty. Free and cheaper is already changing our world for the better, and we ain’t seen nothing yet.

If you don’t agree, I’d really like to know why. Leave a comment, please, and let us know.

 

* I was about to write “without paying anything,” but every time I do some folk pop up to remind me that I am paying with my attention and my data, since a lot of online businesses support themselves with ads, and/or by selling my data on. I find this a silly and tiresome argument but I’m tired of having it, hence the wording in the text of the post.

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