Posted tagged ‘economics’

Brooks on the Attitudinal Health of “Protocol Economies”

December 22, 2009

Today’s NYTimes features an op-ed by David Brooks that offers an alternative take on the changing notions of ownership I brought up in my post a few days ago. Brooks’ frames this as a transition from an economy of physical things (his corn and steel, my bicycle) to an economy of “protocols”:

A software program is a protocol for organizing information. A new drug is a protocol for organizing chemicals. Wal-Mart produces protocols for moving and marketing consumer goods. Even when you are buying a car, you are mostly paying for the knowledge embedded in its design, not the metal and glass.

Brooks then goes on to argue, referencing a new book by Arnold Kling (of the Cato Institute) and Nick Schulz (of AEI), that the success of a protocol economy “depends on its ability to invent and embrace new protocols.” And what is it that allows economies to nurture this ability?

Protocols are intangible, so the traits needed to invent and absorb them are intangible, too. First, a nation has to have a good operating system: laws, regulations and property rights.


Second, a nation has to have a good economic culture. “From Poverty to Prosperity” [ed., a new book by Kling and Schulz] includes interviews with major economists, and it is striking how they are moving away from mathematical modeling and toward fields like sociology and anthropology.

What really matters, Edmund S. Phelps of Columbia argues, is economic culture — attitudes toward uncertainty, the willingness to exert leadership, the willingness to follow orders. A strong economy needs daring consumers (Phelps says China lacks this) and young researchers with money to play with (Romer notes that N.I.H. grants used to go to 35-year-olds but now they go to 50-year-olds).

A protocol economy tends toward inequality because some societies and subcultures have norms, attitudes and customs that increase the velocity of new recipes while other subcultures retard it. Some nations are blessed with self-reliant families, social trust and fairly enforced regulations, while others are cursed by distrust, corruption and fatalistic attitudes about the future. It is very hard to transfer the protocols of one culture onto those of another.

So, according to Brooks, successful economies must quickly adopt new protocols, and the two most important factors in being able to adopt protocols quickly is to develop strong intellecual property rights and then to have inate anthropological characteristics that will develop strong leaders and eager followers, all arranged into self-reliant families. In short, Brooks takes a Randian, social Darwinist perspective on the global information economy. Those who excel in such economies do so because they originate from superior cultures and are bolstered by regulations which prevent the untermenschen from ransacking their protocols (which would, one assumes, weaken the incentive for futher protocol development). This is a proposal for a Bell Curve of the information economy.

On a related note, Arnold Kling got himself into a little scandal last February, when he suggested that Obama’s stimulus plan was actually “a reparations bill” (additional commentary here). Unintentionally as it may have been, Kling draws a very neat line between the ethics of slavery and colonialism and opposition to the so-called Socialism of government-run social services.

In any case, ignoring for the time being the fact that we all still rely very much on things like food and petroleum, not just “protocols,” Brooks’ logic (or the logic he takes from Kling, Schulz, et al) also fits quite nicely into a Hayekian/Trickle-Down worldview wherein the concentration of resources in the hands of the few somehow ultimately translates into prosperity for the masses.

As such, Brooks’ argument seems to have nothing to do with changing systems of value and ownership in the protocol age, except in that it seeks to justify the imposition of artifical scarcity on digital resources in order to preserve the same old justifications for enclosure that existed in those old-fashioned physical economies.