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Hazlett in Financial Times: Overhype and Emerging Markets

Capitalism accommodates both closed and open markets says Professor Thomas Hazlett in the Financial Times, continuing, "Markets thrust revolutions upon us, boldly and magnificently, far more often than we care to remember."

Hazlett's article examines overhype about emerging markets and the resultant enthusiasm of the "e-crowd," and he points out that while large-scale community collaboration is touted in the media, proprietary content is growing and costing those who can afford to use it dearly.

The global village and the madness of e-crowds, Financial Times, February 5, 2007. By Thomas W. Hazlett.

"The excitement over robust social change is, hype-adjusted, deserved. Just as the Industrial Revolution discovered productive solutions previously unimagined, and mass transit (such as railroads) and mass communications (telegraphs, telephone, and radio) turned societies upside down, the possibilities on today's frontier are ripe with promise.

"Which is to say: we've surfed these waves before. The 'user-generated content' business model may have its own My Space page, but it dates to the telephone network of Alexander Graham Bell. 'Club goods' allow individuals to gain from cooperative efforts, a standard paradigm in economic theory. Many 'commons' sprouting up in the New Economy, where individuals share resources and reap the rewards of teamwork, produce value. But they have some trillions of dollars in productive enterprise to go before they eclipse the workhouse 'commons' of the modern economy: the corporation.

"Overhype about the emerging markets is good clean fun when confined to mindless text-messaging. There is an undeniable 'wow' factor. But there is also a madness to the e-crowd. Whenever a trajectory is spotted that captures the fancy of the zeitgeist, it is formulated as a linear trajectory, and shot into orbit. All cross traffic is banned. Call it 'asymmetric triumphalism.'

"When Time trumpets 'community' and 'collaboration,' beware that their next issue may feature their favourite twenty-something online billionaires. When the claim is that 'the new Web is a very different thing...bringing together the small contributions of millions,' behold the beauty of the long tail -- but note, too, the reverse. Proprietary content is growing like a Paris Hilton video gone viral, with firms like Gartner, Forrester, Yankee Group, IDC and McKinsey & Co. charging fat fees for specialised content of keen interest to deep-pocket customers. As an academic researcher, I am continually impressed by the excellent online databases that are (according to the email marketing, sometimes highly accurate) available for $2,995.00. C'mon guys. I'm a scholar. And what happended to 'openness' and 'community'?

"Yes, the dramatic lowering of distribution costs allows information to travel on a budget. That is an oomph for markets, and perhaps a double-oomph for democracy. But there's more. Never have so many, owed so much, for so few user names and passwords."

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