Holochain Forum

HOURGLASS ECONOMICS: Aggrandizing Art, Science, and FOSS

This is a detailed response to @jakintosh’s well-articulated and sound reply at Holochain for Global Cooperation.

Art, science, and FOSS, all suffer from a common problem: they’re non-rivalrous and non-excludable. In a sense, one can say that they all suffer from positive externalities. However, one need not resort to the externality argument; even in and of itself, the labor expended in the development of recipes (art, scientific endeavors, and open-source developmental work) is economically unrewarding. Or as Mises puts it:

The characteristic mark of formulas, i.e., the mental devices directing the technological procedures, is the inexhaustibility of the services they render. These services are consequently not scarce, and there is no need to economize their employment. Those considerations that resulted in the establishment of the institution of private ownership of economic goods did not refer to them. They remained outside the sphere of private property not because they are immaterial, intangible, and impalpable, but because their serviceableness cannot be exhausted.

Complementary factors of production can only be used to the extent allowed by the availability of the most scarce among them. Let us assume that the production of 1 unit of p requires the expenditure [p. 136] of 7 units of a and of 3 units of b and that neither a nor b can be used for any production other than that of p . If 49 a and 2,000 b are available, no more than 7 p can be produced. The available supply of a determines the extent of the use of b . Only a is considered an economic good; only for a are people ready to pay prices; the full price of p is allowed for 7 units of a . On the other hand b is not an economic good and no prices are allowed for it. There are quantities of b which remain unused.


However, the realization of this truth is often accompanied by sadness and grief, especially when one thinks of the creative genius who practices those fields. This has led to people looking for alternatives…

The obvious one, also the prevalent one, is Intellectual Property laws that treat the issue as that of a negative externality and promise creators the fruits that they rightfully deserve (of which there’re none in the market society; formulas (or recipes) aren’t scarce by any means). That aside, the fact that without the government’s enforcement of IP laws the IP industry won’t stand a chance only enjoins upon and reinforces the original argument against IP. However, the core argument remains the same: that intellectual products are inexhaustible goods and thus do not warrant an effort to privatize themselves.

Another way is that of altruistic charity. Seen from a capitalist profit-maximizing perspective, philanthropy looks utterly unattractive and is infeasible to tackle the issue at hand.

Here I propose a libertarian way to reap some (even if insignificant) fruits off of one’s labor expended in such areas that suffer inexhaustibility.

[ Note that it’s the recepie that is inexhaustible. The chef definitely is a scarce resource, so is his time. However, one must be careful at distinguishing the chef’s labor and the product of that labor: the recepie; the former being a scarce resource while the latter isn’t. ]

I’ll expound the same. Basically, in the world we live in, all economic activities (buys and sells) can be divided into two categories: those concerning scarce resource and those concerning abundant ones. Now, obviously, the latter cannot exist as there can be no monetary price for relatively abundant resources. The attempt is to produce scarce counterparts of those abundant resources. It’s not a radical idea; the NFT bubble is all about the same. Basically, where a painting can be copied and possessed for free, the thank-you token of the painting cannot; where the painting bestows upon the owner a sense of beauty, the token bestows upon him a sense of pride; where the former is abundant, the latter is scarce. Thus one can create a scarce counterpart of an abundant resource. Moreover, the element of charity vanishes from the equation; the investor buys the token but for his own selfish interests. It’s a tit-for-tat solution for an industry that suffers positive externalities.

Here I once went in-depth on how code projects might use the concept…

Here are some old snaps from a mind-mapping app I use (don’t take them too literally):

As for complexity of bigger projects, imagine a code project (like Holochain itself) with thousands of contributors and dozens of merges a day. It’s not hard to conceive of a DAO happ (powered by hREA) that keep track of the contribution of every contributor (with previlidged senior developers to supervise the same, of course). Upon the token sale, every contributor gets a sum that’s proportional to the contribution they made. Simple enough! The key, however, is that the only revenue source for the project must be the one from the token sale and the subsequent price appreciation of the tokens themselves. The tokens bought must, in no way, improve functional user-experience of the (h)app for the holder; the tokens must be sterile.

Vril, as it stands, is an ideal platform to create such tokens. Though the work on Vril hasn’t started yet, rest assured that by the end of this year it will be ready for employment in such use-cases.

Finding that citation by Mises in Human Action took hours… I hope you appreciate the effort…

Why not I study the Austrian school while you the Marxist one? Then we communicate and put our points so as to convince each other?

In fact, that’s where confirmation bias stemmed from. Though I can’t remember the source where I read it…

Basically, economically speaking, the work that we (combined) have to do when I research and assemble information in the favour of my views and you in favor of yours only to communicate and resolve all conflicts, in the end, is way less the work than we’d have to do if I were to study both those schools and you were to study both of them too. Labour is a disutility that man tries to minimize… It’s funny how the roots of a psychological phenomenon like the confirmation bias could be found in economics…

By the way, here’s the joke. It’s called “revealed preference.” If you want to know what people really want, focus on what they do, not what they say.

Leading to this joke: Two economists are walking down the street and they see an expensive sports car. Economist 1: “I’ve always wanted a Ferrari”. Economist 2: “Clearly not". In economic circles, this joke KILLS!

You are so, so close to getting it, but you keep adding a whole bunch of nonsense to shoehorn in your mental requirement for private property.

It is really bizarre for you to be referring to confirmation bias in the same paragraph as you claiming that you think it is best to only study one school of thought for efficiency. Do you not know what confirmation bias is? …do you know what it is and think it’s a good thing??

You are fundamentally misunderstanding the goal of self-education. Your goal is not to find as many things that align with your existing beliefs as possible, but to reach for new things to expand your understanding of the world and to consider new ideas.

Listen, A-Man: You keep asking people to explain things to you, and then you discredit what they say because it’s not what you already believe. Even here you say it would be good for me to study other schools and then “communicate and resolve all conflicts”, but you never ask probing questions to understand the things others say to you. You simply take the things we say, and then quote some libertarian economist to disprove what we say. You clearly believe your worldview is crystallized, all encompassing, and completely true. If you have no intention to open your mind and actually consider alternative views, I have no desire to continue talking about anything with you—there are much better uses of my time than talking to a brick wall.

EDIT: I’ve seen your posts on this forum for months, and I’m fully aware that others have tried to engage with you in good faith to no avail. So, to be clear, this was not an invitation to continue discussion in a different tone, but a more direct request: please refrain from tagging me in the future.

EDIT2: Also I’m sure you’ll respond with some kind of “Haha! Marxists have no logic and resort to blahblhablha because they have no grounds for debate blahablahabla”, but I want you to know that it is not your ideas that I don’t want to engage with, but you, and your fundamental views on knowledge and education that are so incompatible with my own that it impossible for me to get value out of conversation.

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To be clear, the reason for this thread-post was not to answer you back (at least not entirely). The reason was to expound upon my old mention of the term Hourglass Economics (the idea of creating artificial scarcity for inexhaustible resources) regarding which I explained very very little (some months ago), and so felt like it was irresponsible of me to hope that people would somehow get it all by themselves. Certainly not to invite you or anyone into an extensive heated discussion (though I definitely don’t mind anyone replying anything on any of my threads; rather I fully appreciate your replies).

I didn’t mean it literally. I wasn’t pleading that you defend your communist ideas and engage in an argumentation with me whereby you defend your ideas and I defend mine, only to reach some ideological consensus in the end. I was just pointing that that’s how the world works; that people form ideas (that confirm to their beliefs) only to trade them in the end (via verbal communication) with those who hold different beliefs, because doing so is economically more efficient than the alternative of ‘everyone learning everything’. I’ve always done so; I’ve never asked people to “go look into the Austrian school and make up their mind to accept the superiority of private property and capitalism”; I’ve always tried to refute wrong ideas with sane arguments and in-text citations of supportive material. That’s something I’ve never seen others (on this forum and elsewhere) do (with respect to my ideas or that of others). [For instance, when you say I’m adding a bunch of nonsense to shoehorn in my requirement of private property, you don’t say what that is, you don’t say what the correct vision of the ideas might look like, hell you don’t even bother to say what that bunch of nonsense is!] That’s what I was highlighting; that private appropriation of ideas and free trade via communication is how mankind forwards its thinking. Though it’s striking how few people (especially how few fans of “commoning”) understand this basic premise of argumentation.


You directly mentioned me in the beginning of the thread, and the later tagged/quoted me in a follow up comment.

I know I said I wanted to stop engaging but I’ll leave you with this final thought:

Though you made it clear that you won’t do this, I encourage you anyway to entertain that it is not everyone else who is “wrong” about their approach to argumentation, but you–the common denominator in all of these situations. For someone who seems so determined to understand things and work within “the truth”, your inability to self reflect, to question “perhaps I am in the wrong here”, is fundamentally limiting your growth towards more complete ideas of the world. But hey, to each their own. If you choose to just be a walking encyclopedia for a singular school of thought, instead of a complex individual actor who can hold and process many points of view, go for it. But that is not that kind of person I choose to engage with.

Goodbye :v: