Tuesday, March 20, 2012

Wikipedia, Hayek and the marketplace

'Belette' comments here that "there is no marketplace on wiki". Well perhaps there isn't, but its founders certainly thought there is. Hayek's paper about market mechanisms "The Use of Knowledge in Society" is supposed by some, not least by Jimmy Wales himself, to be the model for Wikipedia. You can read the paper for yourself, but Hayek's central argument is that there are two types of knowledge, namely knowledge of the eternally true, scientific sort of stuff that you read about in books, and knowledge of "circumstance", i.e. of little facts peculiar to a time or place, knowledge of which "never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess." Hayek argues that all economic activity is planning, but all planning must be based on knowledge which is not initially available to the planner but to somebody else, which somehow will have to be conveyed to the planner. Which is the best way of utilising this knowledge: central planning or the use of a price mechanism?
Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose—and it is very significant that it does not matter—which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply.
Wales claims (in an email to me) that this idea underpins his whole thinking about Wikipedia. Larry Sanger also had some similar ideas which he expressed in a mini-essay here in 2001.
Academia is sometimes compared to the marketplace of ideas. That's also an apt description of Wikipedia at present: it's unregulated (except for some basic ground rules), and anyone can come in and "set up shop" (write an article), but other "business owners" (contributors) can "compete" (improve the article) according to their understanding of what the facts are, what the best way to express them is, etc. Competition improves articles. Regulation tends to stifle free competition."


Anthony said...

Sanger's analogy, to the extent it is coherent at all, is from Wikipedia's infancy.

The link I see between Hayek's paper and Wikipedia is that the decisionmaking is decentralized. But I wouldn't say that Wikipedia utilizes a marketplace do achieve the decentralized decisionmaking.

What functions as price in the analogy between Wikipedia and a marketplace? Where is the private property?

Anthony said...

By the way, Wales says here (http://www.econtalk.org/archives/2009/03/wales_on_wikipe.html) that the analogy "came after the fact".

He also explains what the analogy is: "is it more effective to communicate all the information inward to a central authority who will use that information to make a decision, or is it more efficient to leave the information where it is and push decision-making out to the endpoints"

Edward Ockham said...

>>What functions as price in the analogy between Wikipedia and a marketplace? Where is the private property?

Thanks for the comments and the useful link, Anthony. I agree. I think there may be a natural confusion between the notion of 'knowledge' as in Hayek's paper and 'knowledge' as in 'bringing all human knowledge to every person on the planet'. The knowledge which H is talking about is 'circumstantial knowledge' relevant to a situation and a time. He explicitly contrasts this with the stable and time-independent knowledge that would go into an encyclopedia. Encyclopedic knowledge is analogous to some commodity like copper which may be in short supply, but which the price mechanism, using circumstantial knowledge, can bring to consumers by adjusting the price.

This does not work for Wikipedia. My research on 'demand' for knowledge, based on page views, suggests that the high-demand articles do not get much work from Wikipedia editors. Conversely, there is a lot of work on articles for which there is not much demand (there was a good piece of research about this which I will dig up). That is because there doesn't appear to be a price mechanism. Viewers who want information from Wikipedia have no way of 'demanding' it via a price mechanism. Nor is there any way of 'rewarding' the miners of that knowledge by paying them.

Was that what you meant?

Edward Ockham said...

PS I pointed this out to Wales in the same email exchange but got no reply.

Anthony said...

Well, what I meant was simply that Wikipedia is not a marketplace, and in fact is rather anti-marketplace. This anti-marketplace is implicitly enforced primarily by the GPL, which mostly prevents individual ownership, and is made explicit by the rules which govern Wikipedia, such as "Wikipedia:OWN", which says quite explicitly that "No one, no matter how skilled, and regardless of their standing in the community, has the right to act as if they are the owner of a particular article.".

But I don't think that's what Wales means when he talks about "The Use of Knowledge in Society" being an influence on Wikipedia. I think he's trying to say that Wikipedia is able to achieve decentralized decisionmaking in a way other than via a marketplace.

You seem to be highly critical of this part. I'm skeptical about it, but there does seem to be *something* to it. Personally I don't think Wikipedia can even be considered an encyclopedia, so comparing it to Britannica in that sense is not appropriate. But there is something to it.

The distinction Hayek makes between "scientific knowledge" and what he calls "the knowledge of
the particular circumstances of time and place" is very interesting. I think this could be explored much further, but so far as I can tell, this hasn't been done. As part of this explanation I think one will find there are other categories of knowledge, some of which are the best parts of Wikipedia (and, interestingly, the parts many Wikipedians fight to keep out). Hyperlocal issues, recent news, trivia...

Wales is known to have once said that he thought Wikipedia should contain a detailed article about every episode of The Simpsons. This is hardly "scientific knowledge".

Wales also watched as Wikipedians pushed aside those Simpsons episodes, and provided the environment for fans to recreate them, at his ad-revenue-generating http://simpsons.wikia.com/wiki/Category:Episodes . Conspiracy or coincidence? I don't know for sure.