Economic Principals

Towards the end of The Economics of Attention: Style and Substance in the Age of Information, Richard A. Lanham relates the circumstances in which, as a young man, he unwittingly tumbled on the topic of his life's work.

Two doors down from where I grew up, the family had a magnificent 1934 Dietrich-bodied Packard, a gleaming black four-door convertible with a bleached white top and burgundy leather upholstery. It rolled on deep white sidewalls mounted on deep red wire wheels. Two more of these wheels, their rubber gloved in white canvas, fit into marvelously contrived wells on the front fenders. On top of each, like a miniature monarch, sat a chrome rearview mirror secured by two tan leather straps. The bumpers were spring steel that curved around at the ends into scrolls topped with small Packard shields. Everything that could gleam, gleamed; everything that could glow with a deep inner fire did so. Here was style.

In front of our house stood a vehicle different in make and kind. A 1941 Ford sedan, its olive green faded and chalky from lack of polish, its meager grill and stamped-steel bumpers rusted, its roof line of unsurpassed ugliness. But it worked faithfully. All through the war, when you couldn't get card fixed, that flathead V-8 started and ran and carried us where we needed to go. Here, clearly, was something else. Here was purpose, not ornament. Here was reality, not rhetoric. Here was substance.

...How could anybody want to drive that Ford when a dual-cowl Packard chariot rolled down the same street? You might not be able to afford one. But not want one? Not lust after a little glitz and glamour in your life if you could swing it? Before I knew what the word meant, I was hooked on "eloquence."

The hunt led on to, among other things, a book-length study of Laurence Sterne's shaggy, bawdy, hyper-loquacious novel Tristram Shandy. As might be expected, then, The Economics of Attention is anything but economical. It is, however, a book about economics, by a retired professor of English at the University of California, an expert witness on copyright and plagiarism, proprietor of Rhetorica, Inc. -- in short, a man of extensive experience who writes well and who has interesting things to say.

Lanham's inquiry had its beginnings in a series of simple questions. What will happen to the printed page as text migrated to the electronic screen? How can words compete with images and sound? What is new about the "new economy," and what is not? What is scarce in the modern age, and what's abundant? The ultimate scarce resource is the human attention required to make sense of the continual flow of information, he concluded. QED, what's needed is an economics of attention.

So he rounds up the usual gurus. Marshall McLuhan. Peter Drucker. Walter Wriston (who said, "The world desperately needs a model of economics of information that will schematize its forms and functions"). He quotes a young man who tells The Wall Street Journal that his father told him, "You've got to dig it, grow it, or build it. Everything else is just fluff." Hence he derives the three economic epochs of humankind: agricultural, industrial; and fluff.

It is when he quotes an early Greek rhetoretician that matters become more interesting. It turns out that even the Athenians were debating the proposition: "That it is not possible, if you were to hand a thing over to someone else, for you to still have this thing." Whatever room for doubt there might have been three thousand years ago, there is none today. Maybe it is not possible to still possess a car, says Lanham. But it's "quite possible with an idea, an argument, a style, a design, an e-mail joke."

These, then, are Lanham's two basic kinds of property: stuff and fluff. Others have made a plainer distinction between "atoms" and "bits" -- between physical things whose corporeality permits their absolute possession, and other things, no less valuable, which can be written down and stored in a computer, and thus possessed by many people at the same time with no diminution of their value -- the Pythagorean Theorem, a novel, the formula for a wonder drug, plans for a nuclear bomb. Fifteen years ago, the economist Paul Romer, then a professor at the University of Chicago, was much more precise, distinguishing between rival and nonrival goods, and the degrees to which their use could be made excludable to others, thereby initiating an exciting new era in technical economics -- a story related at book length in my new book, Knowledge and the Wealth of Nations: A Story of Economic Discovery. What Lanham demonstrates is that a first-rate intuition can get reasonably close to a deep scientific truth -- without necessarily causing the slightest stir beyond an immediate circle of friends and admirers.

The challenge that the second (nonrival) kind of property poses to the first (rival) kind is of longstanding, Lanham writes. In the nineteenth century, publishers opposed lending libraries. In the twenty-first century, daily newspaper headlines record the "increasingly frantic and avaricious efforts by intellectual property holders to map old conceptions of property onto a new world" -- musical file-sharing, the use of software applications programming interface to suppress competition, the counterfeiting of everything from jeans to drugs.

Fundamentally different attitudes towards property may explain the frequent antipathy between the business world and the university, writes Lanham (an idea explored at greater length by Richard Lester and Michael Piore in Innovation: The Missing Dimension). In science and scholarship (and, for that matter, open-source software), ideas are freely available for others to build on, he says, as long as due credit is given. "At least that is how it is supposed to work.," Lanham notes, acknowledging that avarice and frauds are to be found in the academy, too.

From there, Lanham moves to make a second shrewd observation, this one about the nature of economic growth. The famous "tragedy of the commons" is a parable of scarcity, he notes. Shared pastures are quickly overgrazed, open oceans are fished out, because, he says, "each person has the use of it but none the responsibility for it." The World Wide Web, on the other hand, has contributed something new to the situation, he says -- a "comedy of the commons." "The more people who graze on it for their own purposes, the bigger it becomes and the greener its grass grows. It thus combines the power of a free market, where individual gain leads to collective benefit, with the cooperative ownership of the cultural conversation.

"We don't know how to handle this comedy of plenty in which the more we give away, the more we have. The effort to absorb it into the alien, stuff conception of property, to impose it on stuffy sales patterns and profit expectations, have cluttered it up with advertising and finally, perhaps, along with routine human folly, have led to the dot.com collapse."

Now this is pretty smart, but it isn't economics. It's not even journalism about economics (though Lanham writes his reading notes into the story as extensive "background conversations"). For that you have to turn to, say, Charles P. Kindleberger's classic analysis of bubbles, Manias, Panics and Crashes; or, as noted, if you are interested in economic growth, to Knowledge and the Wealth of Nations, or even to Guns, Germs, and Steel, by Jared Diamond, which tells roughly the same story from the perspective of a physical anthropologist. In economics, the offsetting tendency to comedy rather than tragedy is known as the phenomenon of increasing returns, meaning falling average costs. Falling costs have been around a lot longer than the World Wide Web.

Nevertheless, The Economics of Attention is full of interesting observations. As Lanham says, there are many paths that lead to the study of human attention: they run through neuroscience, through cognitive and evolutionary psychology, through behavioral economics, and, certainly, through his own field, which is the history of rhetoric. In his book there are many clever reflections on design, on entrepreneurial styles in the arts (including an especially good riff on the opposition between Christo and Andy Warhol).

And on writing itself, Lanham is superb. Noting the similarities between talk and economic exchange, he writes, "There is, in any utterance, however self-interested, a residual urge to share a view of life. To see the world in a certain way and to want other people to enjoy seeing it that way too. This two-way communication, self-seeking and other-seeking, is after all what makes markets fun to go to and full of life." (Nor is this a bad description of what it is we like about sex.)

In the end, you pay your money and you take your choice. Why get your economics from an economist (or from a journalist who gets it from economists) instead of a professor of English? Because, in the end, the community of economists promise greater clarity, even though their working language is mathematics. At one point, Lanham recalls the 17th century circumstances in which the Royal Society set out the ambition of modern science: "They have therefore been most rigorous in putting in execution, the only remedy, that can be found for this extravagance: and that has been a constant resolution, to reject all the amplification, digressions, and swellings of style: to return back to the primitive purity, and shortness, when men deliver'd so many things, almost in an equal number of words. They have extracted from all their members, a close, naked, natural way of speaking; positive expressions; clear senses; a native easiness: bringing all things as near the Mathematical plainness, as they can."

And so science has continued without peacock feathers, down to the present day, which. for the present purpose (of distinguishing between stuff and fluff), is Romer's paper "Endogenous Technological Change" in the Journal of Political Economy 98 (No. 5, Part 2, October 1990 S71-102), which begins, "Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good."

Who should read Romer's article? (Or, at least, an account of what it says?) Anyone interested what's new about the new economy, and what's not. And who should read The Economics of Attention? Anyone interested in status, certainly; in styling; or in "the enormous complexity of human motive" (in Lanham's phrase). Anyone who likes Tristram Shandy. Anyone who longs to drive a Packard.