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A book by Alexander Dolgin

Manifesto of the New Economy

Institutions and Business Models of the Digital Society

Online Utopia

Alexander Dolgin, HSE Professor and the creator of “Imhonet” recommender portal believes that information technology is drastically changing classical laws of the market. In the new economy a club, that is, a community of people united for the common good, will be the key concept. As a result, we will spend less time searching for best products and services and even post-payment might be possible

“Linor Goralik – 42,336 rub (2,570 votes), Dina Rubina – 47,482 rub (2,323 votes), Yulia Latynina – 66,700 rub (2,240 votes), Boris Strugatsky – 38,543 rub (1,067 votes), Mikhail Shishkin – 110,149 rub (2,196 votes), Kseniya Sobchak - 70 rub (4 votes)…”.

Imhonet Portal summarizes readership awards. Unlike any other literary award, the winner is chosen not by a highbrow jury but by anyone wishing. Imhonet has credited 50 rubles to the accounts of all participants of the action to have them distributed the amount among the nominees at their own discretion. Besides, the participants could add their own funds. These payments make the bonus pool for each author.

“To let anyone wishing to thank with post-payments authors for the pleasure their works give; to assist the expansion of post-factum payments…” this is the goal the organizers of the action have set.

This is not just a usual attempt to make literature awards more popular. The whole ideology stands for “gratuity payments”. The main theorist of this initiative is the creator of Imhonet portal, Professor of High School of Economics, Alexander Dolgin. He has recently published his book “Manifesto of the New Economy. The Second Invisible Hand of the Market”.

- The book is titled “Manifesto of the New Economy…”. Neither “researches” nor “reflections”, but “Manifesto”. One immediately thinks of bearded Karl Marx, the spectre of communism, who used to haunt Europe once… Tell us, do you have any ideas about utopia or ideal society of your own?

- I don’t invent any utopia at all. I simply say – these are the problems generated by superconductivity of informational environment. No one knows how to solve them. Though many are much troubled with these, like content producers who have poor vision of how to gain nowadays. Soon it will be impossible to protect digital information with copyright; or we will have to turn to total, nearly fascist control. I do understand the intrigue. I understand it in terms of information economy. So I suggest a two-way solution: voluntary post-factum payments for a good plus a system of club sanctions against those who hang-backs. The latter works for real in fashion for example. This is why people do not wear any clothes. Some may dislike my solution; some do not believe in it and take it as a utopia. However, there is no other option so far and is unlikely to appear, although lots of wise guys have been struggling with the problem in the last couple years.

- Don’t you have any social idea at all?

- There’s nothing peculiar, everything is modern western civilization styled. The world is populated by different people with different genetic and cultural ingredients. The task is to provide freedom and functioning to them. This is important – to fit freedom and occupation with individual possibilities and inclinations. Also, ideal society is the one where any individual with his inclinations has possibilities to realize them and not to obstruct others. Supposing my ultimate dream is to watch football and have beer with chips. Give it to me, ok!? And I, in return, will sweep wherever you tell or pick-up balls at a golf club. And the modern society, praise to it, is cool with it! One wants to look over media and copy- past texts waking and sleeping. Alright, he has a chance to make the pot boil with it! Some other guy has a good sense of smell and he becomes an eggs checker in a confectionary (so there were no addle eggs among ingredients). Perfectly! The society is well arranged if a person may practice what he likes in line with his ambitions, motivations and abilities. The ideal assumes freedom of exchange relations with symbolic markets added. With better social welfare the latter gets to clearly comply with economic logic. Simply put, a person is not indifferent to how to spend his free time, the quality of experience he will have as a result of choice, and how interesting and busy his me-time will be. A great plenty of things attempt our time, with mean intentions often. Therefore sophisticated tools for decision-making are required. Structuring of society - its division into property and cultural strata, subcultures, clubs, etc. - everything is subordinated to the main objective: management of quality of time. People want to spend their time on those they are interested in, and not to diddle away time on anyone. This is the basic principle of living arrangement; this is what makes communities created, where comfort environment is formed for the existence of this group of individuals.

- The notion of “a club” is often mentioned both in your book and speeches. What do you put in this word?

- A club is a community of individuals created for their interests. These are societies, groups, spheres, etc. A club is a way to produce a collective benefit with reasonable expenses. Let’s say, you need a nanny for your baby for four hours a week. It will be really expensive and difficult to find her on these conditions, if you are alone. Meanwhile, there are fifty neighbors of yours facing the same need. Then you get together, pool your savings and hire as many nannies as you need and everyone’s happy. The question is how to group. The better club creating tools are developed in the society, the better the society itself and the quality of life. A person has many interests, and he needs relevant clubs – to travel to Altai, to photograph or to select a mayor.

- Which clubs would you like to join?

- Is this important for the interview?

- Absolutely, this is the interview with you.

- Well, I would play badminton. One of the sites where you can go to is located on the other side of Moscow. You simply can’t get there. I guess there are five or ten people who want to play it too. But we have no tools to find each other so far.

- And you hope to?

- The creation of such a club is mainly the question of what I know about other people’s intentions. Many goods are not fully implemented only because related demand is not revealed and concentrated in clubs yet. And this is not happening because an individual does not see potential associates, with whom he could manage the thing. This is a purely informational problem; we have all the technologies already to solve it.

- What does a club contribute in terms of economy?

- A club system allows turning to economical schemes of product distribution. The result of up- to-date multilevel trade organization is a price which is two- or three times higher than a manufacturer’s price. And a club allows changing for dealer-free trade – indeed, it aggregates demand not worse than a professional seller. A rash of collective procurement services is right about it. In a club you may use subscriptions and a number of other tools and be effective in connecting demand with offer. But it’s not only about monetary gain. Clubs meet our needs in “good” communications. Quality of all our lives depends on people around us. It’s good to travel in circles where you acquire necessary contacts, where you are of high standing or can find appropriate topics for discussions and business areas. A club is the key form of existence of society, its purpose and its tool. The quality of a club depends on its membership and its balanced composition. It is bad when there are too many or too few people. In the first case, the quality of club goods (the simplest example – a swimming pool) is going down; in the second case, the quality costs too much. A certain optimum has to be maintained. At a party this is achieved by dress code, and in principle, selection mechanisms may be more subtle. A club can not allow someone who does not know the password - the knowledge of certain expressions, texts, images, symbols, reputation or status…

- Another key notion of your theory is collaborative filtering. It sounds somehow scarily. Could’t you invent anything more simple and sonorous?

- Five years ago everyone was freaking out of this English term. And now every last man posts on his web-site a “recommendations” button, which is premised on the same principle. “Collaborative” comes from the English “collaboration”. The only bad thing about this word is the allusion with war collaborationists. The most exact Russian equivalent could be a “club” or “collective filtering”. The principle is that people’s opinions about the quality of a number of things - films, books, theaters, schools, politicians, cars – make folds. Then information sharing is organized, and a forecast of how people will perceive objects they never met before, is calculated on the basis of other people’s evaluations. This evokes the principle of people’s talk, but automatic and noise-free.

- Yeah, yeah… I have read your profile on Imhonet portal. You’ve given about four thousand grades to films, books, people and even cheeses. But what does your opinion offers me, a consumer?

- If we have common tastes, you should have a look at my nines and tens – chances are you will like these objects. The main thing is that past experience makes available the forecast for the present commonality. Let’s say, a user gives high grades to “Ameli” and “Forest Gump” and low grades to “Island” film. If you think so too, it will be logical to look at the grades of the film he has watched and you haven’t yet. Especially if this commonality relates to hundreds of grades, not just two or three. So, you will become a competent consumer – spend your time and money on what you will predictably like. The same is about the camera you travel with to a desert, or the school your child will go to, and the hotel… We all need advice of people who share common thoughts, so, you need to find those somehow.

- One more scarily phrase in your texts is “post-factum gratuity payments”. As I understand it, you mean the model, when we first make a purchase, and then pay for it. And we pay not the fixed price, but the amount we see fit; practically we don’t pay but grant with feeling of gratitude. Isn’t it a utopia? It’s just like communism…

- What, that does revert the usual trading scheme – “take and pay”, doesn’t it? Looks like utopia?! A person will look around and doubt: what gratuity scheme are you talking about, where those gratuity payments will come from!? People are just not like that! In fact, post-factum payments only seem paradoxical. Under certain conditions, it will be the only possible option. Actually, grants have deep roots: ancient practices - donation, kula, potlatch, gift – these are economic instruments of trust and reputation. They help us to understand if we should deal with a person or not. Post-factum gratuity payments are their modern equivalent. Basically, many things in economic practices are connected with habits and stereotypes. It would seem strange - first consume, and then pay. But when you buy books, read them, and again and again find that this is just a waste, and, ostensibly, there’s no one to blame - isn’t it more strange? Such a move – “pay and then consume” – serves manufacturers’ goals, especially those ones who do not care about quality. If you stand for the consumer, you’d better allow him making sure of the product quality, and then paying for it.

When a consumer thinks he’d pay more for this good, this is post-factum logic. And talking about club benefits, we notice that motivation to demonstrate consumer surplus appears. That’s the way all the goods intended to demonstrate wealth and taste are done. A similar behavior may become a norm in digital society too. Then awards to poets for a poem or to authors for essays will be as natural as it is to pay 5 dollars for a cup of coffee now.

- But there arises the question then, which every communist utopist has been asked – how to deal with free-loaders? There will be a great deal of those who consume a lot and pay nothing.

- As all norms, post-payments must be entrenched by sanctions, which are club prerogatives. Nowadays people follow dress-codes and cannot afford the clothes they want to; so tomorrow they will follow rules of post-payments as well. Because every action they make will be posted to their digital profile. Invisible will become visible. Free-loaders (or free-riders in the language of science) are the curse of public benefits. And this curse may be taken off if we turn public benefit into the club one – this is a universal recipe. A club rectifies free-riders or drives them out. If you demonstrate high grades, a club will expect you to pay much. You don’t want to pay to an iconic author, but via social networks we know that you have read his pieces, - so we take it as you gave the lowest grade to the author and whether you want it or not you publicly admit it. A payment is a signal about the grade. It is exact and hard to be falsified. It is like when a not very rich person buys fake Swiss watch and therefore makes false signal about his wealth. And if he will be found out, he will be ashamed. Honestly speaking, I am dreaming of the day when I can send money by clicking a button to the author of an article, text, picture, melody – well, anything that inspires me. (Imhonet practices such a possibility for a year). For example, I have read “Ferris Wheel” by Michail Gigolashvili and have sent him some money added to the book price. Let’s say 100 dollars. Well, I have spent my thirty reading hours on it! Is money that more valuable than time?! That’s a rhetorical question! I should admit this is so for the majority. I guess the reason is that money is easy to “touch”, unlike time. Consequently, people are ready to spend one hour surfing the Internet for a so called free download of a 3 dollar thing. And such irrational behavior is common for even those whose labor hour costs much more!

- Perhaps the same payment system could be arranged for journalists…

- Absolutely! If fifty thousand people read a journalist’s piece and each of them will pay 1 cent that will give nothing less than five thousand dollars for an article.

- That is tempting!

- The question is: what is so impossible about this? A person allocates a part of his monthly budget; 10 or 100 dollars – that depends. Then he reads, watches, listens and by one click gives grades to what he likes. And the system automatically converts these grades into payments. Facebook “likes” are a step towards this direction. Otherwise – what are they for?

- May be this will give us more freedom of speech?

- Well… If considering that present titles somehow limit author’s language or topics, then with this gratuity system a journalist may freelance with no control. The whole business-model of the creative work will suffer changes.

- There might happen then that an author of serious analytical economical articles gets much less money that the one who’d cry out in writing “Down Putin!”, mightn’t it?

- There is a balance of demand and supply. It is worth nothing to write “Holy mackerel, hey,

ref, get some glasses!” But as easy as it is, there will be plenty of those who wish to do the same, and because of the competition you will get nothing.

- Your examples are mainly about digital works. It costs almost nothing to copy an article or a film. Can gratuity payments relate to something tangible?

- The question hit the spot. There’s one such product, which has been known for over forty years already – these are some restaurants, where meals are free, and the payment is done according to your conscience. In Europe there are tens of such restaurants. If you live in the area and you like the restaurant, you will have to pay; otherwise you will look bad in the eyes of your neighbors. World universities with their multi-billion budgets exist by grants means. The same is for health  institutions. The most important example is Wikipedia. Its users with all humidity chip in together if the founder asks them to.

- Speaking of restaurants, tipping is subject to the same scheme. You give money to your waiter after your meal. You can give him nothing, or leave him traditional ten percent, and you can give him a thousand of a bill in the fullness of your heart. Something similar happens with money for a doctor. It is considered polite if a patient gives doctor money after recovery, and the amount originally is not specified...

- Many have heard the saying “there is nothing more practical than a good theory”. So, by analogy, there is nothing more coming true than a sober utopia.

Filler

Alexander Dolgin. Profile compiled according to Imhonet recommender service

49, Capricorn Russia, Moscow and Moscow oblast, Moscow Marital status - single Occupation – Imhonet Director Interests: Moscow, Crimea, Reading, Social Philosophy, Economic History, Table Tennis, Scrabble, Surfing, Russia, Italy, Turkey,

Gives 1 – “as bad as it gets”
Post in gerbert’s blog “Anti-Stalinist – a fool or a scoundrel?”
“ZAZ” cars
“Indimensional Kim-Tango” performance by Mikhail Levitin
(3 grades in all)

Gives 2 – “very bad”
Mikhail Zadornov, satirist
“Water” documentary
Red Bull
“Let them speak” TV-show
(34 grades in all)

Gives grade 3 (“bad”)
“Spiritless: Story of Unreal Man” book by Sergey Minaev
Fyodor Bondarchyuk, director
“Rossiyskaya Gazeta”, newspaper

“Mosoblspirt Myagkaya”, vodka
“300”, film
(122 grades in all)

Gives 4 (“below the average”)

“Argumenty y Fackty”, newspaper
Chevrolet cars
“Operation “Y” and Other Adventures of Shurik”, film
“Damn Old House” song by “The King and the Clown”
“Sunday Evening with Vladimir Solovyov”, TV-show
(211 grades in all)

Gives 5 (“average”)

“Cranes and Dwarfs” book by Leonid Yuzefovich
“Real Dad” comedy
Dmitry Pevtsov, actor
“High Crimes” thriller
“Russian Standard”, vodka
(316 grades in all)

Gives 6 – “above the average”
“The Devil's Advocate” thriller
“The Year of Deception” book by Andrey Gelasimov
“Home Alone” comedy
“Wall-E” cartoon
Corona Extra beer
(364 grades in all)

Gives 7 – “normal”
“What Men Talk About” comedy
“Memories of My Melancholy Whores” by Gabriel Garcia Marquez
Sergei Makovetsky, actor
“Inglorious Bastards”, thriller
“Flamingo - Proud Bird”, selection of photos
(624 grades in all)

Gives 8 – "good"
“Vkontakte legalizes video”, article in “Vedomosti” newspaper
“Breaking Bad”, series
Victor Pelevin, writer
“It’s Complicated” comedy
“The Lion in Winter” film
(1088 grades in all)

Gives 9 – "excellent"
“My Past and Thoughts” by Alexander Herzen
“Life in a Microcosm” BBC series
“Live Flesh” melodrama
Brauneberger Juffer Riesling Kabinett, QmP, 2005, wine
(615 grades in all)

Gives 10 – “as good as it gets”
Michail Shishkin, writer
Alexander Auzan, economist
“Bluff” comedy
“The Diving Bell and the Butterfly” drama
“Rome” series
(538 grades in all)

The coincidence of the grades with the grades of Grigory Tarasevich, the article author – 66% (close enough to have all reasons to observe the vis-à-vis grades)

Filler 2

From the book “Manifesto of the New Economy. The Second Invisible Hand of the Market”

“One might imagine that languages, symbols and signs are born and live in accordance with rules which have little in common with the material economy, and at one time that was true. But even as we watch they are going the same way as air and water, which are beginning to be scarce. They have moved from the category of free goods to the category of economic goods in short supply.”

“The media and entertainment industries ramp up their offerings but encounter a shortage of eyes and ears. Advertising markets calculate the monetary equivalent of attention, how much a unit of time of a particular social stratum is worth at a particular hour of the day on a particular advertising platform.”

"Cognitive markers help to minimise communication with unsuitable, ‘wrong’ people. The industries of the New Economy thus produce not mere goods with utilitarian qualities, but primarily a system of signs and signals essential for the ordering of personal life, acquisition of professional contacts, and discovering proximate and less closely related groups..."

“ The problem of keeping usefully employed in the leisure era has become so acute that the classic Russian question, ‘What is to be done?’ has taken on a new resonance: what is to be done not in the usual sense of ‘How do we get out of this pickle?’, but ‘How do we keep ourselves occupied?’. It is more and more difficult for people to find a productive use for themselves, especially in the technical, engineer’s, progressivist sense in which that was previously understood.”

"Since this direct exchange of information has taken off, to the famous invisible hand we can add a parallel mechanism which operates on observation not of prices but of who is buying what, for what reason, and to what effect."

Grigory Tarasevich. Expert
13.12.2010