Internet Economics: Writing on the Virtual Wall

Abstract

Most economic literature on the internet views the internet through the lens of private markets. However, the internet, concretely, as a collection of software protocols, is intrinsically a public good, as economists define them. The article reviews a selection of conventional approaches to the internet; the focus of which, on markets, is an example of Alfred North Whitehead’s fallacy of misplaced concreteness. On closer analysis, these markets turn out to be traditional business activities enabled by internet applications, which are themselves not market “goods.” An alternative analogy is that of a virtual public square, the walls of which are used as a communal bulletin board. This image is actually a close representation of the way that the early internet was developed. A number of policy conclusions are drawn from this contrasting approach. The public good character of the internet needs to be protected against private interests, including the current group of internet oligarchs. In line with Thomas Piketty’s work on the extreme levels of income and wealth inequality that have evolved in the global economy, some small measure of correction can be assisted by making the private appropriators of the public good pay for the services that the internet provides to them.