Social production as a new source of economic value creation

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Two different business organization charts

In this short TED video clip, Yochai Benkler provides a useful framing of what he terms “social production.”

In the past, Benkler argues, prominent transactional frameworks for exchange were largely categorized as follows:

  • Price system: A decentralized, market-based exchange system
  • Firm hierarchy: A centralized, market-based exchange system
  • Government/non-profit: A centralized, non-market-based exchange system

Before the cost of communication dropped precipitously, Benlker suggests that it was too expensive to have a decentralized social production exchange system. Today however, citing open source projects such as SETI@home and Apache, he makes the claim that social sharing and exchange is emerging as a significant and sustained factor of production.

Moreover, social production creates a new form of competition for firms who operate in the centralized market-based framework.

  • Peer-to-peer file sharing creates is competing with the recording industry
  • Free and open source software is competing with traditional IT companies
  • IP telephony is competing with traditional telecom industry

What we are witnessing here is the emergence of social production as a fourth transactional framework.

Benkler argues that social production is not a fad; it is a fact. While it does represent a new form of competition for incumbents, it also represents a new source of opportunity for everyone.

The question he leaves us with, and the one that I believe is meant to explore, is this: How will this new model of social production develop alongside the traditional industrial information economy?

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Tony O'Driscoll Ed.D. is a Professor of the Practice at Duke University’s Fuqua School of Business where he also serves as Executive Director of Fuqua’s Center for IT and Media; a research center dedicated to understanding the strategic, structural, operational and business model issues associated with these vibrant and volatile sectors.


I'm pretty sure what you refer to as "SITI" above is <a href="">SETI@home</a>.

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