The Economics of Amateurism

Interesting paper from Dan Hunter and John Quiggin:

In the economy of the 21st century, economic and technical innovation is increasingly based on developments that don't rely on economic incentive or public provision. Unlike 20th century innovation, the most important developments in innovation have been driven not by research funded by governments or developed by corporations but by the collaborative interactions of individuals. In most cases, this modality of innovation has not been motivated by economic concerns or the prospect of profit. This raises the possibility of a world in which some of the sectors of the economy particularly the ones dealing with innovation and creativity are driven by social interactions of various kinds, rather than by profit-oriented investment. This Article examines the development of this amateur modality of creative production, and explains how it came to exist. It then deals with why this modality is different from and potentially inconsistent with the typical modalities of production that are at the heart of modern views of innovation policy. It provides a number of policy prescriptions that should be used by governments to recognize the significance of amateur innovation, and to further the development of amateur productivity.

One often-underlooked element of the intellectual property debate is the ability of the IP regime to effect the balance. Some things are done on a commercial basis and some are done on an amateur basis. Strong IP makes it more difficult for commercial and non-commercial actors alike to be able to innovate. It compensates for erecting this financial hurdle by creating unique financial incentives toward innovation -- incentives that only help a commercial actor. In a world with weaker IP, more and more work should come from hobbyists, amateurs, and non-profit organizations.

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Matthew Yglesias is a former writer and editor at The Atlantic.

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