Tuesday, 4 December 2012

The Internet - An Example of Adam Smith's Market In Action

I use Google Blogger. In fact I've used it right now as you are reading this very post on it. Me and millions of others. And then there's those who use WordPress , Tumblr and other platforms. 156 million publicly viewable blogs in 2011.

There's a court case in the UK, a man is suing for being libelled on a blog. One of the parties he is trying to sue is Google, for providing the blog tool in which he claimed to have been libelled. The argument runs that as soon as the potential libel had been reported, Google should have taken the offending blog down. Google's case is that it is not a publisher, therefore it has no causative association with the libel. I'm no lawyer, but it seems to me these two arguments do not quite address the other head on, because they are battling over words and definitions; a publisher can be included in a libel claim. A company that is not deemed a publisher cannot. If Google is providing a universal software, is it actually a publisher or a facilitator?

Leaving these finer points of legal definition behind, the thought struck me that in washing their hands of any responsibility, yet providing a worldwide platform for anyone who wants to give their thoughts to the world, Google is approaching the status of the market as outlined by the Eighteenth Century economist Adam Smith.

Smith posited that buyers and sellers each trying to maximise their own gains through trade, creates a market that maximises benefit for all society. His famous quote is that such a market functions "as if by the operation of an invisible hand". That is the intricacies of the myriad of interactions are beyond the analytical conception of any one individual; quite simply, the picture is too big to see.

There are many criticisms of this concept, from the fact that it is clearly a metaphor and that is no literal guiding hand of the market, through to its complete amorality that takes no account of things like social costs, both physical and human. What it suggests to me is that economics is a bogus academic discipline and with guiding concepts such as the invisible (unknowable) hand, is it any surprise that economists and bankers in particular are about as effective as long-term weather forecasters?

But returning to the Google case, their defence seems to me to be akin to the Invisible Hand of the free market. Google seem to be saying they help service the online market by providing platforms, but are powerless to control what is transacted online between bloggers and blog readers. I'm not sure what I think of their argument, but instinctively I am suspicious of the Invisible Hand because it allows its adherents to throw their arms up their arms in helplessness and deny any culpability. Google is saying it isn't an individual and only individuals make potentially libellous statements. But then equally corporations cannot claim to have been libelled and had their feelings hurt when they are accused of various things, because only individuals can have their feelings hurt, not corporations. What corporations mean is they have their brand image damaged. They can't claim to be an individual or a corporation depending on which suits them.

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