A Quick Jaunt Into Economic Theory25 February, 2009
This is the second of what I think will be a trio of semi-related articles (culminating in my review of the book Free Culture, of which I already have 515 words of notes on…) In class today, a guest professor was discussing the relations between ancient Egypt and the other kingdoms in the area. Now, in theory, this would not be at all related to something like buying free music online, and downloading versus stealing music. But, it brought up an interesting subject.
Apparently, the kings of the various regions would send gifts to each other. However, rather than actually being gifts, they were more like items of trade. The king of Babylon, say, would send five teams of horses and three pounds of lapis lazuli to the pharaoh, as a gift. But he would also send a messenger later, asking for a gift of a bunch of gold. And, he was perfectly within his rights back then to ask for more gold, if he needed more and the pharaoh gave only a little as a gift (and he did so, according to letters exchanged between the two kings). Now, today, this is unheard of. One would never receive a gift, and then ask for more. Rather, you would be grateful for what you were given, even if you gave the other person something of higher value.
But perhaps equating these kingly gifts to birthday presents and so on today is not the comparison that should be made. (Can you see where I’m going here?) I think that rather than actually being gifts, these transactions were just a different kind of trade than what we are used to. I’m going to give things names here, that may be actually used for something else, so let me know if they are. I’m going to term two types of trade “push trade” and “pull trade,” taking names from IMAP vs. POP (not important if you don’t know what this is)
Now, what we have today, for the most part, is what I’m calling a “pull trade.” We take what we want, and we give back the monetary value of the item. That is, we “pull” the item from the seller, and then give back money, or barter, or whatever we are using to pay. What the kings were doing, though, is participating in “push trade.” They gave an item, and then expected payment (in kind, in gold, or whatever) to come from the buyer. (Alternately, they gave a payment, and expected an item from the seller, which is another way to think about it). They “push” the item to the buyer, and payment is expected, but not necessarily required.
A push economy seems to me to give certain privileges to everyone involved. The seller gets the privilege to ask for a higher price than they received on an item, as well as giving the seller a moral obligation to pay (which is sometimes a stronger force than an economic or legal obligation, at least for people today). The buyer, in return, gets the choice of his own price, or even not to pay at all (although this is dependant on his morals). Now, does this system seem familiar at all? To me, the kings of the ancient world are using essentially the exact same system as bands like Girl Talk and Radiohead are using today to sell their albums. They push out their albums, and we are morally bound (but not legally bound) to give them money. The king of Babylon pushed out his lapis lazuli, and the pharaoh of Egypt was morally bound (but not legally bound) to give him more gold. Of course, this system was clearly not in use everywhere in the ancient world, and probably only for the very rich, but as a spark for an economic idea, it seems interesting.
Does the change towards free culture require a change in economic theory as well as economic behavior? Do companies have to learn to push rather than pull? Thoughts?