I had the opportunity recently to participate in an invitational workshop sponsored by the the Organization for Economic Cooperation and Development (OECD) (sometimes referred to as the “rich countries club”) discussing the issue of “Measuring the Internet Economy”. This was precipitated by the perceived lack of readily accessible statistics to calculate the impact of the Mubarak regime’s defensive spasm in cutting off Egyptians’ access to the Internet as the demonstrations against him were reaching their climax. It was further spurred by questions raised at Sarkozy’s recent e-G8 meeting discussing the digital economy and other Internet related matters with the heads of OECD governments and a cosy group of mostly hi tech CEO’s. This was what will likely be the first in a series of discussions looking at the difficulties in formally measuring the Internet and its economic impacts (mostly concerning GDP totals as channeled through the individual System of National Accounts (SNA) .
I attended along with a diverse group of academic and government economists, professional national statisticians, heavy hitting business consultants (McKinsey and the Boston Consulting Group who provided a paper which was used as background), and a few others with areas of specific interest (think canaries in the coal mine) in how the Internet is (or in many cases is not) being measured in national economic statistics. I was there because exceptionally the OECD has now established a committee in the Information and Communications Technology sector giving Civil Society the opportunity to participate in “expert” discussions alongside similar committees representing business and labour.
This isn’t an area that I have paid a lot of attention to in the past and quite honestly as someone with a background in Sociology and Philosophy rather than Economics I’ve spent considerable energy in avoiding these kinds of largely theoretical and overwhelmingly statistical discussions. However, in preparation for this event I did some rummaging around on the net, precipitated some interesting discussions on selected professional e-lists and interacted with various colleagues and friends.
What I got out of this background reading and discussion were a few somewhat disconnected observations—
First, it appears that there is a quite significant hole in the National Accounting (and thus the GDP statistics) around Internet related activities since most of this accounting is concerned with measuring the production and distribution of tangible products and the associated services. For the most part the available numbers don’t include many Internet (or “social capital” e.g. in health and education) related activities as they are linked to intangible outputs. The significance of not including social capital components in the GDP has been widely discussed elsewhere. The significance (and potential remediation) of the absence of much of the Internet related activities was the subject of the workshop.
Second, I was reminded that there had been a series of critiques of GDP statistics from Civil Society (CS) over the last few years—each associated with a CS “movements—the Woman’s Movement and the absence of measurement of “women’s (and particularly domestic) work”; the Environmental Movement and the absence of the longer term and environmental costs of the production of the goods that the GDP so blithely counts as a measure of national economic well-being; and most recently with the Sustainability Movement, and the absence of measures reflective of the longer term negative effects/costs of resource depletion and environmental degradation. What I didn’t see anywhere apart from the background discussions to the OECD workshop itself were critiques reflecting issues related to the Internet or ICTs.
The third thing that I came to realize both prior to and even more strongly during the OECD event was that the implications of the limitations in the Internet accounting went beyond a simple technical glitch and had potentially quite profound implications from a national policy and particularly a CS and community based development perspective. The possible distortions in economic measurement arising from the absence of Internet associated numbers in the SNA (there may be some $750 BILLION a year in “value’ being generated by Internet based search alone!) lead to the very real possibility that macro-economic analysis and related policy making may be operating on the basis of inadequate and even fallacious assumptions.
But perhaps of greatest significance from the perspective of Civil Society and of communities is the overall absence of measurement and thus inclusion in the economic accounting of the value of the contributions provided to, through and on the Internet of various voluntary and not-for-profit initiatives and activities. Thus for example, the millions of hours of labour contributed to Wikipedia, or to the development of Free or Open Source software, or to providing support for public Internet access and training is not included as a net contribution or benefit to the economy (as measured through the GDP). Rather, this is measured as a negative effect since, as some would argue, those who are making this contribution could be using their time and talents in more “productive” (and “economically measurable”) activities. Thus for example, a region or country that chooses to go with free or open source software as the basis for its in-school computing is not only “not contributing to ‘economic well being’” it is “statistically” a “cost” to the economy since it is not allowing for expenditures on, for example, suites of Microsoft products.
All of this might be dismissed quite reasonably as economic/statistical folderol except that so much of economic policy and particularly by politicians in their assessment of relative well-being is based on these kinds of measurements and particularly the GDP tables. A country which chose to put all of its resources and purchasing power into open source p2p ICT efforts would, from an economic “growth” (as measured by conventional statistics perspective), be shooting itself in the foot and potentially causing a significant reduction in its GDP!
In practical terms there is a failure to measure or otherwise account for the vast voluntary not for profit (civil society and community) contribution to the development and growth of the Internet. Those activities, features and contents of the Internet which are most widely used and useful–Wikipedia, FAQ’s, Open Office and other free and open source software, as well as the almost overwhelming abundance of freely provided texts, documents, images and sounds which now constitute an enormous global commons and freely and widely accessible patrimony; is not accounted for and the result is to give a totally misleading picture of how the Internet developed, the overall contribution it is making (the “value it is creating”) and the economic and other significance of this to the actors involved and to the overall well-being of humanity.
One effect among many of this distortion is that there appears to have been no systematic attention paid to the relationship of the activities and growth of voluntary contributions to the Internet and the volume, range and depth of Internet activity, digital literacy and economic value being derived from the use of the Internet. Thus for example, while anecdotally the greater the voluntary activity around the Internet in a country the greater the volume and use of the Internet; there would appear to be little or no data in this area and no available means of systematically undertaking such analyses in the absence of a series of expensive one-off research studies—and certainly there is no way based on available national statistics to make this argument to politicians or policy makers who might benefit from such an insight.
Thus for example, an identified association (for example in OECD countries) between voluntary Internet involvement and overall digital literacy might suggest to policy makers (for example in Less Developed Countries) that one way to increase Internet use and activity in a specific country or region might be through encouragement and even incentives towards voluntary participation and contribution to the various elements of Internet activity. However, in the absence of data on voluntary Internet contributions this would be highly unlikely to come forward in policy discussions.
Those things that are not measured are not given “value”—either in formal and official terms as well as in more subtle and informal ways—they are not seen as having worth, at least when compared with those things that are being measured such as for profit software packages and services. Thus the millions upon millions of hours contributed by the technically proficient, those motivated by the driving force of intellectual curiousity and those simply with a motivation to contribute to public well-being through contributing to the development of the Internet are not assessed as “having value”. What should be seen as a triumph of civil society and of freely associated communities both physical and virtual – the building and maintenance of large parts of the infrastructure and operating elements of the Internet and many of its most significant and enduring outputs are devalued as compared to the activities of those whose motivation is for example, pure self-interest or even greed.
The failure to honour and give value to those who freely contributed and continue to contribute to the building of the Internet and its use in support of the public good—the coders, the system architects, the hackers, those spending hours training and supporting their fellow citizens in becoming computer literate, those contributing their thoughts and images to the massive and accelerating pools of freely accessible knowledge and understanding—means that those who are coming up, the young, those just getting on-board, those in Less Developed Countries on the wrong side of the Digital Divide aren’t provided with a clear picture of what has gone before and what is achievable outside of for profit software, the translation of the free contributions of the public into marketable packages for advertisers, the marketing of electronic communities and so on.
When I asked those at the workshop closest to the design of these measurement processes—why there were no procedures in place to measure the voluntary—civil society and community—contribution to the Internet, the answer was a simple—“it’s too difficult”. What they meant was that measurement starts with those things that are easy to measure, but unfortunately as is well known, in practice it stops there as well.
The effect of this of course, is to overall impoverish and diminish the public sphere. This should give us all motivation to insist that account be taken, and measurements, even if partial and inexact, be undertaken of the overwhelming output of support for the public good which the Internet represents.
As an aside it might be worthwhile as a thought experiment to ponder what the Internet and contemporary society/economy would look like in the absence of the the unmeasured and thus unvalued contributions.
I would be interested in examples of the ways in which the absence of measurement of the voluntary contributions to the Internet are having negative and impoverishing effects…