The text below is a transcript from a discussion with Marin Licina and Pieter Verhoeven 25-10-2013, continued by email last week. Comments have been edited for brevity and relevance. All errors are the author’s.
Titiaan: The ability to produce is becoming accessible to more and smaller groups of people. I see a future in which I have access to small-scale production technologies that manufacture food, energy or electronic devices. Will markets for produced goods continue to exist if we can make everything ourselves?
Marin: Today’s manufacturers of commodities are in jeopardy when (1) the “production recipe” is public information; (2) the raw inputs are available and (3) the production machines are affordable and accessible. Think of an electricity provider. When intangible value of a product comes in, the prediction becomes more difficult. For example, a 5 dollar quartz watch tells better time than a Rolex. From a purely functional standpoint a Rolex is a very expensive way to learn what time it is. Yet, many people want the Rolex as a status symbol: it’s expensive, hand-made by a craftsman and made of ‘precious’ metals. Status is one reason why people will not produce their own goods in a future where decentralized production is more economical than centralized production.
Pieter: Two other reasons why consumers may not produce their own goods are that consumers have a desire for a social shopping experience; and that making your own goods consumes more time than buying them from a third party.
Titiaan: How will the shift from production by few to production by many play out in industries where products need certification? Think of medicine. Field trials of medicines are conducted to get a permission to sell to the world. If everyone can make their own medicine, will certification be based on the chemical recipe of the medicine?
Pieter: Interesting question. I think some marketplaces will always be monitored by governments, and so certification will always remain a part of these marketplaces. In the example of producing your own medicine, certification will probably be based on the chemical recipe.
Marin: Perhaps what happened in the digital music industry is an interesting analogy for what we can expect with decentralized production. First, there was total anarchy: Napster, Russian download sites, anything goes. From the chaos, standards emerged: look at the iTunes store and Spotify. This is because pure anarchy didn’t yield the best results. Apple invented a better system, with more order, and like a power law, people flocked to this best system. The winner got bigger, thereby attracting even more customers, which created a virtuous cycle.
What I’m trying to say is that I expect the same for distribution of future products and recipes to make them. There will be winners, who will become the future standard. The anarchy will re-shuffle the players and create new rules. I believe order and chaos need each other.
Titiaan: I believe that when means of production shift from few to many, the information needed for production will be created rapidly. Our challenge in my view is not to open the production blueprints (digital designs), but to democratize the means of production (machines, materials). Once the means of production are democratized and people are connected, information will start to flow.
Marin: I agree with you that production is becoming increasingly decentralized. 20 years ago, only Louis Vuitton made LV bags. Now, there are a bunch of factories in China that do very good fakes. This is a problem for the likes of Vuitton and Rolex: their business model is based on having a monopoly on the design blueprint for a product. Imagine what’s going to happen when everyone can print an LV bag or Prada shoe.