Net Neutrality: What is the Georgist Response?
GroundSwell, September-October 2010]
Lindy Davies and I, Scott Baker, have been trading differing, and
in many cases, similar opinions, on Net Neutrality, and what the
Georgist position should be. There was also the following set of
observations made by Yannis Tziligakis, a long-time student of the
Henry George School in NYC and a Georgist, who was triggered to
write by the issues raised in the recently released unauthorized
biopic: "The Social Network." This major release movie is
about the story of Mark Zuckerberg's meteoric rise to fame as the
controversial founder of the biggest social networking site ever,
Facebook. I've excerpted and edited his thoughts pertaining to net
The Social Network: Thoughts on Copyright of Ideas, the value of
Innovation, Is Value created by individual labor and private Capital
or by the untaxed use of the Commons?
Any idea, such as Facebook, no matter how important, is made big
by the community that embraces it. Value is created on the demand
side (i.e. by the community) not on the supply side (i.e. the
individual capitalist or else businessman or entrepreneur).
Pythagoras invented number theory but at his time... the community
didn't have any use for it... so we had to wait 2,500 years and for
the advent of computers to realize the magnitude and importance of
his work in the extremely important field of cryptography. People
connected socially through the Internet decades before Zuckerberg
thought of (possibly) stealing his friend's idea, according to the
movie, "The Social Network," in order to make Facebook.
Did anybody reward Pythagoras for his inventions, or the nation and
country he represented? We take his work for granted, no royalties
If you have a great idea, good for you... Either you share it with
the community or if you wish keep it to yourself. No copyright, or
more accurately "clopyright" (clopy means theft in Greek)
i.e "cleptocratic rights" on intellectual property. There
are plenty of great ideas - some of them flourish and die within the
lifetime of their creators, while others wait thousands of years to
be awarded the value they deserve.
The mechanical properties of steam were invented by a Greek Heron
from Alexandria and used to automate opening of gates at palaces,
but this idea caught on monetarily with the advent of the need for
industrialized production some 1,800 years later. Shouldn't Heron
have been entitled to royalties for inventing the mechanical use of
steam? Why should Zuckerberg and every would-be Zuckerberg be
awarded hundreds of billions of dollars for their ideas, when they
are built on the work of so many others before them?
One thing the Greeks did not invent or think about was a copyright
system. You would imagine a nation with such a proliferation of
ideas, techniques, entrepreneurship and ingenuity, in every
imaginable form, from the arts (sculpting, painting, pottery,
music), theater (drama, tragedy, comedy), architecture,
construction, religion, mythology, history, philosophy, geology,
mathematics, geometry, military strategy, political science and
economy, geopolitics, maritime and navigation techniques, astronomy,
hydraulics and irrigation systems, metallurgy and mining, economics,
trade...that someone would have thought of patenting their ideas and
putting obstacles in the community for using them in the form of
collecting private royalties from the public use of their ideas.
Yet, in Ancient Greece, knowledge and innovation were considered as
an outcome fostered by social interaction, and public education, so
they had to be shared freely with the community. It's through this
dialectic interaction that synthesis and evolution of ideas happens
in the form of thesis and antithesis. The individual is born as "tabula
rasa" and can achieve practically nothing beyond mere
animalistic existence without the aid of the community. So
innovation - even if individuals create it - is brought about by the
community, through education, stimulation, motivation and the
subjection to the dialectic process of intellectual refinement.
That's the essence of how a democracy works.
Yet, according to the current zeitgeist, Mr. Zuckerberg is not
just to be classified as an innovator, but also as a capitalist. His
software platform, Facebook, is considered "capital."
Capital is wealth that assists in creating more wealth (machinery,
for example) and wealth must have exchange value and meet human
Land and Labor are considered the primary factors and capital is a
derivative of those since capital is created by application of labor
(including mental labor) on land (e.g. the soil in the field of
agriculture, mining and processing in the field of natural
resources, or the making of machinery and tools in the technological
field, or in this case, by programming talent utilizing, ultimately,
physical capital like wires and switches to transmit information).
Now, capital is temporary, which means it constantly needs to be
updated, worked upon, improved upon, replenished to retain its
value. What Zuckerberg is capitalizing upon is not just someone
else's idea (as the film suggests), but on the fact that his company
can use the commons, that is, the bandwidth (which is a non-manmade
natural resource) for free. The value of his software degrades every
day, unless it is updated and improved. So the value of Zuckerberg's
enterprise is not solely in the software (i.e. the capital component
of his idea) but on the "land" component of his idea...
i.e. the use of electromagnetic bandwidth.
Now did Zuckerberg create the bandwidth? Of course not. It's a
community resource as much as the air we breathe.
Yet, he is capitalizing big time by using the bandwidth, gratis.
Or, we could also say abusing it since the proliferation of
information leads to an increase in overall entropy, which also
implies a decrease in the efficiency of the entire system, what
computer scientists call "information overload", or
physicists the 2nd law of Thermodynamics - for example, just think
how many labor hours you spend clearing out spam from your computer
email accounts. Not only Zuckerberg is using the commons for free,
he is polluting it by helping the proliferation of garbage in
cyberspace. And if you think the cyberspace is a virtual space think
again. It may be virtual from the viewpoint of the user but it costs
ENERGY to maintain the networks and store these piles of garbage on
the Internet and keep them accessible for a long time.
This is how value, which belongs to the community, is privately
captured. Zuckerberg encompasses and represents the feudalistic
(note, NOT capitalistic) economic paradigm we live in today and it's
responsible for misallocation and misdistribution of wealth and all
the social and environmental problems that this economic paradigm
brings with it.
So what does he do with the hundreds billions of dollars in public
value that his company has engulfed and pick-pocketed from the free
private use of community resources? He hoards it. Oh wait; he also
gives a few crumbs back to the city of Newark to improve its
schools. How noble.
To put it crudely, Zuckerberg is a pick-pocketer, not only
possibly of ideas, but also of public wealth - the bandwidth of the
electromagnetic spectrum, which he didn't create and without which,
no information could be transmitted by his company and no revenue
could be put into his pockets by advertisers.
We don't directly pay for Facebook, but we pay indirectly, since
his advertizing revenues for the seemingly "free" Facebook
service is added on the prices of everyday products we labor hard to
pay for so as to afford them to satisfy our needs and desires.
So Zuckerberg is picking on our pockets in two ways. Yet, we are
supposed to praise him for our ignorance of basic economic facts (I
guess we have to thank the thousands of private and public
universities and mainly their Economics and Social Science
departments for this widespread ignorance) and for his ability to
loot public assets, or our inability to manage our own public
wealth. Zuckerberg is a posh, glamorous, highly paid public sector
employee, and we pay his wages, yet he is treated as a private
Given the large numbers of similar "entrepreneurial
capitalists" that generate their private wealth by looting the
public coffers and then hiding it from the economy by boosting land
values and rents (which again the community is forced to pay for)
accelerating the spiral of robbery of the public, it's no wonder
there is not enough to go around and that there is widespread
unemployment and lack of liquidity, all while the government prints
more money to keep the vicious circle of public robbery going on and
devaluating the currency.
"The Social Network" is basically a story of how the
community can change the world. But, such a change can only happen
if we adhere to the right economic principles. This means that our
taxation system should tax the use of the commons and not individual
labor or capital. It's the use of the commons that creates the
biggest chunk of economic value, and that is what is due back to the
community coffers. To this day, the markets are not free -
monopolies rule by confiscating publicly created land and natural
Stop taxing wages and tax the use/abuse of the Commons (land, the
natural forces including wind, water, electromagnetic spectrum,
natural gas, timber, oil, metals, and, of course, pollution). This
will connect workers with the fruit of their labor, increase
productivity, increase investment and entrepreneurship, which will
in turn lead to even bigger and more substantial innovation than
Facebook and will create more jobs, reduce unemployment, welfare and
lead to a more aware, educated and healthy population. That is what
progress is all about and there is only one way to implement it.
Encourage the capitalist model but at the same time create
sufficient social funds from the use of the commons to provide for
all the social needs humanity has, education, health care,
Can we break the vicious circle of modern "feudalism",
can we break the shackles of our glamorous slavery, garnished with
crumbs of unrealistic dreams of opulence and comfort?
Yes we can, "Land Value Taxation" and the "Single
Tax Program" brought forth first by Henry George some 140 years
ago in his seminal work "Progress and Poverty" is the way
towards human liberation, fair distribution of economic wealth and
the solution of the increasingly aggravating social problems.
My Point in Response
I've been holding back from replying on the issue of Net
Neutrality; because in this case, following Henry George would lead
to a result against Net Neutrality, something that I, like most
consumers, actually want.
However, if we regard bandwidth as a scarce resource, or, at
least, a finite one, then companies that lease it from the public,
via the government, ought to be able to charge by the time interval.
That is, if a provider needs 2 minutes of time, he ought to pay
twice as much as one who only needs 1 minute of time. While we could
say there is no legitimate reason for a carrier to charge one, say,
movie producer, more than another for the same unit of time, there
really is no Georgist argument why a movie producer should not be
charged more for a 2 minute download than, say, a producer of an
all-text page that only takes 2 seconds to download.
Now, of course, carriers (phone & cable companies) would like
to offer faster speeds for more money - money that only the richest
producers of media could afford. This would clearly be
discriminatory in preferring one producer of media over another, for
money, but is that anti-Georgist? I don't think so. George embraced
competition and never said suppliers of a service couldn't offer a
better service for more money. Indeed, he would have said just the
Putting it into terms of the services of his day, it would be like
saying a railroad offered a faster train (content) between Chicago
and New York over the same tracks (bandwidth) as a slower one, but
to do this, the slower one would have to temporarily pull off on a
siding, slowing it down even more, while the faster one whizzed by.
The richer passengers aboard the faster train would get to New York
faster, but they'd have to pay for it.
Now, as consumers, maybe we like having alternative media like,
say, Op Ed News (where I am a Senior Editor and Writer) available as
quickly as, say, The New York Times, but the Times can pay for
faster service, while Op Ed News, which operates on $6,000/month,
cannot. The market has spoken, no? Well, the problem is that the
media has already been concentrated into just 5 owners of almost all
mainstream media, vs. nearly 30, just some 20 years ago. Encouraging
pay-for-speed will only favor the rich media companies even more,
encouraging even more consolidation and less diversity, because the
cost of transporting over the airwaves is a smaller proportion of
their revenue, even at expensive high speeds.
It's arguable that making rich media companies pay more for
services will stimulate new technology, both to carry content more
efficiently, and for producers to produce more compact content that
travels over the airwaves or in-ground cables more cheaply. This
would be akin to producing a faster train in George's day over
better tracks - something that would benefit both high-speed more
expensive trains, and slower speed cheaper trains. That, at least,
is the argument of the telephone and cable companies. But, in
reality, they are neither in a position to encourage more riders on
the slower "train" (that is, less well-off, alternative
media), nor has it been historically in their interest to do so.
They would rather sell expensive packages to richer clients, because
the margins are higher. On top of that, the bandwidth providers are
content providers too. Time Warner, for example, supplies content as
well as the wires to pump the content over. So do wireless carriers
like AT&T and Verizon. They would clearly be tempted to give
themselves a "better deal" than competing content
providers, thus encouraging media consolidation still more.
At first glance, the answer to this problem seems to be in the
anti-trust area, more a matter for Teddy Roosevelt followers than
Henry George followers. As a person who consumes and develops
content for alternative media, I might prefer a neutral net, but at
first pass, I can't see the capitalist, or Georgist, case for it.
What is one to do about this ever-growing concentration of content
providers into fewer and fewer hands? Well, let's step back a bit
and remember that these are public airwaves (perhaps the cables in
the ground carrying broadband are private, but the right-of-way
through them certainly isn't; that is granted to some carriers and
not to others - a fact the courts have recognized and which allows
for competing carriers to use each others' wires, without having to
dig up their competitor's wires every time a customer switches
carriers, thank goodness!). The public has an interest in seeing
more diversity of opinion, not less; this is amply demonstrated by
taking the counter-example of a country where all the media content
is provided by the State in a government monopoly, or to a few
well-connected crony companies. There's no room for GroundSwell or
Op Ed News in those countries! The public will simply have to demand
that a portion of its bandwidth be devoted to carrying alternative
media. This is sloppy, and not terribly free-market capitalist, but
it is in the public interest. If we look at access to information as
a basic human right, than it's perfectly Georgist, because George,
above all, was a champion of human rights.
Counter-response to Scott Baker by Yannis Tziligakis
1) George is not for patent rights (the quote I would use is from
Progress and Poverty but I have to find the exact phrasing).
2) Even the capital improvements that companies install (such as
cable) still have to be placed on public land. So the Georgist
argument (which I laid forth with respect to Facebook and their use
of bandwidth which uses cables, which uses public land) does indeed
apply there and of course it's relevant for net-neutrality as well.
Counter-Point, while not entirely disagreeing with Scott Baker
Fascinating conversation, guys. I mostly agree with Scott here,
but I think Yannis makes one good point about "the Net"
that's worth considering.
Is there a Geoist position on intellectual property? Well, I think
there is, even though some parts of it are controversial. For one
thing, Henry George is very clear that the product of labor should
go to the producers, and the return to natural opportunities belongs
to the community. This indicates a difference between patents and
copyrights. A copyright protects the unique product of someone's
labor, while a patent gives exclusive rights to some idea that the
inventor discovered, but did not create. Thus, George tended to
approve of copyrights, but not patents.
Well, it seems to me that what Zuckerberg did falls squarely in
the realm of copyright. He created a Web service. He didn't stop
anyone else from creating other Web services -- in fact, weren't
MySpace, and other social networking sites, around before Facebook?
So, even though he might have gotten a very big payout for it, I
don't see how his earnings for that are anything but legitimate
return for entrepreneurship. (I haven't seen the movie yet; the
ethical issue of stealing his friend's idea is a whole other thing.)
However: I do think there is a Georgist element to the issue of
Net Neutrality. There is an aspect in which the Internet can be seen
as a kind of natural opportunity. Here's the thing: the Net started
out as a free public good. Its usefulness and value increased as
more people started to use it -- to provide content, to receive
content, and indeed to do both things. This is a process that
economists call a "network externality." The value of
being on the Internet increases as more people get on the Internet.
This isn't something that any one individual does, but individual
users do benefit from it.
Now the cool thing about the Net from the start was that its very
design ensured that every user had the same access to it as any
other. This great equality of opportunity allowed all manner of
neato services and content to be created by entrepreneurs. Unlike TV
or publishing or films, the Internet offered the same cost of access
to anyone who wanted to use it.
OK -- so we have this level playing field of entry into a
worldwide medium whose value increases as more people use it. But --
wouldn't it be cool if we could think of a way to get OUR content
through the Internet's "pipe" faster than other people's
content!? If we could do that, we could monopolize the commons of
the Net -- not in terms of space, but in terms of time. In effect,
we'd be gaining privileged access to users' time, which would make
it much more likely that they'd choose to view our content.
(Incidentally -- I'm not sure, but I don't think Facebook does that.
It has a vast number of users, yes, but it seems as though it
doesn't provide individual users with huge gobs of content at once.
It has some java games & stuff, but I think it takes up less
bandwidth than, say, a news site with embedded video. It's a lot
easier to have high bandwidth going out to the world than it is to
have large bandwidth at the end for each individual user.)
Well, that is what today's "Net Neutrality" debate boils
down to. The Net is growing; it needs Pipes. If a company provides a
pipe, should it have to make that pipe available to any data-packet
that happens to zip through it, or should it be allowed to restrict
that pipe to proprietary content?
Well (OK: self back-patting alert!) I wrote a paper in 1995 in
which I argued that the way to solve this problem would be for the
government to collect rent from content providers proportional to
the degree to which they privatize the digital commons -- and to use
that revenue to increase the capacity of Internet infrastructure,
which would then be used on an equal basis. If someone develops a
software process through which their content moves faster through
the Net, more power to them -- and more rent to the community. The
content providers wouldn't have to pay for the new Pipes -- only the
value of the monopolization.
Scott Baker's Response to Lindy Davies' Counter-Point
There is a lot of material to digest here, but I think the issue
of Monopoly, which Lindy brought up too, is central to the argument
on both sides. I take it that the FCC and others are torn on how to
treat the "Broadband" - as an information service or a
utility. It has elements of both. Information can travel over the
airwaves, or through various physical media (cable, fiber-optic,
telephone lines, power lines etc.). Only the first of these has a
natural limitation, in frequencies. But you could argue that a
consumer will have only one set of phone lines, power lines or,
maybe, cable lines, so there is a physical restriction there too,
based on capital in place, and court rulings to utilize it with just
one carrier at a time. In that case, Lindy makes a good point in
that there is an effective monopoly over a given media. The issue
is, will enforcing network neutrality prevent new and innovative,
and perhaps costly, methods of delivering ever-growing amounts of
information from reaching the consumer who is willing to pay for
faster speeds? The answer seems to be a qualified yes. I remember
using ordinary phone lines and a dial-up modem in the old days to
connect to the Internet. It was ponderous, unreliable, and slow.
Now, I have relatively trouble-free, reliable and much faster
service through Cable, but I have to pay much more. It seems in this
case, you do get what you pay for. If I really wanted blazing speed,
I could theoretically pay for a dedicated T3 line* for over
$3,000/month. It's hard to see what benefit an individual user would
gain from that, but corporations shell out for T3 lines all the
Now, of course, there is a difference between letting the consumer
pay for different levels of access, and pushing that cost onto the
content providers, but in either case, the consumer would pay in the
I still maintain that there are valid arguments to keeping the net
neutral, but they go to keeping access to a diversity of media in
order to have a fully informed citizenry, and this, while not
strictly a Georgist argument, is one George, as a former radical
printer and then writer, would probably have agreed with.
What Are T1 Lines and T3 Lines?
Response to Lindy Davies and Scott Baker by Yannis Tziligakis
I'm not bashing Zuckerberg for developing Facebook, regardless
whether the original idea was his or not. Neither do I accuse him or
blame him for his alleged thievery. It's the economic system in
place which allows him to use public resources collect
disproportionate private revenues.
Any... private idea and the internet for this matter, lives on
public land, and uses public natural forces to realize itself. Of
course there are elements of individual human ingenuity in it and
those should be compensated for. But this happens at the wage level,
i.e they are part of labor. The ad infinitum collection of premiums
for a single contribution in space and time violates the basic
economic principles, of what labor, land and capital are and also...
who is that creates the economic value of a single idea. According
to me it's the demand, i.e the community side. And I've cited many
explicit examples for that, i.e number theory, steam. According to
Bertrand Russell much of the past 2,000 years of Western philosophy
is nothing but a footnote to Plato, yet Plato hasn't collected a
single penny in royalties, and if he hasn't or doesn't then nobody
The copyright and patent system allows people who can fake sole
proprietorship of ideas developed through society's forces to rent
their socially acquired knowledge and ideas back to society. I don't
see how's that not different from renting public land to the public.
A single individual could never amass enough wealth to repay all the
ingenious ideas that he is benefiting in the every second of his
life. And yes, there are some things money can't buy.
As economies grow and societies evolve, land values increase and
rents increase. There is nothing wrong with that. What's wrong is
that this collective social progress is privately monetized. And
this is the exact story with the internet. I have no problem paying
more for faster internet service but this extra survalue should
really be appropriated by society and shouldn't stop at the middle
men, i.e the capitalists in modern nomenclature, or the "undercover
feudalists" as I like to call them.
The issue of intellectual property, patents and copyright is a
crucial one, for this is how monopolies get established and set a
private stronghold on public wealth. George was not in favor of
patents, or any other obstacles to the broad use, access and sharing
of knowledge or to the exchange. Of course establishment of
authorship is an obvious provision that the creative environment
should have in place, but using copyright to obstruct other people
from using ideas previously discovered (be it by individuals, or
groups of people, Universities, or other corporations), is out of
place in the Georgist economic paradigm.
Of course Henry George makes this point, in Progress and Poverty,
I quote him verbatim and I let the readers judge for themselves,
what George would say on this subject: (Progress and Poverty, Book
IV, Chapter 3)
"In what has preceded, I have, of course, spoken of
inventions and improvements when generally diffused. It is hardly
necessary to say that as long as an invention or an improvement is
used by so few that they derive a special advantage from it, it does
not, to the extent of this special advantage, affect the general
distribution of wealth. So, in regard to the limited monopolies
created by patent laws, or by the causes which give the same
character to railroad and telegraph lines, etc. Although generally
mistaken for profits of capital, the special profits thus arising
are really the returns of monopoly, as has been explained in a
previous chapter, and, to the extent that they subtract from the
benefits of an improvement, do not primarily affect general
distribution. For instance, the benefits of a railroad or similar
improvement in cheapening transportation are diffused or
monopolized, as its charges are reduced to a rate which will yield
ordinary interest on the capital invested, or kept up to a point
which will yield an extraordinary return, or cover the stealing of
the constructors or directors. And, as is well known, the rise in
rent or land values corresponds with the reduction in the charges."