We have some readily accepted theories about how one good or service in the marketplace is replaced by another. The first theory is that some company providing some good or service X outcompetes another company (or companies) providing a like good or service. This victory may be owing, it is held, (i) to the improved quality of that good or service, (ii) to the cost, or (more mysteriously) (iii) to the brand. The focus of these discussions is mostly on labor, efficiency, and technology.
The second theory, proposed by Peter Thiel, holds that one company comes up with an innovation that deliberately makes the old model useless and thereby achieves, if only temporarily, monopoly status. PayPal did not outcompete other banks; rather, it invented an alternative model for peer-to-peer banking. The recent, excited talk of disruption fits this entrepreneurial picture of temporary monopolization.
What goes undiscussed and unconsidered is the question of how some products and services become obsolete not in virtue of out-competition or monopolization but because such goods have exited the market system. They become obsolete because they are unnecessary, because they are useless, because a suitable alternative is virtually free, or some combination of thereof. It is this infrequently asked question about the connection between obsolescence and the market system that piques my interest.
According to Karl Polanyi, the market system came fully into being around the nineteenth century when labor, land, goods, and money were conceptualized in terms of wages, rent, commodities, and interest, thereby creating a network of markets: the labor market, the housing market, commodities markets, and various financial markets. In shorthand, I have called this phenomenon of trade or exchange a Category II: exchanging what’s in hand. Noteworthy is the idea that most all economic arrangements, after the rise of the market system, end up being grasped, asked, and answered in market terms. ‘How shall I make a living?’ becomes as much a market question as does ‘What shall I have for dinner?,’ and it becomes taken for granted that most, if not all, material needs (food, water, shelter, warmth, coldness, etc.) are to be met by resorting to some market within the market system.
The hegemony of the market system tends to hide an interesting counter-phenomenon: the ways in which land, labor, goods, and money have all, rather quietly, migrated into different conceptual domains. On this view, good X may, in some instances, become obsolete not when there is a better good offered in the marketplace (the out-competition theory) or when good Y is an example of an innovation that resets the market terms (the temporary monopolization theory) so that good X is no longer in demand but rather when that good can be supplied just as well or better in (what I’ve called) Category I and Category III terms.
By Category I, I mean ‘using what’s on hand.’ Take the obsolescence of web design as a profession. From one point of view, it could be argued that WordPress and SquareSpace out-innovated with the result that this is just another Category II. To some extent, this is true. Yet, from another point of view, it seems defensible to argue that anyone who builds his own website by using one of these platforms is, to a large degree, using what skills he already has. I believe it wouldn’t be hard to come up with many examples in which we’re witnessing, in the context of obsolescence, a drift from strict Category II’s to strict or mixed Category I’s. How conceivable would it be that those of an Etsy generation would, in lieu of buying handbags or jewelry or other accessories, begin making their own with whatever is already on hand? How far-fetched would it be to think that clever, perceptive makers will return to giving gifts to their friends and family that were not purchased but made from what is lying about their homes, their neighborhoods, or the surrounding fields?
Now consider how Category III has been, or could be, assisting in the exit of some goods and services from the market system. By Category III, I mean ‘offering (and receiving) what one can.’ These gestures include sharing, borrowing, lending, giving, as well as related acts. Rather than buying a suit in order to attend a wedding (a suit that one will rarely, if ever, wear otherwise), one could borrow a good enough suit from a friend. In lieu of paying a professional masseuse to quiet one’s aching joints, one could learn self-massage and, when appropriate, ask for favors from a friend or spouse. An example with greater scale: provided that the right platform was set up, how difficult would it be to imagine a People’s Library that involved book sharing between relative strangers along the lines of a nearly-free Netfix model circa early 2000s? Or, again assuming that the right platform were developed, a hospitality model in which guests were invited to stay without money changing hands (based on certain understandings) that made AirBnb obsolete?
To test my view that a wide array of goods, services, and labor could migrate from Category II (the market system) to Category I or III, simply ask yourself, ‘I’m considering paying for X or offering my labor for Y. Could I just as easily get what I’m after by skillfully using what’s on hand (Category I) or by offering and receiving what I can (Category III)?’ More often than you would imagine, the answer turns out to be yes.
A footnote: I agree with Polanyi that one wouldn’t wish to do away with markets entirely for they fulfill a number of important social functions, only with a certain conception called the market system. On the view I’m espousing, what would follow, were more goods and services to drift out of the market system and into Category I and Category II, would be a greater equilibrium achieved between using you’ve got, exchanging what’s in hand, and offering and receiving what you can.