How discussion platforms on the internet are changing the way we test and propagate new ideas.

Hayek with a class of students at the London School of Economics (LSE), 1948.

It would not be an overstatement to say that Hayek’s conception of the market as the arbiter of the ‘value’ of a product, is one of the most important theoretical breakthroughs of the 20th century.

Frederich Hayek, the great Austrian economist, whose genius rivals that of the other great economist of the last century, John Keynes, was an ardent supporter of free market economics.

This school of thought proposes that, human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills, within an institutional framework characterised by competition and minimal regulation. It owes its origin to the theories of the great Philosopher, John Locke and the economist, Adam Smith.

At its most fundamental level, a Free Market can be conceptualised as a social institution rather than only as a economic system because it’s participants are social beings, first and economic actors, second. Their economic decisions are routinely conditioned by their social consciousness.

Hayek says, a Free Market provides a relatively unbiased judgement on the ‘value’ of a product by aggregating the biased opinions of those who participate in the market.

Individual subjectivity is transformed into objectivity of the market.

In a Free Market, millions try to guess the tastes of strangers, to whom they plan to sell things. Through trial and error, the commensurate value of a product is reached that is agreeable to those sellers willing to sell the product at a particular price and vice versa. There is an aggregation of knowledge regarding the best way to satisfy a particular human want. However in a planned economy, where most resources are owned by a small group of planners, this would lead to deficiency in knowledge regarding the tastes of people, thereby leading to misallocation of funds. In the erstwhile Soviet Union, there was a chronic shortage of essential supplies while other goods were in plenty.

Similarly, Free Market mechanism, when applied to disciplines outside of finance, like medicine, journalism, law, education etc. yields interesting insights. For example, we can speculate that the professor teaching a group of students in a university setting can be thought of as the planned economy with a top-down approach while the online content platforms like Reddit, YouTube and Wikipedia, as free market specimens with a bottom-up approach.

The professor/doctor/lawyer/journalist who operates in a controlled setting, is bound to commit certain errors of both commission and omission while performing his respective duties and these mistakes might go unnoticed. This is because they are individuals with limited intelligence and strength. Contrast this with online discussion platforms like Reddit where most mistakes are called out regularly by people with varying degrees of expertise.

In the presence of an expert, knowledge exchange is mostly one-sided. However, on the internet, it flows from everyone to everyone and the best ideas are routinely pumped up higher.

Many of these experts are well read and keep themselves continuously updated on the latest developments in their fields. But they can’t know more than the collective consciousness of millions of internet users. Also, there is a greater cross-fertilisation of ideas from different fields because of the sheer variety of people online.

Credentials matter less in an online setting because of anonymity and it’s a lot easier to criticise an idea without knowing the person.

A single expert in real life is more susceptible to corruption and to give a sub-optimal advice. This is why the Senate in Ancient Greece had 1000s members because bribing all or most of them was way too expensive.

Sure, you can’t perform neurosurgeries or win class-action suits through Reddit but many complex tasks are made easier and much less risky by such discussions. Even everyday issues are routinely discussed and suggestions are many-a-time quite effective. This is because the advice has been discussed and tested by thousands of people spread across space and time.

However, it would be naive to say that the online discussions are truly objective. Like the free markets in the offline world, online forums have inherent biases. This is because not all participants have access to equal information. Some ideas/people/groups have disproportionate power and influence. But this can be countered by bringing more and more people online.

As Hayek pointed out, greater the number of people participating in the market, better will be the approximation of the price of the product to its value.

The Free Markets of Knowledge on the Internet facilitate the creation of a greater number of ideas, testing by a greater number of people for consistency and their dispersion to a greater number of people. Thus, they benefit the human race in immeasurable ways.

But there is a growing tendency in the academia and even among the general public, to be sceptical of the information obtained from such platforms, especially Wikipedia. The argument is that, since it is crowd-sourced, it’s not reliable. Also, it is edited routinely by people who want to push a particular agenda. However, as argued above, Wikipedia articles are dynamically monitored by hundreds, if not thousands of volunteers spread around the world and most, if not all, motivated edits are rectified at the earliest.

Also, many would argue that, platforms like Reddit & YouTube, with their inherent biases, serve as mere echo chambers with little critical discussion. This is, in fact, applicable to the entire internet to some degree. Search engines, news streams, Facebook Feed etc., tweak their algorithms to show you only those things which affirm already entrenched prejudices.

However, this is no different than a particular professor/doctor having inherent biases himself. At the very least, bias on the internet can and is readily exposed by people with differing opinions. In the offline world, bias is clothed in such sophistication that it becomes extremely difficult to distinguish between expertise and ideology.

It should be noted here that, online platforms represent the residual process of democratisation. It has those elements, people and ideas that could not find a voice in the usual political and social process. That doesn’t make them wrong. In fact, platforms like Reddit/tumblr, by providing a safe vent to people, has prevented deep social fragmentation.

Friedrich Hayek.

In such cases, the governments/corporations should be very careful in enforcing regulations on the internet. Taking a classic Economics example, studies have repeatedly shown that a price floor, like a minimum wage, which restricts how low a price can go, tends to excessively increase the supply of that good or service. This leads to inefficient allocation of resources. Seminal work by George Stigler, a Nobel Laureate concluded that a minimum wage actually tends to increase unemployment and reduce family income. In the same way, online discussions should be restricted only if they advocate direct violence towards a specific person. Then it becomes a law & order issue.

In a way, Medium.com also brings to fore, the Free Market mechanism to publishing and journalism. Writers, who previously could not find a voice in the media bureaucracy either due to ideological discrepancies or other social commitments, can now reach out to hundreds of thousands of people. Even the readers benefit immensely due to the diverse content.

In conclusion, Free Market, though a practically flawed concept, is the best tool we have today, to advance human well-being and reduce untoward suffering.