Creations whose impact depends on being public generate uncertain value through not-particularly modular combination with many other things and have a large combinatorial surface area

Notes

  • By “public” I mean technology that it’s not illegal to copy without permission. It doesn’t necessarily mean it’s ‘open’ (thought that does make it more public.) It also doesn’t mean that it was funded by the government (which incidentally funds plenty of private inventions.)
  • I’ll be using the term “creation” to describe nebulous discovery/invention/potential innovation type things . Heuretic is a better word than innovation, but it might be confusing here.

What’s the line between innovations that would create drastically less value for the world if their value had been captured by their creators (There is a significant class of innovations that would create drastically less value for the world if their value had been captured by their creators) and those accelerated by privatization?

You can approach the question of “what are the characteristics?” both empirically and theoretically. Both approaches are flawed. Theoretically you can make arguments on both sides and the ultimate conclusion is something around “it depends.” Empirically there are anecdotes to support any position. I’m going to focus on the theoretical approach to outline characteristics and lean on the empirical approach to argue that potential innovations with these characteristics are increasingly common in the world.

Theoretical Approach

I’ll start with the assertion that Ignoring incentives, scientific and technological knowledge will have more impact if it is more public.

Of course, incentives exist and research can be expensive. Value capture is important for incentivizing and funding research.

So there are good arguments both for making knowledge private and public. We neither live in a communist paradise ruled by an omniscient overlord who distributes resources to their optimal use nor one in which frictionless markets exist for everything that can distribute value perfectly to its creators. So the answer to “what will maximize impact?” Is “it depends” and our job is to figure out what makes the answer tip to one side vs. another.

There are two main ways to capture value from private knowledge - licensing IP and creating products. ^1Current value capture mechanisms are crude]. Patents inherently prevent a piece of IP from being combined with other knowledge so if the majority of the value of a heuretic will be generated combinatorially, that may suggest a heuristic for creations that will have much more impact if they’re public. If there are only a few big clearly valuable combinations that are possible, IP (especially a non-exclusive license) may still be reasonable.

There is also the question of how composable the creation is. How large is its ‘combinatorial surface area’ and how much do you need to mess with its insides to combine it with other things? If a creation is low-surface area and/or very composable it can have a lot of impact as a private product. Take bolts for example. They are only valuable when you combine them with other things to create something new. However, they have a small combinatorial surface area (you almost always use them to hold things against a threaded thing) and you rarely need to modify them (if you do, you’re probably doing something wrong but I have an angle grinder to sell you.) Well-designed APIs are also extremely composable. Low surface-area, composable creations make good private products that can achieve near-maximum impact.

Inverting the characteristics of heuretics that can create significant impact as private goods might suggest which sorts of things would create significantly less impact if you tried to capture their value. These heuretics generate uncertain value through combination with many other things, have a large combinatorial surface area, and frequently require internal modifications to enable these combinations to happen.

Related

^1: There are technically ways to capture value from private knowledge like consulting but they don’t scale well so I feel comfortable ignoring them.

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