Bloomsbury Academic

In one of this blog's forays into the economics of publishing (rather than the publishing of economics), I spoke to Frances Pinter, the publisher of Bloomsbury Academic. An offshoot of Bloomsbury, best known for the Harry Potter books, it's a commercial experiment, a test of a business model for the online world.

The model goes like this. Scholarly titles will be available for free download under a Creative Commons licence – currently as pdfs but later in HTML format. There will be hardback versions, priced comparably to other academic publishers who sell to libraries. (The prices of the titles currently available on the website look high to me compared to most university press titles, but are apparently not representative of the forthcoming list). And there will be e-book versions for whatever devices are available, with additional material, perhaps further content, or multimedia content. These too will be priced close to the market median. Ms Pinter compares these different versions to a plain vanilla ice cream, an ice cream sandwich, and an ice cream sundae respectively.

The gamble in the model is that the free CC version will increase rather than decrease hardback sales. As the website says,

The debate over whether or not free availability increases or decreases
sales rages on, not just in publishing but also in the music and film
industries. Pilot projects in academic publishing indicate that book
sales are not harmed, and authors are happy to reach a wider audience.

If that proves correct, the hardbacks will do a lot of the work of covering costs – which it is intended will include a small royalty for authors – and the profit margin. For one novelty about Bloomsbury Academic compared to other experiments is that it's fully commercial and intended to deliver a commercial return to the parent company. Competitors are often subsidized in some way – perhaps through authors' research grants (at least for monographs, although not often for the full costs of originating a book), or through the publishers drawing a university salary as well as running the publishing operation. I think this is true of Open Book Publishers, about which I blogged a while ago.

Ms Pinter says Bloomsbury Academic is attracting a lot of 'stellar' authors who like the free download of their work being made available. There are not many titles on the website as yet – more will arrive after launch of course. Bloomsbury Academic was announced in the autumn of 2008 and will be fully launched early in 2010. Given the success of the parent company, this is definitely an enterprise worth keeping an eye on. At the scale of publishing planned, it will prove a real test of the impact of free downloads on sales in other formats.

Google books

Robert Darnton, one of the most thoughtful commentators on the Google books deal, has written about the latest developments in a further New York Review of Books article, Google and the New Digital Future. It's a good overview of the debate. Darnton concludes with his own suggestion:

“The most ambitious solution would transform Google's digital
database into a truly public library. That, of course, would require an
act of Congress, one that would make a decisive break with the American
habit of determining public issues by private lawsuit. The legislation
would have to settle ancillary problems—how to adjust copyright, deal
with orphan books, and compensate Google for its investment in
digitizing—but it would have the advantage of clearing up a messy legal
landscape and of giving the American people what they deserve: a
national digital library equal to the needs of the twenty-first
century. But it is not clear how Google would react to such a buyout.

If state intervention is deemed to go too far against the American
grain, a minimal solution could be devised for the private sector.
Congress would have to intervene with legislation to protect the
digitization of orphan works from lawsuits, but it would not need to
appropriate funds. Instead, funding could come from a coalition of
foundations. The digitizing, open-access distribution, and preservation
of orphan works could be done by a nonprofit organization such as the
Internet Archive, a nonprofit group that was built as a digital library
of texts, images, and archived Web pages. In order to avoid conflict
with interests in the current commercial market, the database would
include only books in the public domain and orphan works. Its time span
would increase as copyrights expired, and it could include an opt-in
provision for rightsholders of books that are in copyright but out of
print.”

Publishing 2.0

My favourite technology correspondent* has brought to my attention a great article on Techcrunch on what e-books are doing to publishing and rights. It's by Paul Carr, author of Bringing Nothing to the Party. He says: “I just gave away the entire PDF to Bringing Nothing via TechCrunch. Here’s my column explaining the decision…” The article should be read by anybody in publishing struggling with online strategy decisions.

*
I have to say it's quite an old photograph of him on the BBC site

The Hesitant Hand

Steven Medema's history of the idea of self-interest in economics, The Hesitant Hand, starts with the Ancient Greeks and works through to public choice theory and the Coase theorem. So it's not unambitious to start with. It also captured my attention more than I had expected because it's actually about much more than how economics has used the assumption of self-interest. Rather, the theme is the centuries-long debate about how best to govern society, and the extent to which the market does a better job than any other means of organization.

For Plato and Aristotle, and all the way through the Scholastics, good government was that which comported best with the dictates of natural law. Self-interest was to be restrained by rulers – hence, for example, usury prohibitions. Self-interest was sinful. It wasn't really until Adam Smith that the operation of self-interest in the economy was seen to have any positive effects for social welfare – as Medema puts it: “Smith was arguing…that the individual pursuit of self interest serves the best interests of society as a whole, that self-interest and the social interest are partners rather than enemies.” Smith set the scene therefore for the evergreen debate about the extent to which the government can and should intervene in the operation of self-interest through market transactions.

Medema traces this debate through Mill, Marshall, Sidgwick, Pigou and on through the Italian public finance tradition and Wicksell. He depicts a pendulum swing in the centre of gravity in welfare economics, from laissez faire to government regulation and intervention and back again. But he also notes that the views of the principals in this debate have tended to be exaggerated. Those economists painted as the most laissez faire – including Smith – always insisted that the state has an important role in economic life. He quotes Pigou as saying the role of the state is to shape institutions within which markets and self-interest will consequently operate in the general interest. Medema writes:

“Acceptance of this basic idea about the relationship between government and the economy changes the entire character of one's thinking about market and state. 'The real question,' said Pigou, 'is not whether the state should act or not, but in what principles, in what degree and over what departments of economic life its action should be carried on.'” (p65)

However, Pigou's pragmatism has been overlooked, and he is seen instead as the founder of welfare analysis based on interventions in markets by a benevolent dictator, a dispassionate and objective government, to correct market failures. This approach dominated economics for decades, and indeed is still influential.

Yet the other great moment of innovation in this area of economic thought was the appreciation that just as markets could either be perfect or imperfect, so could governments – up until Coase and the public choice theorists, economics assumed that market failures could be corrected by (perfect) government action. As we'd do well to appreciate fully now that markets are in the doghouse, intellectually, due to the financial crisis, government failure is not a minor problem. Coase's challenge to the previously dominant notion that social welfare can be improved if the government steps in to correct an externality – say a tax on pollution – was to note that while pollution imposes harm on others, so does imposing a tax. It raises manufacturers' costs. So the proper debate is one about the distribution of harms and benefits. And of course he went on to show that – absent transactions costs – the allocation of resources will not change but parties with competing rights will negotiate the distribution of income. Coase of course also recognised the importance and prevalence of transactions costs, which went on to form the basis of institutional economics. But he was scathing about what he referred to as the 'blackboard economics' of prescribing a government intervention to transform a market outcome into an idealized 'optimum'. (p120)

Doubts about the efficacy of government intervention were voiced fully by the public choice school, while Coase laid the foundations for the joint discipline of economics and law. As it challenges the objectivity and efficacy of government, public choice theory is often seen as innately right-wing. This is a cop-out – anyone in favour of state intervention has a stronger duty to understand the difficulties of process, of getting good policies implemented in specific circumstances, in ways which take account of legitimate competing interests and are seen to be fair.

But whatever one's political views, it has to be granted that both have contributed to a much richer understanding of the processes of economic policy. You only need to watch what's happening in the climate change debate, from email-gate to Copenhagen, to see the influence of the many personal motivations driving public policy.

I wouldn't describe this as an easy read – it is after all a scholarly book on an aspect of the history of economic thought. But I liked it for illuminating the inanity of thinking in terms of market versus state. The challenge of governing in the public interest is, sadly, more difficult than that.

Educating Economists – an update

I recently commented on  Educating Economists, edited by David Colander and KimMarie McGoldrick, a volume of interesting essays on the breadth (or rather lack of it) in the education of economists. The publisher has emailed me that it will be on sale for a bargain price of $5 at the upcoming ASSA conference in Atlanta. It ought to sell a copy to every single teacher of young economists attending the conference. The need for reform in the curriculum is urgent given the chasm that has emerged between what's taught in universities and what good economists now do in their own research.