The term " public goods " (public goods) has become popular in web3 and regenerative finance circles recently, but research on the concept dates back to the 1950s, when it was proposed by economist Paul Samuelson, and more recently by the economist Promoted by celebrities such as scholar Elinor Ostrom. Let's start with a simple understanding of the concept and why web3 is a proving ground for improving the development of these products.
What is a public good or commons?
In general, any commodity (product/service/resource) can be classified by two key characteristics:
- Competitive vs. non-competitive : Competitive (Rivalrous) That is, you can use it, but others cannot (i.e. scarcity), as opposed to non-rivalry.
- Exclusive and non-exclusive : Exclusive (Excludable) sets the standards for who can use an item (for example, through a business model), while non-exclusive is the opposite.
Generally speaking, private goods (such as homesteads and personal items) are both competitive and excludable; movie theaters and clubs are exclusive and non-competitive... By analogy, public goods are both non-competitive and excludable. Is non-exclusively .
It has two key features: no one is prevented from consuming them ("non-excludable"), and the consumption of by any individual does not diminish anyone else's ability to consume ("non-rivalrous"). Common examples of public goods include breathing clean air or a society ruled by law, and free knowledge from Wikipedia is also one of them.
Develop and manage public goods and commons
Ecosystems (countries, industries, etc.) will get better if there is a certain (non-zero) number of public goods and commons. However, the capital market, the currently dominant market mechanism for , does not properly incentivize the development and maintenance of for these commodities, which has led to two major problems that are regarded as "market failures":
- The "free rider" problem : No resources contributed to developing good uses, but parties that benefit from them.
- "Tragedy of the Commons" : Individual actors acting in their own self-interest consume common resources and harm the broader ecosystem.
Now, the failure of traditional market paradigms has led to underinvestment, so we need new solutions to ensure that these important commodities can maintain appropriate levels of development. How does
support public goods and commons?
Existing solutions to commons and public goods often take the form of two general mechanisms:
- Community : bottom-up redistribution of resources by individuals and groups that gain sufficient value in collective governance or social norms.
- is based on rules : top-down regulation/centrally enforced value capture, and reinvestment determined by central authority.
In communities, public goods can be understood as an important part of any society for the collective good.
In this case, the main funding mechanism is tax , a large enough entity (such as a national government) can extract enough value from the public good to redirect funds sustainably to any of the smaller Products that organizations are unable to fund. Community-driven individual philanthropy has also been a social mechanism for redirecting collected local excess value into public goods and commons.
Government funding is essentially a top-down centralized effort that often produces sub-optimal local results, and it is exactly what governments do that falls short that leads to huge innovations that enable more public goods and commons The project began to flourish on the Internet.
Public goods and commons in the Internet
The Internet has given rise to "digital public goods", the most common forms of which are open source software (such as linux) and knowledge distribution ( such as Wikipedia).
The open source software has created huge value for society. The development and maintenance of basic Internet protocols such as TCP/IP, HTTP, FTP, and SMTP bring free, nonexclusive, and noncompetitive access to information to the global community.
Due to the lack of a central "internet government", the mechanisms for funding these technologies are mainly community-driven philanthropy or guided by large organizations/companies that accumulate enough value to subsidize development, but this is also a centralized approach and can easily occur Similar errors to those in government funding. At this time, Web3 appeared.
Web3:
A new public goods and commons paradigm
Many people believe that Web3 provides an opportunity to develop new public goods and commons paradigms because new value capture systems and communities supported by the underlying technology exist, and Willingness to try and invest resources for the betterment of society.
In the past, public goods created huge value, but did not have a way to capture the value to sustain themselves. From the perspective of the Web3 ecosystem, mechanisms such as tokenization and protocol design can both define new ways to obtain value and ensure that the acquired value is optimally allocated to public goods and public resources .
Web3's focus on community, collective intelligence, and resilience has led to the development of new community resource allocation mechanisms , such as secondary voting, retroactive public goods funding, and market influence. Beyond this, in an environment of transparency, rapid experimentation and a willingness to collaborate more can also accelerate the development of the mechanisms needed to expand public goods and public funding .
Web3 is a great proving ground and its structure allows the new economic model to develop quickly and at scale. Here, the possibility exists for the development of free-assembly models, where decentralized planning and coordination bring together the mechanisms, experts, and funds needed to maintain public goods and commons.
believes that over time they can become a boon to open source development as well as research and science, and quickly expand beyond Web3 from the bottom up to the wider society.
