Review: Business as Usual During Alterations

"Business as Usual During Alterations" by Ralph Williams (Astounding Science Fiction, July 1958)  is a light little piece of science fiction with a very simple plot, yet it has the singular honour of being regularly cited  in economics classes.  This isn't surprising because it not only provides an interesting thought experiment, but it also predicts a problem that the 21st century is only now recognising and coming to terms with.

The premise is a very simple:  One morning, all over the world, machines appear in various places.  They are all identical; a box of electronics on which rest two metal pans and a red button.  Also on the box is a plaque that  explains that if you place a non-living object in one pan and press the button, that object will be instantly duplicated (doing so with a living creature results in a dead duplicate).  It also states:

Warning! A push of the button grants your heart's desire. It is also a chip at the foundations of human society. A few billion such chips will bring it crashing down. The choice is yours.

The reason behind this is no secret, as is explained at the beginning of the story.  A race of extraterrestrials notices how fast Earth is progressing and are afraid that we may be too unstable to have running loose around the galaxy.  Noticing our selfish nature, the ETs come up with an elegant solution.  They give us matter duplicating machines.  If we are the selfish, unstable culture we seem, the machines will quickly destroy human society.  If we are fit to live in the galaxy, we'll reject it.

Fortunately for Earth, there is a third option.   I was going to say "unfortunately for the aliens," but they have no further part to play in the story.  In fact, they could have been easily written out and replaced with a mad inventor or just having the machine showing up in a curio shop without explanation.  The real story revolves around Mr John Thomas, manager of Brown's Department Store, who quickly realises what is going to happen.  Human economies are based on scarcity.  If there isn't enough of something to meet demand, then it is valuable.  But if you had a machine that could give you a duplicate of an object instantly, that scarcity vanishes and with it, value.  You literally couldn't give products away and the economy would quickly collapse.

While some people try to cash in on the duplicators as fast as they can and others stock up on guns against the obvious, Thomas realises that it isn't possible to get rid of the machines and the old system of trade can't survive, so his idea is to adapt to the machines.  In other words, create an economy based on abundance.  He does this by first refusing to take cash for any further transaction at the store, but making it incredibly easy to open a credit account.  He then starts the day by selling duplicators and then selling items to customers at an knock-down price that they can duplicate for themselves.

The final solution is no spoiler to relate (you can see it coming a parsec off) is to fall back on creativity and diversity.   Scarcity required uniformity, so abundance requires new and different things.  And with production taken out of the equation, things like economy of scale vanish.  You don't need a large market for something; just one that's big enough to turn a profit after paying for creating the prototype.

If that sound familiar, it's because I've just described the economy of today–at least, where it applies to digital goods.  Books, images, videos, music; these all relied on their markets because creating and distributing copies created a bottleneck and hence scarcity.  Now, if you have one copy of a book or video or whatever, everyone on Earth can potentially have one for free.  The media companies, so far, have tried to deal with this by reimposing the bottleneck and making what is abundant artificially scarce.

They aren't having much success.  Perhaps they should read this story.

Fast.