What I find so intriguing isn't really the continued downward trend in prices--we've gotten used to that--but rather, the question of why the process has never proceeded to its logical conclusion.

I would say that goods fall into two categories. One categoriy is "evolving products", and computers are a good example. The downward trend in manufacturing costs is offset by a rising curve of capability and capacity. If computer capabilities had been frozen at the level of the 370, then you'd expect manufacturing cost to come very near zero.

Then there's the category of "perfected products". Let's face it, there's no real difference anymore in brands of soap or toothpaste, only variations in scent and taste. Same with most foods; bread is bread, and differentiation comes from introducing novelty types or making claims about the nutritional value of additives. Vegetables and fruits, derivatives like fruit juices--they're all the same product in a wild variety of wrappers.

Why hasn't the cost of perfected products fallen to zero?

Adam Smith envisioned a dampening effect of counterbalancing forces that would slow trends of cost, in either direction, through supply and demand. But he never talked about any inherent limit to any one trend that's unopposed.

When you look at the cost of most commodities, the cost of the product itself is negligable. The major cost components are packaging, transportation, marketing and advertising, the amortised general overhead of the company, and profit.

Except for transportation, the major cost components that keep the cost of products from approaching zero are actually the result of competition: Advertising and marketing, and R&D to come up with trivial ways of differentiating otherwise-perfect products.

Kind of goes against the Smithian grain, doesn't it? But I think Smith didn't look far enough ahead, to the need to somehow maintain profits for the owners even though costs approach zero. The kind of competition we see in most commodities is entirely artificial, not based on any inherent characteristic of the product or the market.

It's also constructive featherbedding. Few people are engaged in directly productive occupations any more. Most people are in nonproductive jobs playing the game of artificial competition. That puts money in people's pockets, enabling them to buy the commodities and funneling a little profit to the owners.

It's an economic circle-jerk, but a useful one.

However, once I see the situation that way, I'm free to wonder if there isn't a better way. Marx and a lot of other utopians (including Gene Roddenberry, to end where we started) imagined the process of continuing improvement taken to its logical conclusion. Commodities, indeed most goods, would be free; we'd forage what we need from the environment, much like our primitive ancestors, except that what we harvest is enormously more sophisticated. The utopian part was that people would then be free to concentrate on the things that matter to them personally, instead of jumping through somebody else's hoops to attain sustenance. If the hoops we jump through are substantially artificial, isn't there something wrong with the way things are?

What might be better?

(Knowing the audience, I know I should be clear that I'm in no way criticizing free-enterprise and capitalism. Just the opposite: This is praise for the system that brought us to the point where we can think about costs approaching zero, and think about a successor that's even better. And I'm certainly not advocating Marxism. Marx got the endpoint right, I think, but screwed up the means to the end.)

Also, while the costs of some products have hit the wall on the trend toward zero costs, newer products are still evolving. Any successor system would have to differentiate between "perfected goods" and "evolving goods", and provide for continuous innovation and introduction of the truly new.

OK, now I'll shut up and give somebody else a chance.