In the Jun 2009 issue of Wired, Kevin Kelly uses the loaded term "socialism" to describe how the fragmentation of everything is giving us access to more choice than ever before. He admits to using a word with much cultural baggage, and it's not clear if by coining the phrase "digital socialism" the result will be to co-opt and re-define the popular meaning of the word, or if careless readers will simply think he's giving a nod of approval to a dangerous meme that of necessity is associated with coercion and top-down control.
Open Source founder and guru Richard Stallman reminds us of the two meanings of "free": The first ("as in beer") refers to not having to pay for something. But the second, which embodies the real power of the open internet, means liberty, the freedom to choose what you like, with no coercion from a government or supplier. Traditional socialism offers a world that is free in the first sense ("free healthcare") but not in the second ("freedom to choose a non-government appointed supplier"). Capitalism, in the original Adam Smith sense, emphasizes the second (liberty) aspect of free. The Invisible Hand won't work unless you can freely choose your suppliers and customers.
Kevin Kelly's insight is that we are moving to a world where we can have both meanings of "free". The best things in what the Wired issue calls the "New New Economy" are free in both senses (e.g. Wikipedia, which lets you both access and modify freely without payment). He calls it "digitial socialism", but he wants us to think of it as a third way that renders irrelevant the old debates about traditional capitalism and socialism.
But it isn't a third way. What Kevin Kelly calls "digital socialism" is just plain old decentralized, Hayekian capitalism: zillions of independent, free actors whose individual self-motivated choices add up to something bigger than any of us. The real baggage of socialism, and the reason I think Kevin Kelly's term doesn't work, is that it relies on coercion by a third party (government) to make it work. Capitalism and liberty are always tightly associated because neither can work without the other. Socialism's "free as in beer" is always associated with a strong (government) Leviathan who can (by force if necessary) redistribute from one person to another.
In the digital world, where redistribution has no cost, Kevin Kelly thinks we can remove the coercive aspect of socialism. Nobody forces you to contribute your Linux bug fixes or Youtube videos to the collective -- you give freely and selflessly, something he believes you would never do in a world motivated only by money. But capitalism isn't about money, as Adam Smith himself notes: "The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it." If Kevin Kelly's digital socialism simply means we no longer need government to reduce the cost of acquiring things, then why not use the term that already describes a system that does exactly that: capitalism.
update: Lawrence Lessig agrees, disputing Kevin Kelly’s word choice. Socialism requires coercion.