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Ganesh Prasad: Open Source-onomics: Examining some pseudo-economic arguments about Open Source
By Ganesh Prasad




Synopsis:
While the technical arguments against Linux and Open Source are being gradually silenced,
several unrefuted myths about the economics of Open Source continue to float about,
confusing and scaring off people considering these alternative products. Worse, the Open
Source community is itself divided on such issues, and is unable to provide a cogent
rebuttal. This article is an attempt to set the record straight.


Contents


"The poor performance of Linux stocks proves that Linux is a failure"
"Open Source is not economically viable"
"Not paying for software will ultimately kill the industry"
"Why will programmers continue to contribute code if they can't make money from it?"
"Even Open Source development involves effort, so there has to be payment for that effort"
"Are Open Source programmers writing themselves out of their jobs?"
"But free isn't natural. There's no such thing as a free lunch."
"Is software a commodity?"
"Who will invest in software development if it doesn't yield a return?"
"Open Source may have a niche, but proprietary commercial products will continue to rule"
"Customers will never trust something that is free"
"Open Source may release value, but it doesn't create value"
God, Government, Market and Community
Conclusion
References
About the Author



"The poor performance of Linux stocks proves that Linux is a failure"

What's the relationship between the performance of Linux stocks and Linux's own prospects of
success? When stocks of companies like Red Hat and VA Linux Systems skyrocketed in the wake of
their IPOs, that was taken as an indication that Linux had arrived, and Linux advocates said
nothing to counter the impression. Indeed, many gleefully used the stockmarket to show their
peers that Linux was to be taken seriously. So now that the same stocks are trading far below
those prices, doesn't it indicate that the Linux shine has worn off? Look at the number
of Linux companies in the doldrums, that have laid off employees or closed down. That certainly
seems to indicate the end of Linux. It was a great idea that failed to deliver on its promises,
and we should now go back to software and companies that are more firmly grounded in economic
realities, right?


Well, first of all, Linux is quite independent of Linux companies in a way that the market has
never seen before. Windows means Microsoft, Netware means Novell, OS/390 means IBM. The fortunes
of operating system and company are usually heavily intertwined. That's simply not the case with
Linux. If Novell closes down, that pretty much means the end of Netware, unless another company
sees fit to buy the product and keep it alive (On the other hand, Microsoft may simply choose to
buy Netware and kill it!). Such things can't happen to Linux. As an Open Source operating system,
Linux is teflon-coated against the commercial failures of the companies that try to build business
models around it. Commercial entities are Johnnies-come-lately to Linux anyway. Linux managed
without them for years, and will continue to exist even if they should all disappear.


In fact, companies that claim to support Linux are wrong -- Linux supports them!

"Open Source is not economically viable"


OK, so Linux as a technical product may continue to exist, but if companies cannot make money from
it (as is seemingly evidenced by the woes of the Linux companies today), then it's another great
technical success that is a commercial failure. History is littered with such examples. Linux will
never go anywhere unless people can make money off it.


Now here's an argument even Open Source sympathisers have trouble with, -- the assumption that money
must be made for Open Source to succeed. However, the argument is incomplete because it chooses
to concentrate on the supply side alone, without regard to the demand side.


While it may well be true that no one can make money from Open Source, that should only serve to
discourage suppliers of software. On the demand side, however, consumers are saving
tons of money by using Open Source. Since a penny saved is a penny earned, there is a strong
economic basis for the success of Open Source after all. Someone is saving money, and they will fight
to keep those savings.


The demand side is the one that should drag the rest of the market, kicking and screaming, to a
regime of drastically lower prices. Vendors will see their margins shrink, many will close down,
newer, leaner ones will spring up, vendors in other market segments will provide software, and
eventually, the market will adjust itself to the new reality. Dollar volumes will go down even
as unit volumes go up. The transition could be quite painful for suppliers of software, but no
law of economics says it cannot happen. It is not a law of nature that vendors must continue to
make the revenues and profits they are used to.


"Not paying for software will ultimately kill the industry"

There are the long-term worriers who don't like this scenario at all, even as they accept that
it may happen. Yes, they say, customers will save money in the short term, but they're eating their
seed corn. Customers need financially healthy vendors to be around to support them and continually
improve their offerings. A herd of gnu may be happy at the disappearance of the local lion
population, but the herd needs predators to cull its ranks of the weak and the sick, and
to keep its gene pool healthy. Saving money by starving your suppliers is not in your own
long-term self-interest.


This is a strange suggestion from people who probably describe themselves as market capitalists.
When customers make a purchase, should they think about their own savings or should they worry
about the supplier or the economy? Is it reasonable to ask them to choose costlier products because
that will ultimately and indirectly serve their own interests? The argument smacks more of Marx
than Adam Smith, -- The State above the individual.


This was the convenient argument of horse-buggy manufacturers when the locomotive arrived, and of
the railroad companies when the aeroplane appeared. We've seen this dozens of times in our history.
A generation of suppliers is threatened, and they try to convince the rest that society as a whole
is threatened. If history is any guide, consumers will make the decisions that suit their immediate
interests, and vendors will have no choice but to adapt as best as they can. Those decisions may
decimate them, but civilisation will survive, as it always has. L'Etat, c'est moi.


"Why will programmers continue to contribute code if they can't make money from it?"

Right. Given a choice between a free software product and a competitor with a price tag,
it is understandable if customers choose the free one. But why should anyone write it for
free in the first place? What would they gain?


The assumption behind this question is that there are only three types of transactions
between parties: win-win, win-lose and lose-lose (Lose-lose transactions should never
occur under conditions of rational decision-making). Win-lose transactions occur when
the winning party is stronger than the other and can force a transaction through. All
other transactions are willingly entered into by two parties and are win-win.


In the case of Open Source, the recipients of the software are obviously winners, but the
writers of the software don't seem to be winning anything because the recipients don't
have to pay them for it. Therefore, our assumption tells us that this not a win-win
situation, and that there is no economic incentive for a programmer to write Open Source
software.


For the moment, let us go along with the assumption that the only motivation for writing
software is economic (which is not true). Even with such an assumption, the reasoning is
flawed because there are other types of transactions which are not so obvious and which
have not been considered: win-neutral, lose-neutral and neutral-neutral.


Under conditions of rational decision-making, lose-neutral and neutral-neutral transactions
have no incentive to occur, but win-neutral transactions can and do occur quite frequently.
Everyday examples include someone asking for directions, or asking for change. Here, the
person asking certainly gains something from the transaction, but the other party neither
gains nor loses from it. Therefore, the transaction can still take place.


Most Open Source programmers would probably not write software and give it away if it cost
them something to do so. However, they don't perceive the effort of writing it to be a cost.
Most of them write software to solve a specific problem that they happen to be facing, or to
"scratch their personal itch", as Eric Raymond points out. The process of developing such
software is actually quite pleasurable and energising to most good programmers. Once the
software has been written, giving away copies of it does not deprive the programmer of the
ability to continue to use it, and it costs them nothing extra to do so. It is a win-neutral
transaction, and therefore there is no economic reason to prevent it from taking place.


(Economics purists would point out that there is indeed a cost to giving away the software --
the opportunity cost of not selling the software instead. However, for many programmers,
the process of selling their software is more trouble than it is worth, so the effective
opportunity cost is actually zero, and it is a win-neutral situation after all.)


If that was not sufficient reason, Open Source programmers also tend to work with others
who share their interest and contribute code. They enjoy a multiplier effect from such
cooperation. Metaphorically speaking, each programmer contributes a brick and each
gets back a complete house in return. In software, unlike with physical goods, one person's
gain does not come at the expense of another because a copy does not deplete the original
in any way. Sharing software is not a zero-sum game, and there are tremendous efficiencies
from participating in such a cooperative endeavour.


No, the absence of direct monetary reward does not really constitute a disincentive to writing
Open Source software.


"Even Open Source development involves effort, so there has to be payment for that effort"

OK, Open Source programmers lose nothing by giving away the software that they have already
written (and they may even gain in non-monetary terms). But some effort has gone
into their products. Shouldn't such effort be compensated in cash as well? Programmers have
families to support, and they need to put bread on the table. They can't live on software and
satisfaction alone. To be viable in the long term, Open Source needs to evolve a mechanism
to support its contributors financially. Without remuneration, over time, most of these
volunteer programmers will simply wander away in search of food.


This argument appeals to equity as well as economic commonsense, and finds sympathisers even in the
Open Source community. Certainly, we would all like to see programmers being compensated for their
contributions. There are several business models that are being attempted. The SourceForge and
Collab.Net method of raising contributions from users to pay developers is an innovative
one, but its success is as yet unproven. Programmers could also try and make money by supporting
their creations, maybe selling copies of it as well, providing consultancy and professional services,
etc. But we still don't know of a foolproof business model for this sort of thing. There may not
even be one. In the absence of a good system coming along pretty soon, Open Source will perhaps continue
to be written by volunteer programmers who have day jobs writing commercial software. It could also
expect contributions from hardware or services companies with a stake in its success.


But even in this worst case, does it mean that Open Source will stop being written? As long as
Open Source programmers have alternative sources of income (i.e. day jobs), they lose nothing
by working on Open Source projects in their spare time (a win-neutral transaction). With the
increasing number of people being exposed to Open Source, the pool of contributors is in fact
growing larger by the day.


"Are Open Source programmers writing themselves out of their jobs?"

But that leads to what may seem the ultimate argument against the economics of Open Source:
How long can programmers work day jobs at commercial software companies and write software at night
that puts those same companies out of business? Writing Open Source software is not just
irrational, it is positively suicidal. 'Tis an ill bird that fouls its own nest, not to mention
an extremely foolish one.


Indeed, this appears to be a very powerful argument. However, Eric Raymond comes to our rescue with
this statistical nugget: Only 5% of all programmers are actually engaged in writing "for sale" commercial software.
The other 95% actually write and maintain custom-built software for in-house use. Open Source doesn't
threaten custom-built software at all. It only competes with packaged software that is sold as a
product. And so, in the worst case, Open Source programmers are only going to put 5% of their own
kind out of work. That's an acceptable level of collateral damage, as the generals might say.


"But free isn't natural. There's no such thing as a free lunch."

But this entire idea is crazy, somewhat like producing something out of nothing! How can one seriously
expect an entire economy to be based on something that is absolutely free? Doesn't it violate some
fundamental economic law, just as producing something out of nothing violates the Law of Conservation
of Mass in physics?


Let's examine whether it does.


We realise it is not possible for any supplier to charge less for a product than it cost them
to produce it. That would mean a loss. At the same time, if all products in a category are roughly
alike in function, and there are plenty of suppliers for those products, it is not possible for any
of them to charge significantly more than their competitors without pricing themselves out of the
market. So they should all end up charging just slightly more than it cost them to make the product,
making only modest profits in the process. The underlying assumption here, though, is that we
have "pure competition".


"Pure competition" in economics means a buyers' market. Consumers love it and suppliers hate it
(though, curiously, all suppliers claim to welcome it). A competitive market means that consumers
can easily find any number of alternative suppliers for a product. It also means the product is
a commodity.


A "commodity" product means that there is very little differentiation between the various versions
of a product. They all do the same thing, with only minor, insignificant differences. Consumers
don't bother about brands when buying commodities. Suppliers hate commoditisation for the same
reason and try their best to create artificial differentiation. (The best example is the Vodka
Paradox: Vodka, by definition, is a colourless, odourless and flavourless drink of a specific
composition, so all vodkas should be the same! But we know of both premium and downmarket
brands of vodka, so at least some of them are, by definition, not vodka at all!)


Look at the software market from these angles. Is it competitive? Is it a commodity market? Think
about whether it would be easy for you to replace Windows on your PC with another operating system.
Think about whether such a system would work the same way. Such an analysis may suggest that this
is neither a competitive nor a commodity market. However, these aren't very straightforward
questions to answer because some recent developments have impacted the market a great deal, but
we'll come back to them a bit later.


The important point to note is, if the software market becomes a competitive commodity market,
the price of software should be close to the cost of producing it. That's what economic
commonsense says should happen.


How about the marginal cost of production of software? It's fairly well known that the cost of
producing the second copy of a piece of software is so low as to be virtually zero. How much
effort and cost is involved in burning a CD, anyway? That's the marginal cost of software,
i.e. virtually zero.


"Marginal cost of production" refers to the cost of producing the nth unit of a product. It
may cost a lot of money to set up the facilities to produce the very first unit of a product, but
it costs much less to produce the second (because those facilities are already in place), and
probably even less to produce the third (due to continuing efficiencies of production). The
marginal cost of production generally declines until it reaches some steady level.

--

"Is software a commodity?"

But why would the software market suddenly turn competitive and into a commodity market? The
answers are standards, the Internet, and Open Source software itself.


The correct way to build an application using 1990s thinking is to grab a copy of Visual Basic
or PowerBuilder, develop a Windows executable and install it on every user's PC. The larger
the number of PCs to install the software on, the more you walk around. When you need to
upgrade the software, you put on your sneakers again and take another walk.


Now fast-forward to today. The correct way to build an application using millennial thinking
is to put the application on a website and get users to point their browsers at it. When you
need to upgrade the software, you modify it once on the server and your users hit the Refresh
button on their browsers.


Web technology, if you stop to think about it, is a predominantly server-side technology.
True, there's the Java applet, but hardly anyone uses it. There's Javascript, but ever since
the browser wars, when you couldn't be sure which browser would break your code, developers
have been wary of coding a lot of Javascript. That leaves virtually all development on the
server side. All that the user needs is a lowly browser.


At one stroke, the web has commoditised the server, because all a server needs to do is talk
some standard "protocols". If it knows HTTP (HyperText Transfer Protocol), it can talk to a
browser. If it spits out some HTML (HyperText Markup Language), the browser can actually render
it for the user to read. Whither brand? Neither the browser nor the user sees the brand of
the server software. The same goes for other Internet standards such as SMTP (Simple Mail
Transfer Protocol) and LDAP (Lightweight Directory Access Protocol). They have completely
commoditised the servers that implement them. Suddenly, standards are king, and anyone can
play.


The favourite vendor tactic, -- differentiation, -- doesn't work very well in this situation.
Differentiation breaks standards. More is less. A product that fails to comply
with a standard is automatically incapable of surviving in the Internet ecosystem. Any
superfluous features it boasts simply wither away through disuse. It's a self-perpetuating
discipline. Internet protocols and standards rule with an iron fist. So it looks as if
commoditisation is here to stay, however much vendors may hate it.


What's more, every such standard and protocol is faithfully implemented in at least one
Open Source product. That keeps commercial implementers honest, too. No oligopoly is
possible in the Internet-era software market, because any Open Source implementation
pre-emptively breaks the cartel! (As an example, the nascent oligopoly among web
application server vendors is coming under severe pressure from the Open Source JBoss
and Enhydra. Expect to see prices tumble in this market).


And so, here we are, in a competitive and commodity market after all. We know that in
such a market, the price of software will be close to the cost of producing it. So if
we can show that the cost of producing software is zero, then the price tag of zero is
justified.


"Who will invest in software development if it doesn't yield a return?"

It sounds a preposterous argument on the face of it. How can the cost of software ever
be zero? Doesn't it take significant effort to develop software? Even Open Source software
is not miraculously produced. Programmers spend many man-months of effort on it. So how
can the price of software ever be zero?


Selling below cost is considered predatory pricing in many countries. In international
trade, it's called "dumping". Is Open Source guilty of "dumping" or predatory pricing?
If unchecked, this could destroy the commercial software industry. Who will invest in
developing software if they cannot recoup their development costs?


The answer to this question may be surprising, because it overturns many of our
fundamental assumptions about the way the world is run.


Let's start by observing that if Linux had been developed by a commercial organisation,
it could never have been free. Commercial organisations, whether funded by debt or by
equity, need to show a return on their investment. They cannot waste that investment by
giving away their products. Therefore, even if it costs nothing to create additional
copies of software (what's called the "marginal cost" of software), the initial costs
of development must be spread over many copies, they must be priced in such a way that
those costs can be recouped, and a positive return must be shown on the initial investment.


Of course, for this to work, software must be shoehorned into the mould of a physical
product. Copying of software by anyone other than the producer must be made a crime.
The infinite replicability inherent in software must be artificially curtailed
through legislation. Only then can the model work. This is precisely what we have
with commercial software today. It is important to understand that the commercial
model works by imposing a system of artificial scarcity. It is physically possible
and economically feasible to produce as many copies of software as the world needs,
but that is however, legally punishable. That means that many people who need software
but cannot pay the asking price must go without it. That is the only possible (legal)
outcome. There are people who need a software product, and the product can be replicated
at little cost, yet the transaction cannot take place. From society's viewpoint, this
inefficiency is the price it pays for choosing a commercial vehicle for software development.


But now, consider an alternative to the investment model. If the cost of software
development can somehow be treated as an expense, and simply written off,
then the software is freed from the requirement to show a return on investment.
There will be no need to artificially constrain its natural replicability. The world
can have as many copies of it as it needs. There will be no need for restrictive
legislation. From society's point of view, what could be more efficient?


Large expenses, however, cannot readily be written off. They need to be "amortised"
over a sufficiently large number of units. This is where another property of
software becomes invaluable. Software can quite practicably be developed by
hundreds, even thousands of programmers. Other intellectual works, such as books,
music or movies, while sharing software's trait of infinite replicability, cannot
be produced by a cast of thousands. Of all the works of mankind, physical and
intellectual, software stands alone in its twin characteristics of infinite
replicability and amortisability of effort.


Looked at this way, Open Source seems the more natural and efficient way to build
software. Get a large number of interested developers to work on a piece of software.
Most of them spend less than a couple of hours a day on it, so they don't mind "writing
off" the effort in terms of expecting a monetary return. That is why Open Source
operating systems and associated software are free for every man, woman and child on
earth to copy. By keeping important software like Linux out of the ambit of commercial
interests, society has benefitted handsomely.


Software, like wealth itself, is potentially limitless. Capitalism correctly views
wealth as potentially infinite, and fuels global growth to increase the overall
size of the economic pie. However, the current structure of the commercial software
market is not capitalistic at all, but mercantile. It sees software as a limited
good that needs to be hoarded and released sparingly. It is therefore incapable of
being an engine of growth.


Lest our current "capitalistic" mileu should give anyone the wrong idea, it must be
noted as a matter of sociological interest that commercial organisations do not
have a divine right to exist. They exist at society's pleasure, because they have
hitherto been the most efficient known means of producing quality goods and
services at reasonable prices. However, it appears that the investment model that
underlies all commercial activity is a grossly inefficient vehicle to deliver to
society the levels of software that it needs.


So here's a really subversive thought: Perhaps corporations shouldn't develop software
at all! Just as free market advocates call for governments to get out of the business of
running industries, perhaps we should call for corporations to get out of the
business of writing software. They are applying the wrong economic model to software,
and it is proving too costly and inefficient for society to bear. We need a model
that takes a capitalistic view of software, not a mercantile one.


What we see today with the gradual success of Open Source is perhaps society's
"invisible hand" turning over software development to the more efficient (from its
viewpoint) Open Source vehicle, and gradually relegating commercial software to
the fringes of economic activity. Adam Smith would have approved.


(Along the way, notice that we have also shown how the cost of software can be
effectively reduced to zero, thereby justifying its zero price-tag.)


"Open Source may have a niche, but proprietary commercial products will continue to rule"

We may have shown that Open Source is viable and will most likely continue to survive,
maybe even thrive. But isn't it too much to suggest that proprietary, commercial software
will go the way of the dodo? Is this really a commodity market? Aren't most leading
commercial software products ahead of their Open Source equivalents, anyway? How can
Open Source hope to beat commercial software in features? For example, can the Open
Source database package PostgreSQL ever hope to match Oracle? Customers won't use inferior
products just because they're free! They'd prefer to pay for better products.


This situation is similar to the story of the two men who come upon a tiger in the jungle.
One of them starts putting on his running shoes. "Are you crazy?" whispers the other,
"You can't hope to outrun a tiger!" "I don't have to outrun the tiger," explains the first,
"I only have to outrun you!"


Open Source products don't have to become better than their commercial equivalents. They
just have to become good enough to meet user requirements. Why would users pay for features
they don't need? Do you really need a webserver inside your database? A Java Virtual Machine,
perhaps? Or a whole host of features you're never going to use? No? Then why pay for Oracle
9i? PostgreSQL lets you create tables, fill them with data, fire SQL queries at them, and
gives you reasonable performance. Isn't that good enough for you, and for 90% of the market?
So PostgreSQL didn't have to outrun the tiger, did it?


Notice that this is an economic argument. It is not a technological argument along the lines
of "Open Source products evolve faster and fix bugs quicker, so they'll get better than
their commercial rivals one day". Actually, we couldn't care less. At a certain point in
time, commercial vendors may be reduced to selling differentiated features that 90% of
the market doesn't need, while the most commonly-required features will be available to all,
free of charge. Those common features will conform to standards, while proprietary,
differentiating features will remain exactly that, -- proprietary and non-standard.


It is such commoditisation of the market that could slaughter proprietary commercial
software, driving it into niches and ensuring that the mainstream goes Open Source.


"Customers will never trust something that is free"

All of this sounds pretty convincing in theory, but Open Source should have been growing
like gangbusters if all of this is true. But we see very gradual adoption of Open Source
in the market. Is it perhaps because people will never respect and trust something that
is free...?


In economics, we have two concepts, -- competing products and substitutes.
Competing products are other brands in the same category. Substitutes are products in
another category that perform much the same function. If I don't like Nescafe, I'll go
with Moccona (a competitor), but if I read a medical report finding that coffee is
extremely dangerous, I will drink tea rather than coffee when the urge hits me. It's
not the same thing, but I could bring myself to settle for tea. That's what a substitute
means.


It's more difficult to switch to a substitute than to a competing product, but it can be
done when there are compelling reasons. Open Source software is a substitute, not a
competitor, to the entire category of proprietary commercial software. It requires a
different mindset and a willingness to work with different development and support
mechanisms. That's what makes its uptake less than straightforward.


With both substitutes and competitors, "good enough" is a great reason to switch when
the price is far lower, and that is what Open Source offers. But with substitutes,
there is an extra mental adjustment process that consumers need to go through before
full acceptance happens. That takes time. Consumers need time to gain confidence from
the positive examples of early adopters. The current situation with Open Source in
the marketplace reflects exactly this stage of the proceedings. Potential savings and
a greater degree of control over one's destiny are the compelling arguments that will
encourage the switch. When the mental adjustment process is complete, the downfall of
proprietary software could be swift (put options on Oracle, anyone?).


"Open Source may release value, but it doesn't create value"

New thinking among financial analysts has discovered that most firms reporting improved
earnings year after year are doing so by cutting costs rather than by increasing revenue.
By reducing waste and improving productivity, companies are "releasing" value that was
hitherto "locked up" in inefficient processes. But they aren't creating new value.
They're not innovating. True wealth comes from new ideas, and there don't seem to be
too many of them. So there are natural limits to how far these companies can go before
they hit a plateau.


Isn't Open Source something similar? Sure, it'll help us reduce costs, but is it helping
us create anything? It's nothing more than a cheaper substitute for our existing
software, so its long-term impact will probably be marginal, not revolutionary.


Well asked, and therein lies the difference between a market and a community. To play in
a market, you need to have money. That automatically excludes all the people who can't
pay. It's a shame that in a world of over 6 billion people, about half are just bystanders
watching the global marketplace in action. There are brains ticking away in that half-world
of market outcasts that could contribute to making the world better in a myriad little
ways that we fortunate few don't bother to think about. There are problems to be solved,
living standards to be raised, yes, value to be created, and the "market" isn't doing
it fast enough.


God, Government, Market and Community

There are millions who have been waiting for generations for their lot to improve. Religion
has promised them a better afterlife, but no god has seen fit to improve their present one.
In a world where socialism has been humiliatingly defeated, governments seem ashamed to
spend money on development. Everyone now seems to believe that governments must be
self-effacingly small. The market is now the politically correct way to solve all problems.
But the market, as we have seen, doesn't recognise the existence of those who have nothing
to offer as suppliers and nothing to pay as consumers. They are invisible people.


Therefore it falls to the miserable to improve their lot themselves. Given the tools, they
can raise themselves out of their situation. They will then enter the market, which will
wholeheartedly welcome them (though it hadn't the foresight to help them enter it in the
first place).


Where will such tools come from? In a world where intellectual property has such vociferous
defenders that people must be forced to pay for software, information technology widens the
gap between the haves and the have-nots, a phenomenon known as the digital divide. If
producers of software deserve to be paid, then that means hundreds of thousands of people
will never have access to that software. That's a fair market, but a lousy community.


Open Source is doing what god, government and market have failed to do. It is putting
powerful technology within the reach of cash-poor but idea-rich people. Analysts could
quibble about whether that is creating or merely releasing value, but we could do with a
bit of either.


And yes, that is revolutionary.


Conclusion

Is it possible to make money off Open Source? In the light of all that we have discussed,
this now seems a rather petty and inconsequential question to ask. There is great wealth
that will be created through Open Source in the coming months and years, and very little of
that will have anything to do with money. A lot of it will have to do with people being
empowered to help themselves and raise their living standards. No saint, statesman or
scholar has ever done this for them, and certainly no merchant. If this increase in the
overall size of the economic pie results in proportionately more wealth for all, then that's
the grand answer to our petty question.


Economics is all about human achievement. It wasn't aliens from outer space who raised us
from our caves to where we are today. It was the way we organised ourselves to create our
wealth, rather like the donkey with a carrot dangling before it that pulls a cart a great
distance. Open Source gives means to human aspiration. It breaks the artificial mercantilist
limits of yesterday's software market and unleashes potentially limitless growth.


When the dust settles, and even the greatest industrial creations of today stand dwarfed
by the scale of development that Open Source will bring in its wake, the world will have
learnt a thing or two about economics.


References


"The Cathedral and the Bazaar" by Eric S. Raymond
( http://www.tuxedo.org/~esr/writings/cathedral-bazaar)
"The Magic Cauldron" by Eric S. Raymond
( http://www.tuxedo.org/~esr/writings/magic-cauldron)
"A-Level Economics" by Ray Powell, Letts Educational
"The Real Meaning of Money" by Dorothy Rowe, Harper-Collins, 1997



About the Author

Ganesh Prasad has been a Linux user since 1996, and his major fascination with Open Source
has been its social and economic impact, though the technical side has its appeal, too. He
has been troubled by much of the pseudo-economic bunkum around Open Source, and has
decided to shine the brilliant light of his logic to cut through the clutter, making up
for lack of rigour with stabs of attempted humour.


Copyright (c) 2001 Ganesh Prasad.
Permission is granted to copy, distribute and/or modify this document
under the terms of the GNU Free Documentation License, Version 1.1
or any later version published by the Free Software Foundation;
with no Invariant Sections, no Front-Cover Texts and no
Back-Cover Texts.
A copy of the license is at http://www.gnu.org/copyleft/fdl.html.




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