Good old dictionary.com says paranoia is baseless or excessive suspicion of the motives of others. There are a few examples where I think Stallman is excessively paranoid. I personally like using the web only over e-mail to avoid "survellance". Wander that deep down the rabbit hole, and the all powerful three letter agencies out to get you will also have secret exploits for Lynx. Seriously, it's all in the Snowden documents! And I totally did remember to take my medication!
However, there are way less examples that seem extreme like that today then there used to be. Re-writing your hard drive firmware with secret monitoring tools? In 2015 evidence that might be happening is reasonable news, not paranoia.
I've seen plenty of examples of companies who do not want to share code unless compelled to. There are software compliance tools for lawyers whose main purpose is checking corporate source code repos to make sure there's no GPL code. But the number of corporate contributors to all the BSD distributions says the GPL is not mandatory to develop open code. Did it help? Sure. I think open source software as a way to share overhead on boring infrastructure code was inevitable though, even if there was no "free software" (tm).