Ironica's Journal: Open Source and the Market Economy

So my journal entry yesterday made me think a bit about Open Source and the market economy. I read an article linked from /. that referred to OS as "intellectual community property," which sounds suspiciously like public goods. Hm, could they be on to something?

People have often argued that OS is the "solution" to the rather broken application of copyright to software. A common response to this is that "Open Source is not commercially viable." It's hard to argue with that. But, on the other hand, it's not entirely relevant.

In the US, we're used to thinking of everything from the market economy standpoint. We bought into Adam Smith's efficient allocation of resources (without noting the caveats about perfect information or perfect mobility... oops). So we have trouble conceiving of any other system of distribution.

In yesterday's journal entry, I mentioned the free rider problem. In a market-regulated economy, free riders bring the whole system down, because people see that someone's getting something for nothing, and they stop paying also. In the end, you have a suboptimal solution for everyone, even if every individual is acting in their own best interests (the prisoner's dilemma). That's the justification for government intervention in market failures.

Open Source is another kind of response to a market failure. It has the assumption of free riders. This is something that boggles the American mind. Instead of making something good because you can sell it, people make something good so that they have something good, and then let other people use it. This can indirectly increase their wealth; they may get a great job offer based on their OS work, for example. But since they don't immediately, directly see financial benefit from their work, there's an assumption that they won't do as good a job as they might if they were being paid for it.

The corollary to this assumption is that open source cannot produce as good a product as proprietary software. People say this, and ignore the fact that it doesn't appear to be true. With no large-scale marketing, no bundle licensing agreements, and no evil empire, Linux has a 26% market share in corporate back-office servers. It's not just the price, either; sysadmins are switching to Linux because of the stability, the ease of administration, and the security over Windows-based solutions.

Generally speaking, the OS model seems to produce a product that is superior in mechanism, but inferior in interface. The superior part isn't hard to figure; people are making this stuff because they want to use it, so they're motivated to make it work well. Add to that the concept of peer review -- your code is out there for all to see, so you want to make it look good. Did your mother ever say "Wear clean underwear in case you get in an accident?" Sort of the same thing, but less foreboding.

The interface is where OS falls behind, so far. Again, looking at how it's made makes this obvious: people who are good with software are making it to be used by people who are good with software. There's not much point to spending the effort to make it appeal to the lowest common denominator... not when you could spend that time and effort making it run .01% faster. ;-) Of course, the attempt to make it commercially viable by selling packaging and support is changing this, slowly. In time, the gap will probably close to a point that there's no real difference between using Linux and using a proprietary desktop or server operating system.

So, basically, they're right: open source can't work in a free market economy. It works outside of it. It's making a new economy, one that's desperately needed. /me cheers.