I've seen the term artificial scarcity used a few times in this context. Could you elaborate on what you mean by that?
When I think artifical scarcity, I think something like DeBeers who has warehouses full of diamonds they are hoarding. Whereas with software, there actually is a scarcity of great programmers. There are only so many of them.
With software, you know... it takes time and energy to support it. It costs money to write help documentation, pay for servers where people can download it. All that stuff costs money.
Is open source anti-capitalism?
Is the artificial scarcity coming from the thought that because software is just 1's and 0's that it can be copied almost infinitely? It takes a lot of time and energy to build something that is worth copying. What about all that research and development and risk that was taken to build it. How are those risk takers and R&D staffs going to generate a return on that investment without charging for the product they create?
Artificial scarcity is not an ethical or legal principle, but an economic one. Because 1s and 0s can be "copied almost infinitely", in order to make money on it one has to enforce an artifical constraint on the number of copies that are allowed to be made. The distinction is simply that with its opposite, natural scarcity, no effort needs to be made to ensure that each object has value on its own.
To put it another way, the "default state" of a naturally scarce commodity, when it is simply produced and then discarded, is still high-value. It can be resold at auction, or traded in a market, and will be fought over even in a state of legal and moral anarchy. The default state of an artificially scarce commodity, however, is value asymptotically approaching zero; without some sort of agency to "prop up" its value, it is worthless, and no secondary party will assign it value unless it is forced to as part of a larger deal (e.g. accepting the legal code to be a citizen of a country.)
Your question ("is open source anti-capitalism?") is just a matter of equivocation. Open Source fits just fine with capitalism, but it is not the capitalism you would first imagine (i.e. that of the US); it is instead "true", or lassiez-faire Capitalism.
In Lassiez-faire Capitalism, there can be no artificially scarce commodities; they are simply a market inefficiency to be eliminated, along with those producing them. A true Capitalism would destroy the value in all "information products"—movies, books, music, games, and, yes, software. In a true Capitalism, value is just "what people are willing to pay"; you don't deserve an ROI just because you worked hard, you only earn money if people feel that your commodity has value to them. In such a market, the only software that could exist is that which was produced for other motives than profit—open source software—or produced as a means to an end of profit, e.g. software that makes a business process more efficient, rather than software that is a product in-and-of-itself.
And now you see why we do not use such a capitalism ;) Though some "creatives" would survive, whether as on-the-whole consultants or by donations from fans (see http://pc.ign.com/articles/967/967564p1.html), the majority would not. In reality, a majority of people desire to keep these creatives around and producing, even at the cost of large market inefficiencies. Realize thus that copyright, more than anything, is a form of socialism, in that it redistributes wealth to those we think deserve a "fair share" for their efforts. Sort of mixes up the arguments most people have on the subject: Open Source is anti-socialist ;)
Artificial scarcity is not an ethical or legal principle, but an economic one. Because 1s and 0s can be "copied almost infinitely", in order to make money on it one has to enforce an artifical constraint on the number of copies that are allowed to be made.
Good customer service and a deep understanding of specific technical issues are not trivially reproducible.
Okay, I think I understand better now. There's only physically so much gold on the planet. Barring alchemy, we can't make more of it, so it has a natural scarcity.
From that, I gather that we can't use the traditional economics of Supply and Demand to allow a market to decide the value of software. Because the denominator in the equation demand divided by supply is infinite, essentially, it doesn't matter what value demand has in the numerator, because anything divided by infinity is zero.
But my initial impression of this model is that it is doomed to failure. It is doomed to failure, because the artificially scarce product being produced itself requires the consumption of naturally scarce products that are subject to the laws of supply and demand. The developers that produce the software for example need to eat, the need to live in a house, they need to consume energy to drive to work, etc...
So how do we find a balance? Do we find a new way to value software or will software just go away? Will software be relegated to a charitable organization like in the article you linked to, which was quite interesting by the way, so thanks for that. Will the only valuable software be that software which is paid for in advance to be developed at the risk of the consumer? "If you pay me, I'll build it, otherwise, I won't" sort of scenario?
It's like the software only has value if it doesn't exist. If the mechanism to produce the software exists only in the minds of a scarce few who can implement the solution or who have the ability to control access to it, perhaps through SaaS or some other monthly subscription mechanism like WoW or battle.net.
Perhaps we can value software based on how much additional revenue it helps you generate or how much savings it generates through optimizations or automations.
How are we going to strike that balance? Is the gold rush for software over? If there is no carrot, who will run those wheels and invest in our future? Who will take the time to solve the problems before the problems arise? Take Oracle vs. MySQL. Oracle has solved a lot of the problems MySQL has. Over time, as people contribute to the MySQL code base, those problems can be resolved, but consumers of MySQL have to wait for someone else to implement the solution, or they have to pay for a computer programmer to find a work around or implement some solution outside MySQL.
It feels like it will slow us down. Corporations like Oracle and Microsoft will survive a little while longer, but if MySQL ever actually does become as good as Oracle, then people will stop paying for Oracle. If people stop paying for Oracle, Oracle can't hire the best and the brightest.
Well, I appreciate the answer, I do understand better, but that just leaves me with more questions, so I'm thinking out loud.
All I can think of right now is that software will all move to aaS models or be embedded in physical devices so that we can attach a natural scarcity to them. There are only so many factories that can produce microchips. The article you linked to suggested selling plastic figurines with the software, which is a similar idea. It harkens back to the age of dongles.
Perhaps we can value software based on how much additional revenue it helps you generate or how much savings it generates through optimizations or automations.
My former company tried to do this. People balk at this. "Why should I pay when there's 'free?'"
When I think artifical scarcity, I think something like DeBeers who has warehouses full of diamonds they are hoarding. Whereas with software, there actually is a scarcity of great programmers. There are only so many of them.
With software, you know... it takes time and energy to support it. It costs money to write help documentation, pay for servers where people can download it. All that stuff costs money.
Is open source anti-capitalism?
Is the artificial scarcity coming from the thought that because software is just 1's and 0's that it can be copied almost infinitely? It takes a lot of time and energy to build something that is worth copying. What about all that research and development and risk that was taken to build it. How are those risk takers and R&D staffs going to generate a return on that investment without charging for the product they create?