Exploitation? Entrepreneurship, Capitalism, and Making Money on Free Software

Recently, I was directed toward an excellent analysis of commons-based peer production as a phenomenon which separates "entrepreneurs" (who want to get things done and create value in the world) from "capitalists" (who want to get a return on an investment of property without contributing any labor). An observer -- clearly outside of the community of free software developers -- expressed dismay at the example of Mozilla Foundation, which makes money from the open source Mozilla project, but does not pay for most voluntarily contributed code improvements to the Mozilla software. Is he right? Is this exploitation of those contributors?

Jed Harris wrote an excellent piece called "Capitalists vs. Entrepreneurs" in his Anomalous Presumptions blog. It's a great piece, because it puts a lot of the relationships in free software and other commons-based production into an economic perspective. Some of the conclusions are obvious to anyone familiar with the free software community, but the way of getting there is what I liked most about the article.

Are developers on open source projects "exploited" when somebody makes money from the software? (Comic by Nina Paley / CC By-SA 3.0)

As I mentioned in a previous blog (Is Free Software Communist? Maybe Yes...), the information economy is so different from the material economy (mainly due to the loss of the conservation of number) that a lot of the assumptions implicit in what we call "economic theory" (but which is really only "material economic theory") fail utterly when applied to the economics of producing information products. The theory frequently predicts the exact opposite of what really happens. When that happens, you don't need a few tweaks. You need a new theory.

The weirdest thing for me, though, was that one of the people reading this article concluded that open source developers are exploited by companies which promote and sell open source software based products. Well, in a technical sense, this is probably true -- they are using the software as a resource and making money from it.

Why is it that open source developers don't feel "exploited"?

My first reaction was to be utterly taken aback (I think the technical term here is "Facepalm!"), but how to articulate that reaction?

Why is it that open source developers don't feel "exploited"? Is it because they're just naive or too desperate to notice? I don't think so.

The truth is, they are all getting the product of the collaboration, and that is generally far more valuable to them than any money that might be made off of it. The main reason to contribute to the development of a piece of free software is that you want to be able to use it. Collaborating on its production is a cheap way to get that, especially if you are already a programmer.

So, the funny thing is, most programmers probably don't even stop to think of what is being "taken" from them, but rather of what they are "given" by the project -- for which their contribution often seems like a rather small cost. Add to this the satisfaction of the work itself, of seeing your contribution make a difference in the world, to say nothing of the gain in reputation among your peers, and it's not exploitation that most contributors feel. Rather they are more likely to feel it's "too good to be true" and fear that they are exploiting others.

Or as some people have described it: you give a brick and you get back a building.

So where does that fit into the economic worldview?

Capitalism is not the only way to organize big projects!

Capitalism is not the only way to organize big projects! In fact, it has particular weaknesses, due to the way it operates on fundamentally selfish motivations. When the goal is something that helps the whole society without showing any favoritism, capitalist businesses have nothing to sell. And that puts them in an awkward situation. But of course, such goals are among the highest any civilization can aspire to. So, while capitalism helps us solve lots of little problems that need solving, it can make the biggest and most important problems unattainable.

Our capitalist society has come up with two broad approaches to deal with that:

1 - Artificial Scarcity

One is to artificially create (usually fictitious or intangible) things to sell so that capitalist enterprises can make money selling them and otherwise operate more or less as intended. In this mode we have "carbon credits", "intellectual property", or "private health insurance". Even relatively tangible things like electrical power or phone service work in this way in practice, because of the need to share power distribution and data lines (otherwise the landscape would be cluttered with redundant power and telephone poles and every right-of-way would be crammed full of redundant cables -- at enormous cost to society).

This is the type of strategy that traditional copyright law adopts, by creating an intangible "good" in the "rights" to publish a work (which are otherwise reserved under a state-supported monopoly. This was an okay system for a long time, but it's increasingly clear that it is not an adequate system for the 21st century.

2 - Socialize Production

The other is to create a non-profit organization (NPO) or a government to manage the project. From this comes things like "NASA" or "public education" or the military. These organizations collect their money either voluntarily (NPO) or coercively (government, via taxes), and the money is used to support their costs.

An awful lot of the raging political polemics in US politics are between proponents of the two different systems. For myself, I'll say this: they both can work, they both have drawbacks, and it would probably be foolish to assume that one or the other is always the best solution.

Neither of these really fits the open source free software model very well.

However, I skipped an important option. Well, I didn't really, because I was telling you what "our capitalist society" has come up with. This third option isn't really capitalist, even though it often winds up being lumped with the "NPO" solution, and it is much older:

3 - Have a Barn Raising

That solution is to just do it. People get together in large groups or small and they contribute their time. Typically, they don't get paid. Ever volunteer in a soup kitchen? Ever help a friend move into a new house? Ever help your neighbor get their computer working? This is the gift economy, and in the world of intellectual production it is a great deal more important.

The reason it's not so important in the material world is because it's limited. You can give away a hammer you're not using anymore, but that only helps one person. And it hurts you -- you don't have the hammer anymore. It's easy to see that this kind of gift economy is pretty limited in what it can do. So this never gets very far in the material economy, and economist have been safe to ignore it for most purposes, or treat it as a footnote which explains minor deviations.

But what if what you gave your friend wasn't material? What if it were, say, a recipe for really good cornbread? Or the tacit knowledge of how to use a hammer to build a house? In doing that, you haven't lost anything. Your friend gained. And what's more, you can give that away again. So can your friend. If it's really good cornbread, your entire community may know how to make it in a month or two. You will have had a major impact on the entire community. That might be a thousand people. Or a billion. Either way, the cost to you is not only the same, it's negligible.

Not only that, but you might not even have to make your special cornbread any more -- you could pay somebody else for the service of making it for you. That's a new option for you, and it comes without removing your right to make your own cornbread if you want to.

So Where's the Exploitation?

Some people would like to claim that the company making your cornbread is "exploiting" you. Well, that would obviously make sense if the company forced you to buy their version of your cornbread. But they can't do that if the cornbread recipe isn't property.

Nor can they stop you from starting your own company and selling your cornbread.

Plus, as the real originator of the recipe, you can give your own company your endorsement -- "Come and buy the real cornbread from the real source."

It's not the sense that someone is making money off of your work that makes you feel "exploited"; it's the sense that they are taking advantage of some disparity to do so

You see it's not the sense that someone is making money off of your work that makes you feel "exploited"; it's the sense that they are taking advantage of some disparity to do so. But free software licenses -- particularly copyleft licenses like the GNU General Public License -- ensure a degree of parity. No one can keep you from sharing your work (or the work of all the other developers who collaborated with you) away from you. No one can keep you from using it. Nor even from offering your own services based on it.

So, ultimately the sense is that you could make more money from it if you wanted to, and that the companies who succeed at this (mainly because they are good at marketing) are earning their keep.

The possibility of direct competition also tends to keep those companies pretty lean, so we're really not worried about them suddenly becoming an unproductive impediment to progress the way proprietary software companies can.

Finally, there's a direct benefit from this kind of marketing: those companies bring more people to the project, and more people usually translates to more collaborators -- either because some of those people are developers, or because they inspire companies to pay other programmers to build on what you created already, thus subsidizing your project.

So, really, the whole thing is a win-win scenario, and it's hard to imagine feeling exploited in this.

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This work may be distributed under the terms of the Creative Commons Attribution-ShareAlike License, version 3.0, with attribution to "Terry Hancock, first published in Free Software Magazine". Illustrations and modifications to illustrations are under the same license and attribution, except as noted in their captions (all images in this article are CC By-SA 3.0 compatible).


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