Profits and the Information Economy (Re: De Long on network economy

Nathan Newman nathan.newman at yale.edu
Sat Jul 24 06:49:21 PDT 1999


-----Original Message----- From: Chris Beggy <chrisb at kippona.com>


>The mail archive for lbo-talk resides on a computer
>whose operating system, Linux, is protected by the GPL
>and widely available at no cost. The software that runs
>about half of the web servers in the internet world,
>Apache, is free, open source software.
>I don't dispute that internet capitalists continue to harvest,
>package, and market these public creations for profit.
>There is evidence though, that the capitalists are to
>some extent convinced, embarrassed (or gently extorted) into
>giving back resources to the communities from which the assets
>arose.

If industries derive much of their profits from leeching off the free resources created freely by the public, it makes sense that the deepest competitive threat to those companies would come often not from competitive rivals but from such public collaborations such as open source software like Linux and Apache.

The irony is that companies depend on a continual supply of innovation from that public sphere that threatens them, which explains the love-hate relationship of technology industries with government funding and involvement in technology research. They need the maximum investment with the minimum of demands for public compensation for that investment.

But in regards to Linux, don't buy the hype of voluntarism around it. Linux derives from massive government planning and investment over thirty years. The first UNIX software came out of federally-subsized Bell Labs, which was forced to widely license the software by federal regulation of the phone company, then was improved (largely at Berkeley) by a new infusion of federal funds in the 70s- including the inclusion of Internet protocols - then in the 1980s, the government purchasing rules barred proprietary software purchases for federal agencies, thereby forcing all companies into offering UNIX on their larger machines. Linux itself was a modification of UNIX whose key programmer, Linus Torvalds, was on the Finnish government payroll as a student when he first worked on it, and the most recent desktop innovation for Linus, a front-end Windows-like interface called GNOME, was created with large funding by the Mexican government at the University of Mexico City.

In the 1990s, the US government policy on operating systems was extremely lax, which allowed Microsoft to expand its monopoly, but there is hope that part of the solution out of the trial will be a new commitment by the federal government to supporting open public software standards. Although it will be a fight as the tension of subsidy and profits by technology companies wars for the balance.

I have a paper on the whole evolution of government policy connected to open source software and the Internet at the NetAction site:

http://netaction.org/opensrc/future/

--Nathan Newman



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