Most economic theories are merely dogmatic prejudices which become meaningless in the real world. Nothing stifles our economy more effectively than attempts to apply any single economic theory to everyone in all cases. Instead, real economies must be driven by a combination of compromises struck between opposing forces. Ultimately, it is hard to prove that any one economic theory works to the exclusion of all others. But one can see that there are moral differences between theories.
To illustrate this point, I’ll look at various software release cycles, and see how they are affected by prevailing economic theories. I’ll start by defining in a very general way what we mean by a software cycle. Software products are shipped in cycles. A typical cycle would include at least one iteration of the following pattern: outlining new features, fixing bugs, testing new code, then shipping the product. The next cycle would repeat the same process.
The economic theories discussed in this article are:
- Free market economies: Here companies compete against each other for market share. In a Darwinian world, only the strongest can survive.
- Free software: Here people create software for free, and only the needs of users determine which software will thrive.
- Monocultures: In these markets one company has a monopoly, and no real competition exists. For the purposes of this article, any company that has a 90 percent market share in a particular area will be considered to be a monoculture.
Here is how software cycles are dictated by these economic theories:
- In free market economies, we are told that economic pressures drive release cycles: Products must ship at certain dates and times to bring in needed revenue, and feature sets bend to conform to schedules.
- The free software movement, on the other hand, does not have the same economic pressures. It is not forced to ship on a particular schedule, nor are its features sets dictated by economic pressures. Instead, free software ships when a product is ready, and feature sets are dictated by demand, not be enforced schedules.
- Monocultures, because they exist in a world without competition, can work on the same wide open schedule as the free software movement. They ship when they are ready to ship, and they contain the features that the monopoly deems important or useful.
What does all this tell us about open source software, free software and the free market? Seemingly unquestioned conventional wisdom says that unfettered free market competition is the best possible system because it creates the greatest good for the greatest number of people. It is the best way of motivating people to create both products and wealth. All other systems are supposedly doomed to failure by definition.
Since neither Microsoft nor the free software movement participate in a free market, what does their success say about this economic theory? How much of what we believe is simple prejudice, and how much is founded on events that take place in the real world?