How can you value something that isn't scarce and costs nothing?
In the midst of a long thread on the ProjectVRM list, Joe Andrieu wrote this summary statement about economics and markets: “Economics is about allocating limited resources. The market is a mechanism for discovering prices.” He then added, “You can allocate other ways, of course.”
Although one might argue those definitions, they do explain why Linux, along with the rest of free software and open source, gets little attention in economics discussions and little credit for influence on markets—mostly because it allocates in other ways.
Chief among those is use. Linux strives to be useful. But kernel development doesn't happen in userspace, which is where economics and markets live. It happens in kernel space, which is boring, unless you're a contributor to it or you depend on keeping up with what's happening there.
Even though the only code I know is Morse, I often find reassuring the constant hum of progress coming off the Linux Kernel Mailing List (lkml.org). The latest post today (January 4, 2012, as I write this) concerns a patch for better low memory handling from Mike Waychison. The hottest message is one from Greg KH announcing the Linux 3.1.7 release, which has a single bugfix for resume issues, and which he says you won't need if those issues aren't yours.
Maybe it's just that I spent too much of my life in marketing and, therefore, love too much the sound of its absence, but I find in that kind of talk a reassurance that something right is going on in the world.
Or, maybe it's just that the instruction programmed into my head by my old-school parents—“make yourself useful”—remains a Platinum Rule, more valuable even than the Golden one, perhaps because it's something you do for others, rather than “unto” them.
It's around “for” that Linux allocation succeeds. Linux has saturated the networked world (and our lives with it) with almost no help from marketing of the usual sort. Our collective dependence on Linux today verges on the absolute. Take Linux away from the world, and all but the most electronics-free markets would cease to operate.
And still, because Linux is neither scarce nor sold, economics doesn't know how to value it. Not exactly, anyway. That is, not in terms of costs or prices.
Economics does have terms that cover the kind of stuff that Linux is, however. Two are non-rivalrous and non-excludable. Non-rivalrous means use of it by one party does not prevent another party from using it; non-excludable means it can't be made scarce. Linux is both, making it what economists call a public good. Wikipedia sorts out rivalrous, excludable and their non- counterparts as shown in Table 1.
Table 1. Rivalrous, Excludable and Their Non- Counterparts (from Wikipedia)
| Excludable | Non-excludable | |
|---|---|---|
| Rivalrous | Private goods: food, clothing, cars, personal electronics | Common goods (common-pool resources): fish stocks, timber, coal |
| Non-rivalrous | Club goods: cinemas, private parks, satellite television | Public goods: free-to-air television, air, national defense |
This differs little from what it said when I posted the same table for “Greater Goods”, an essay for the December 2006 issue of Linux Journal (www.linuxjournal.com/article/9344). Back then I noted: “Yet it seems that the purpose of free and open-source development is to produce a common pool resource. As Craig Burton has often observed, the idea is to create common infrastructural building material that supports whole industries, rather than just one player in that industry. We do this by making goods that become abundant by being both open and in the public domain.”
And we still do, as proven by the continuing progress of useful free and open code-making. But, as the T-shirt says, “Yes, it works in practice, but will it work in theory?”
The best theories I've found so far are those of Yochai Benkler, Elinor Ostrom and Lewis Hyde. (Yochai and Lewis I know well. Elinor I've never met but would like to.) Yochai addresses the issue directly in Coase's Penguin, or Linux and the Nature of the Firm. Elinor does so less directly in Governing the Commons: The Evolution of Institutions for Collective Action. Lewis' latest and most direct approach is in Common as Air: Revolution, Art, and Ownership. My own fave, however, is Lewis' first book, The Gift: Creativity and the Artist in the Modern World, because it goes more deeply into the matter of motivation.
In The Gift, Lewis makes a distinction between logos and eros. The first, he says, is “reason and logic in general”, and adds that “a market economy is an emanation of logos”. The second is giving without expectation of exchange, or even of calculation. For example, the love we give to spouses and children, and the respect we give to friends, are gifts. To put a price on eros would violate its nature, and make it something else.
“People live differently who treat a portion of their wealth as a gift”, Lewis writes. “To begin with, unlike the sale of a commodity, the giving of a gift tends to establish a relationship between the parties involved. Furthermore, when gifts circulate within a group, their commerce leaves a series of interconnected relationships in its wake, and a kind of decentralized cohesiveness emerges.”
Clearly we have that, at least between those who create Linux and its conscious beneficiaries. Right now, that's a superset of Linux Journal readers. Perhaps in time it will include economists and policy-makers as well.