Markets (was Re: Hayek was right. Twice.)

[Sampo Syreeni]

On Thu, 4 Jul 2002, Ian Grigg wrote:

>See also the work of Eric Hughes, John Walker, the AMIX, Robin Hanson
>and others.

Believe me, they're all known to me and properly appreciated.

>Well, the problem is that you are asking too much of one OS.  If you
>want stability, use FreeBSD (we do). If you want security, check out
>OpenBSD. If you want portability, try NetBSD.

But that's precisely my point. If you want to serve an interest which is
widely spread, with little willingness to pay on behalf of each of a
couple of million beneficiaries, you will have a public goods problem. One
way to arrive at such a problem is to demand everything of a single
system. But at the same time there are a number of monolithic problems
which achieve the same by themselves. That's what I was talking about.

>Mind you, it is getting a whole lot better! [...] We've had a lot of
>success with open source.

Of course. We might argue that has to do with the dependency of a gift
economy on income effects feedback which gives a good deal of nice
outcomes when people are nevertheless getting richer. Somewhat pointedly
the question becomes, could Open Source keep up the rise in income by
itself? Is it a productive part of the entire economy or a parasite on
existing forms of welfare creation?

>We had to write Cryptix, that was a business requirement as we needed
>crypto in Java (and Perl) and nobody had done it before. But, once done,
>I didn't want to pay to keep it going. So we open sourced it. We got
>the support and the updates for free, mostly, thereafter.

Again, my point in a nutshell. When a problem is grave enough to warrant
an investment on behalf of a single developer, that single developer
*will* develop the software and, at the very least in the absence of
copyrights, face a very low price on open sourcing the code. But there's
still the kind of software which gives some tens of millions of people a
per capita benefit of, say, $1 a year while requiring a clear, centralized
development effort with considerable cost. Cryptix hardly lies in that
category, even while extremely useful to a number of people.

>But, when it comes down to it, their model failed, because they were
>seduced into the apparent gold mine of PKI...

Aye. PKI is a tarpit. You get into it, but only rarely do you find someone
who cashed out on it. In this case it isn't the market that fails,
though...

>There are other benefits to the open source model: most of the people
>who've volunteered have boosted their CVs and picked up good work
>because of it.

Nobody's putting open source down, here. Far from it. My point was an
economic one, having little to do with those forms of software development
which obviously work. It wasn't even meant to advocate a particular
approach to financing the production of goods infected by the problem.
Instead it was a simple reminder of the limitations of the commonly
accepted image of free market, purely bilateral trade attaining efficiency
in a general sense, without any regard for transaction cost analysis.

Sampo Syreeni, aka decoy - mailto:decoy at iki.fi, tel:+358-50-5756111
student/math+cs/helsinki university, http://www.iki.fi/~decoy/front
openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2