Open Source Is The Pinnacle Of The Free Market

Though I am not going to advocate Laissez-faire economics, I do want to point out that the open source world is as close as you can get to a pure free market. The reason is because if you make a product in the open source world, anybody is able to study it, modify it, redistribute it and even sell it without many restrictions.

If person A delivers a great product, but person B is able to study the product and make it better in a cheaper way, the free market has done its job. This can happen in the open source world but has a hard time happening in the proprietary one.

Current Patent Laws Prevent True Market Freedom
Take the iPod. Steve Jobs admits the iPod has been fully patented through and through. If somebody has the ability to deliver the same product, just better and cheaper, his/her hands are tied.

We will never know if Apple is the company who delivers the iPod at the greatest value for customers since nobody is legally allowed to try.

Proves Red Hat Is The Best
This is not true of Red Hat. Red Hat makes billions, and if someone was able to take Red Hat, make it better and cheaper in a way that pleases customers there is nothing stopping them.

Guess what, Oracle recently tried and failed. Despite the open possibility, nobody can deliver Red Hat software with as great of value as Red Hat can. This proves Red Hat is truly the best at what they do.

If You Really Provided Your Product At The Best Value You Wouldn’t Need Patent/Proprietary Protection
Look again at Red Hat. They don’t need them. They still make billions. I have a feeling Apple and Microsoft would run scared stiff if you took their patents and proprietary licenses from them for the risk of someone doing it better and cheaper would be extremely high.

Edit: When I said Red Hat makes billions I mean they have made billions over the years. (total)

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11 Comments on “Open Source Is The Pinnacle Of The Free Market”

  1. linuxfan Says:

    Red Hat doesn’t make billions 🙂 But I take your point, nice article.
    ‘The end of fiscal year results show a total revenue of almost $563 million and net income of almost $79 million.’

  2. Joseph Smidt Says:

    Linuxfan, sorry for the technical error. What I meant was over the years Red Hat has made billions. (total)

  3. jef spaleta Says:

    I think you take too hard line a stance on patents. You don’t take into account the development costs of physical objects. We don’t live in an age yet where we all have access to low cost robotic electronics fabs and 3-d printers or injection molding equipment. The production of physical devices that you can touch and interact with does not involve the usage of commodity tools in their production. You nor I can easily create an ipod at our desks at home..well I could…but I’d have to carve the case out of wood by hand.

    We can easily create the software interfaces on our commodity retail computers..but the physical electronics and the plastic and metal they are held together in…that takes serious production investment. Large companies with lots of production capability have an advantage…and advantage which tends towards monopolization. You have to remember monopolies are valid outcomes of a free market theory under the right market pressures. Free market theory is not all butterflies and rainbows.

    Patents on physical objects serve a purpose. They make it possible for a small producer with small production capacity to bring a new idea forward by giving them a breathing space over which they can recoup their production infrastructure investments. A large established producer with excess production capacity would have much less incentive to innovate without the continual competitive threat from small producers that patent protections can provide, when patents are correctly scoped to physical apparatus functionality.

    The key here is correct scoping of patents. No business nor software methods patents…not color choice nor packaging style… patents need to be more strictly confined to functionality inherent to the physical apparatus itself. Extending patents outside of physical functionality undercuts the original intent.

    Similarly, companies that exist solely to license patents, instead of making actual products distort the intent to help provide incentives to innovators get new ideas to market. Companies with no intent to actual produce should not be acting as toll booth attendants for those who do.


  4. Joseph Smidt Says:

    jef, I agree with you. I should have said this at the beginning, I am trying to respond to those who accuse open source being akin to socialism. My main point is open source is closest to a truly free market system.

    However, I did stray from that tone for I also wanted to point out how there is legitimate reason to believe that Red Hat does what they do better then anyone else can. Furthermore, I have a hard time believing that those who must hide behind patents are really best at what they do. (Ie. Apple/Microsoft)

  5. […] here: Open Source Is The Pinnacle Of The Free Market « California Quantum This entry was posted on Tuesday, March 31st, 2009 at 1:55 pm and is filed under Linux, News, […]

  6. darryl Says:

    The problem with your argument that does not wash is this.

    Red Hat is not a software company, its an IT support company that happends to give away the software it supports. Clients pay for support and maintenance and not for software.

    Patents for software should be (and are) just as valid for anything else physical or not, it takes money and time to write code, companies like MS spend a great deal of money writing code just as INTEL spend a great deal of money designing CPU’s.

    After all a CPU is a few cents worth of metal and some sand !!.

    Even “Free” as in FOSS software costs money to create, those programmers have to eat and live and they have to earn money, just like those at MS or INTEL.

    And i dont think its fair (nor does the rest of the world) that if you see someone come up with a good idea, you have the right to copy it, make it cheaper and “rip off” the original inventor. Thats just theft, and its leave a sour taste in the mouthes of many who otherwise would consider using FOSS and Linux products.

    In relation to MS and FAT and TomTom, how is it a promotion of innovation by using FAT as opposed to innovatiovating something by yourself.

    Its not, its the easy way out, why write an operating system when its easier to use say UNIX that you see as successful,

    Why try to make your file systems popular when you can steal the file system of someone who is allready successful and just use that ?

    One day (I hope) the FREE and FOSS people will see the damage this attitude is doing to your movement.

    You dont have the freedom to steal off others, sure if you give me your bank account details, and i can draw out all your money, that would be a free market by your definition.

    I look forward to receiving all your bank details so i can have your money, because thats way easier than me having to earn it myself.

    Now thats true freedom, and when i want a new pc, i might just come to your place and take yours. !!!

    The result of this is FOSS is still very small, and yes it has its supporters, but it has alot of people who see it for what it is. and they dont like what they see.

    Lots of people like to pay for quality, and integrity, they like to know their money is paying the wages of someone else and helping the economy.

    What they dont like is paying for a product, to see someone else steal that idea for their own benefit.

    Thats what FOSS has done with UNIX and Windows, FAT and whatever else they lift off others for their own use.

    Its a “freedom” no one wants, you are not free to steal, cheat, copy, ripoff. You are free to compete on quality and in the free and open market.

    its just FOSS dont want to play by the rules. or they want the rules changed to suit themselves.

  7. David Says:

    @ darryl:
    There can only be innovation if you can base your ideas on what others have done in the past. A nice way of saying this could also be as follows: copy one source and it is called plagiarism, copy from many sources and it is called research. This is absolutely true for many innovation driven processes (engineering, IT, etc). If you are not allowed to be inspired by others, new and innovative idea’s will become a rare commodity in time. There is a difference between plagiarism and improving an existing idea. The first is lousy (and seriously, what is the added value when you sell exactly the same product as the ‘inventor’?), the second is called innovation. However, when a lot of idea’s are protected and hidden behind patent laws, the process of innovation is seriously crippled.

    You state somewhere: “Its not, its the easy way out, why write an operating system when its easier to use say UNIX that you see as successful”. I think you completely miss the point of FOSS, why spent resources developing a code that already exists (talking about efficiency)? What is the added value there? Why not using that as a starting point to make something much better. Imagine what the possibilities and quality of generations of FOSS software can be if everybody improves each other’s code. Companies as Red Hat prove that you can built a business on that open idea.

    By the way, in scientific world, everybody publish his or her idea in the open field! Why do you think that the scientific knowledge base in the last 100 years has grown exponentially? I believe that open access to many different sources is one of the key components in that success story! Everybody can built on the knowledge others have gather before you. That is the key behind innovation and a very strict patent mechanism obstructs that process!

  8. Kevin Dean Says:

    Right on, and I do advocate laissez-faire economics and voluntary interaction. 😉

  9. Otto Says:


    You are mixing up patents and copyrights. Copyrights serve the purpose of protecting a work against being copied by others.

    Patents serve the purpose of preventing others from using the same or a similar idea, even if that other person came up with that idea independently (i.e. did not copy it). This amounts to giving someone or a company a monopoly.

    Patents also make it very hard for small companies to enter the market as only big companies can keep other big companies off their back by using their own patents as a counter threat.

    Also too many trivial ideas have been patented, that took a mere few minutes or a meeting to “develop”. Patents were not intended for this at all and if anything the system has been abused.

  10. […] Open Source Is The Pinnacle Of The Free Market Though I am not going to advocate Laissez-faire economics, I do want to point out that the open source world is as close as you can get to a pure free market. The reason is because if you make a product in the open source world, anybody is able to study it, modify it, redistribute it and even sell it without many restrictions. […]

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