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Feature: Free Software

The gift economy and free software

By Jem Matzan on June 05, 2004 (8:00:00 AM)

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A "gift economy" is a social system in which status is given by how much one shares or gives to one's community, as opposed to an "exchange economy" where status is given to those who own or control the most stuff. In today's world we're used to the latter economic philosophy, as it has been closely affiliated with the capitalist system since at least the Industrial Revolution and the invention of the corporation. But the Industrial Age is over -- this is the Information Age now, and things are changing.

The gift economy concept does not interfere with capitalism at all, despite the general misunderstanding and mythology that surrounds it. There are already many microcosms that thrive on the concept of the gift economy, the scientific community being the most famous. Scientists generally receive status from their peers by contributing the greatest ideas and inventions and allowing others to use them in the creation of more ideas and inventions. The benefits from this method of idea propagation are immeasurable. Can you imagine the setbacks that the world of physics would have experienced if Albert Einstein had been willing and able to restrict the use of his theories and formulas?

It's about progress

Capitalism was founded on the premise that money would encourage people to be more productive; the key here is encouraging people to be more productive, not the means by which it is achieved. A productive society is also prosperous.

There is no comparison between a gift economy and a socialist economy -- communism requires a forced redistribution of wealth and a decided lack of status among all people. The gift economy philosophy wants us to do better and achieve wealth through contribution, to create more things for the purpose of achieving status and benefitting our community and society in general.

The trouble with an exchange economy is that it discourages the formation and support of the community structure, encouraging the personal greed of the individual instead. If someone has an idea in an exchange economic structure, he has incentive to keep it secret until he can find a way to safely use it to gain power over others. Examples of this are the concepts of "trade secrets" and patents. If you have a great idea and can patent it, you are in position of power over anyone who wants to use that idea for the next twenty years; they are not free to use it, modify it, build on it, or sell it without your permission. The trouble with this social system (or rather, antisocial system) is that ideas rarely flourish in isolation -- they require the input and insight of several others to truly evolve and become valuable.

A software corporation in an exchange economy is like an isolated community where ideas are passed around and improved upon internally before being developed and sold as a licensed software product. In the gift economy of the Free and Open-Source Software world, the community is larger, more open and non-exclusive, thus tapping a larger reserve of intelligence and experience to formulate and cultivate ideas and implementations. So the gift economy approach is more conducive to the formulation and development of new ideas and technologies, and in that respect it is beneficial to both the consumer and the developer.

When put into this kind of perspective it's easy to see why the executives of large proprietary software corporations are scared silly of the Open Source philosophy. How can they compete when they're using inferior methods to develop new ideas, and with significantly fewer people contributing?

The benefits of the gift economy

While it may mean the eventual end (or at least shrinkage) of the big proprietary software corporations, the Free Software community is an invaluable resource to companies and end-users. Instead of paying a huge amount of money to a big proprietary firm for a specially designed rights-restricted software application, a business can take and modify a Free Software project to meet its needs at a lower cost and with greater control over its own software. Individual users are also free to use, modify, and distribute Free Software programs as they see fit. So the gift economy philosophy benefits the end-user, and that benefit is more immediate and definitive than it is for the development community that creates the software.

But what do the developers get in return? What is the benefit in producing Free Software? That seems to be the primary concern among programmers who work for software corporations, who scorn and ridicule the Free Software movement.

It's not necessarily the development philosophy that scares them so much as it is the erroneous idea that Free Software must be free of charge as well as free as in rights, and therefore there are no benefits for the creators and maintainers of the software. This is, as modern philosophers often say, "old thinking." It's a form of outdated reasoning from the Industrial Age.

The "gift" part of "gift economy" should not be taken literally. This social system does not demand that people work as slaves with no compensation, their needs being met only by karma and magic manna falling from the sky. The "gift" in "gift economy" does not equate to a birthday gift or a wedding present; it is an entirely different context.

The payment of prestige

A Free Software project may not yield much (if any) direct and immediate monetary profit, but not all that glitters is gold. We're so entrenched in the exchange economy that we assume that money is the direct and only benefit that working produces. We go to our jobs during the day and for our efforts get paychecks at regular intervals, and the more important our work is judged to be, the more we get paid. So following this logic, if someone designs an important Free Software project they should be paid a lot of money, right? Well, not exactly.

The payment for volunteer or nonprofit work comes in many forms, and often pays back for years to come. Richard Stallman, the president of the Free Software Foundation and the original developer behind many of the most important parts of the GNU/Linux operating system, doesn't think of any of this in terms of economic theory. "The main benefit for me," he says, "is that I can use a computer without starting through an act of betrayal -- promising not to share." So the first benefit to developing Free Software is, of course, to be able to use it yourself without having to accept an unreasonable license agreement. Stallman adds, "I also like the admiration that some people feel for my work. Of course, other people have scorn for me, but I don't care much what they think."

Stallman's status is so high in the software community that he can travel virtually anywhere in the world and admirers will offer him a place to stay and a meal to eat. He's received numerous fellowships, awards, and honorary degrees, and is often asked to speak at conventions and conferences. He's also worked as a consultant to several companies. MIT has allowed Stallman the use of an office on their campus for the past two decades. He's even spoken privately with leaders of countries and other important dignitaries regarding software philosophy and policy. While a few of these things translate directly into money, some are measured in resources and others have a value beyond dollars and cents.

Theo de Raadt of the OpenBSD project survives off of monetary donations and sales of OpenBSD CD sets. But there's a lot more than money that makes it all worthwhile. "To a large extent we exist because we are tired of running corporate produced software ... not because it costs, but because the quality of it is lower. We are just tired of running low quality crap, and hence, are writing our own," he says of OpenBSD and its associated software projects. Like Stallman, de Raadt sees the primary benefit being the ability to use the very software that he helps produce. While a great deal of hardware is donated to him, Theo still has to spend thousands of dollars per year buying hardware for testing and development, and at times has difficulty finding a place to keep it all. What money is left pays for rental space and accommodations for "Hackathons" for the project, which are large get-togethers for OpenBSD developers to work on modifying and improving the software for extended periods of time. Although to some that probably sounds like work, developers fly from around the world to sit among their friends and colleagues and hack OpenBSD code -- it's a lot of fun for those who enjoy programming.

Eric Raymond of the Open Source Initiative, author of several books and the developer responsible for key networking and programming tools and technologies, is able to more easily capitalize on his status: "I sell a lot of books and people fly me to places. And there's my stock from the boom days, though that's not worth what it was." The OSI survives on monetary donations -- sometimes very large ones -- from individual donors and large corporations who have or will soon benefit from Open Source Software. Several leaders in the Free and Open Source Software community (including Eric Raymond and Linus Torvalds) received large allocations of IPO stock when companies -- such as Red Hat -- that depend on that software went public. While the tech boom is over and the stock has devalued somewhat, it's still worth money.

Raymond also originally introduced the distinction between gift and exchange economies into the theory of open source, and objects to the view that markets are destructive of community; he sees the open-source community and its gift economy as a natural production of the free market as opposed to an enemy of the exchange economy.

The power of status

The gift economy pays in status, and status pays in many ways -- sometimes with money, sometimes with donations of hardware or offers for help. Those who do a lot of good work will see their efforts returned to them over a long period of time -- and I'm not talking about magic karma and rainbows and hippies. Good work is noticed, admired, and rewarded by those who benefit from it.

Status is something that fades little with time, and in fact can grow if it is not fulfilled. Unrequited status creates legends; by dying before he can receive a return on his contributions, a great community contributor becomes legendary after his death. The community rewards him with the only method that is left -- to make him into a legend.

By helping the software community through contributions of time, work, money, or other resources, you become eligible to receive help from members of the community -- you've "given," so you will "get" as well. The above examples are of people who have given a lot to the community and continue to do so; they consider this their life's work. The majority of the community is not composed of people who give this much, so how much would you as an individual developer be entitled to receive and what could you expect as payment for your efforts?

Status eventually leads to money if you continue to grow it. If you have something to sell, such as a CD copy of your program or a T-shirt with your program's logo or motto on it, or books on related subjects, you can capitalize on your status in the gift economy. Even if what you're selling has nothing to do with the software you're creating, you can still use your status to make money. It's also perfectly acceptable to solicit monetary or other donations from those who use the software you've created. Pamela Jones hosts her Groklaw site on donated Web space and bandwidth, and NetBSD developers often rely on donated hardware to port their operating system to new architectures.

There are also a large number of technology and services corporations who need experienced programmers who are familiar with the world of Open Source Software. Such companies include AMD, Intel, IBM, Apple, HP, and many others. By doing good work on Free Software projects you making yourself more valuable as a potential job applicant. For a long time it's been a common and accepted practice for recent college graduates to accept unpaid internships as a method of gaining industry experience. If you're a programmer, working on a Free Software project can be just as beneficial to your career as a standard internship.

There are also software bounties out there, and it's not uncommon for a user in need to offer money to fix a problem with or add a feature to an Open Source program.

Gifts and sharing

The Open Source Development Lab (OSDL) provides access to enterprise-grade hardware and infrastructure resources to Open Source developers who wish to add support or write software for such devices. OSDL relies on money from its members, which are primarily computer hardware manufacturers and service providers who benefit in some way from Free and Open Source Software. Tim Witham, an Open Source advocate and Chief Technology Officer of OSDL, sees Open Source Software as a quid pro quo, a classic business relationship where you get and give in return. By sharing source code like scientists share their theories and discoveries (as mentioned above), greater solutions can be reached. "A gift," he says, "comes with no attachments. Software licenses add attachments; they allow you to keep your intellectual property." So even though you're sharing your ideas and methods, you're still retaining the rights to your work. "I think every major player in Open Source has business in mind," Witham says. "No one is giving anything away." Instead, developers create software which is useful; if it is useful to them, then, like Theo de Raadt, that is the return and if it is shared then others may capitalize on it in the same way. If it was created to be useful to others, then that developer or business generally works on the project with the expectation of some kind of compensation in return. In both cases the return of the Open Source development method is also that other programmers can make your program better for free. So while they get to use it, you get to have it updated, expanded and improved -- again, quid pro quo.

Tim Witham is right, certainly, in the sense that the term "gift" doesn't really fit in "gift economy." It's a sort of misnomer in the same way that "Free Software" is -- it misleads if misinterpreted. Of course no one really wants to work for free and we're not slaves, but volunteerism and Free Software programming is not a gift in the sense that no return is expected. Whatever we do with our time, we always expect a return of some kind even if it is only to have fun, such as the OpenBSD programmers do at their Hackathons. Generally there is more at stake than that, but the point is that there is always a reason, always motivation for what we do. Usually there are several distinct motivating factors involved when someone dedicates time to writing a software program, so the returns can be many and varied.

There are myriad ways to achieve a return on your investment in Free Software. Great work earns prestige and status, which translates into opportunity. Useful programs help you be more productive and allow you to use your computer without starting with an act of betrayal. Sharing ideas helps to develop news ones. Software bounties offer money for work performed. And certainly not to be overlooked is the satisfaction of a job well done.

You don't have to be poor to contribute to Free and Open Source Software, but by the same token you don't have to be rich. The gift economy is the system that will succeed for software development in the Information Age because it is about sharing information and ideas instead of locking them up to wield power over others.

Jem Matzan is the author of three books, a freelance journalist, and editor-in-chief of The Jem Report.

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on The gift economy and free software

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Information is worth nothing

Posted by: Anonymous Coward on June 06, 2004 03:23 AM
Information only has value in small quantities:

If someone asks a question and you give him an answer then that has real value. If you give him a book, it has less value and if you send him to the library, your answer has zero value.

This is probably the best explanation of why software and all information in general, should be free.

Information inflation - supply and demand...


Re:Information is worth nothing

Posted by: Jem Matzan on June 06, 2004 06:06 AM
Precisely. If all (or more) information is free, we can all equally use it to create new ideas and technologies. That means more innovation -- exponentially more, because so many more people will have access to it.



Re:Information is worth nothing

Posted by: Anonymous Coward on June 06, 2004 11:05 PM
Software isn't information. An algorithm is information but software is a product.


Re:Information is worth nothing

Posted by: PaulFrields on June 08, 2004 12:37 AM

That's an interesting comment, especially in light of the "help" many new users receive in response to queries about open source and free software operating systems and applications. I'm a constant Linux user at home and work, and am amazed at how insular these communities can be when outsiders try to get a foothold entering them.

If I'm being obtuse, here's another way of restating your comment, if I may: Answering a user's question with an answer that tells him the solution to his problem has real value. If you give him a link to the HOWTO or online man page with the answer, that has less value. And if you tell him to RTFM, your answer has zero value.


Re:Information is worth nothing

Posted by: Anonymous Coward on June 08, 2004 08:30 PM
Yup, you are geting zero value, so you would create the value - the exact answer yourself.

There is not a single reason someone *must* give you the value for free. Unless you ask real real nice.

Oh ant last but not the least - Give a man a fish and you will feed him for a day. Teach a man to fish and you will feed him for a lifetime.
a.k.a. if i'll tell you how to fix you soundblaster - tomorow you'll ask me how to fix your modem and after tomorow i'll have to explain you how to fix your hard drive. I don't want to explain you how to fix your hard drive so i'll tell you where to find the information so you can learn using the info yourself and hopefully in 3 days you'll be able to google your hard drive manual yourself.


Re:Information is worth nothing

Posted by: Anonymous Coward on June 09, 2004 08:39 PM
I disagree.

In the long run, making the asker rtfm will serve
him/her better than just answering the question,
because you force him/her to learn.


the problem with prestige

Posted by: Anonymous Coward on June 06, 2004 08:43 AM
The problem with prestige as a currency is that it tends to be a winner-take-all situation. People aren't interested in learning the names of all the developers who contributed to a project; they'll usually settle for the leader and (if they're really motivated) his top lieutenant. There's the Stallman credit tax on free software projects ("GNU-" this and that, which is a thinly veiled reference to RMS). Then there are "advocates" who might not do much technical work at all, but who are experts at keeping their names in the press.

Of course, the same kind of politicking goes on every day inside companies large and small. But at least there you're getting paid a decent salary.

Capitalism is like what Churchill said about democracy - it sucks, but everything else sucks much worse (OK, he said it more elegantly).


Re:the problem with prestige

Posted by: Jem Matzan on June 06, 2004 09:21 AM
You use the prestige of the project. Alan Cox didn't invent or design the Linux kernel, but he did add symmetrical multiprocessing capabilities to it, among other things.

Even if you're nowhere near famous... adding a significant feature or improvement to a famous project associates you with it, and thereby enables you to gain from its prestige. You piggyback on the project's fame.

Stallman's work goes well beyond the programs he wrote -- he spends a lot of time working with governments and corporations to help spread the Free Software movement to other parts of the world. If he gets extra credit for GNU programs, I don't think there should be a problem with that... if it weren't for him, there would be no GNU. We'd all be using BSD instead (some of us are anyway).




Posted by: SarsSmarz on June 06, 2004 11:21 AM
This is a bit like 'ideal communism'. The prestige economy can be easily hijacked by 'defectors' or 'secret operators'. If you look closely at 'publish or perish' science you can see what happens.

If you look in a semi-public corporation you can find people who are really good at sucking in credit, being, essentially, highly efficient weasels (my place!).

If you could arrange a perfect market where everything is transparent, then it could work. But the people operating the market could turn out to be weasels, and start selectively masking out information on their weasel-friends. Think of the New York Stock Exchange!



Posted by: Tak_tak on June 07, 2004 08:33 PM
Don't things like version management tools keep things transparent with respect to software and credit?


"Publish or perish"

Posted by: Anonymous Coward on June 08, 2004 11:59 PM
Actually, there is more and more openness in the "publish or perish" academic world than you describe. Preprint archives which give access to papers before they are published establish a clear record of who first submitted an idea, not who first got it into a journal, which not only facilitates assignment of credit, but also encourages more rapid publication of early results.

And academic careers are ruined by the kind of theft you describe. The severity of punishment for publishing stolen information very effectively discourages it.

Don't knock a system until you know more about it. Open source is the academic culture in real time, and is working.



Posted by: Enquest on June 06, 2004 09:47 PM
More and more kapitalisme is becoming incompatible with the ideas of today about how we want to organise or lives.

We are evolving from Grand kapitalisme to smal kapitalisme. This is a more fair world.

Free software is an eye opener for many people around the world. Where people just want to do what they are good in! Software is also uniek due in digital nature that a copy isn't anything fysical.



Posted by: Anonymous Coward on June 06, 2004 11:08 PM
Yeah, right.

"The gift economy". When you thought you heard all the stupidest businessmodels possible there is always something more stupid around the corner.



Posted by: Anonymous Coward on June 07, 2004 01:31 AM
Uhhmm... the concept of a gift economy is very old and has been analyzed by anthoropologists for a very long time. The author did not just make up this term. It is a phenomenon that has been observed in (in small groups of people generally) for hundreds of years. You may want to read an anthropology textbook. If you don't want to do that, at least search on google on "gift economy".




Posted by: Anonymous Coward on June 07, 2004 02:29 AM
Thats maybe so, it's plain stupid no matter who "invented" it.



Posted by: Anonymous Coward on June 07, 2004 04:59 AM
You have made an absolute assertion without any backing. This does not strengthen your position.

Gift economies are not stupid. A gift economy is the best economic system, for a small number of instances. But it is perfectly legitimate, and has worked well in the few instances where it has been used.

Most of human society has grown in scarcity environments. Hence the rarity of gift economies. But nonetheless, there have still been several cases, for hundreds of years, where a gift economy has been suitable. In these instances, it has worked very well. The best example of this is the scientific community. And as a scientist (mathematical physicist) I can testify that a gift economy is by far the best system for the scientific community.

Gift economies have existed for a long time, and are well studied. In the cases where they apply, they work very well. Personally I believe that software development is a good place for a gift economy, for the same reasons that it is so for science.

Daniel Carrera.



Posted by: Anonymous Coward on June 08, 2004 10:11 PM
A very real example of the gift economy which I am personally aware of is the practice earlier in this century of neighboring farmers helping one another with crops or barn-raising without any money being exchanged. It was just the neighborly thing to do and there was an understanding that you help others and later help will be returned to you. There's no guarantee, but that also was understood.



Posted by: Anonymous Coward on June 09, 2004 10:06 PM
I've heard this philosophy on the "gift economy" and it's a joke. the reason it has worked in certain instances is because there is accountability in small groups. in a large group there is zero incentive to innovate. the academic community is a special situation where the currency is ego (very powerful egos at that), and where innovation is far removed from real-world implementation. As soon as members of the academic community have an idea that can be used to better processes in the real world they patent or copyright it, so that they can "prosper" from their innovation. That is why some professors drive range rovers and some drive bicycles. if you've read more than two anthropology books, you are probably far removed from reality and shouldn't be commenting on "new paradigms" in social order. the gift economy will never happen.


You have missed it.

Posted by: Anonymous Coward on June 07, 2004 07:02 AM
If I am working for closed source company or a open source company I get payed the same as a programmer.

The open source company is paying me to develop a app to save them money internal operations(there kick back is that it is cheeper to run there own program than use microsoft or some other closed source).

The closed source company are paying me to develop a app to make money selling to other companys.

Open souce company give out the source code to save on bug fixing.

Closed source holds on to the source code so they can sell updates

Basicly there are two different ways both work but the big point forgoten some where everyone is getting kick backs. Opensource programmers are able to use the open source programs on there resumes to get them into Closed source development and hired Open Source Development Groups(redhat mandrake OSS....). So there is always a kick back in some form but when a programmer is getting payed it is the same for the programmer.

Note showing me the source code and not letting me work on it is just closed source because it is closed to me doing something to it.


Re:You have missed it.

Posted by: Anonymous Coward on June 07, 2004 08:04 AM
While this whole post doesn't much sense. I especially disagree with the last part. Having access to the source code of a software program, whether or not you can change it, is still valuable as a learning tool and is useful for auditing purposes. Without the source, how are you sure that it does what it claims as well as it claims to?


Re:You have missed it.

Posted by: Anonymous Coward on June 08, 2004 12:42 AM
An anonymous reader wrote: Having access to the source code of a software program, whether or not you can change it, is still valuable as a learning tool and is useful for auditing purposes. Without the source, how are you sure that it does what it claims as well as it claims to?

It makes no difference to the auditing process if the auditor has access to the source code if the generation of the executable is not auditable.

Consider the following example: I ship you a bunch of electronic components, and state that these are used to generate a radio transmitter. You are allowed to inspect and bench-test each component. When you are satisfied, I then insist that you return the parts to me for assembly, and you are not allowed to inspect the assembled transmitter. How can you confirm that I have not added, substituted, or removed components for the final assembly?

Allowing access to the source code, without granting permission to build or use the executable independantly may help diagnose problems encountered in the system, but it does not help resolve those problems if the vendor is unwilling to address the issue. Furthermore, it completely fails to satisfy concerns of the addition of intentional back doors. It is possible to create an independant audit trail (i.e. allow inspectors to view the assembly process to certify that nothing was added, substituted, or removed), but as Ken Thompson <A HREF="" title="">showed</a>, even that process is subject to being comprimised.


Re:You have missed it.

Posted by: Anonymous Coward on July 16, 2004 08:13 AM
Isn't that essentially the difference between open source and free software?


Re:You have missed it.

Posted by: Anonymous Coward on June 07, 2004 04:39 PM
Most open source software is unpaid work, not paid for in any way.

There are exceptions of cause.


How about the payment of cash?

Posted by: belm0 on June 08, 2004 04:26 AM

This article presents a nice explanation of gift economies, but then falls into the same old story. Prestige, at least in the amount required to turn into cash, is awarded only to a precious few. We need a gift economy where supporters can give cash to authors and publishers of free works, and do it in a way that doesn't involve navigating websites or supporting monopoly payment services.

Free software developers interested in this notion might take a look at <A HREF="" title="">Free Software Hacker's Introduction to the Giftfile System</a>. There was also a recent <A HREF="" title="">slashdot article</a> about this system.


No Difference

Posted by: Anonymous Coward on June 08, 2004 04:24 PM
Any system is susceptible to abuse and/or to corruption. Thus, the integrity of any system depends on the honour and the integrity of the people, especially leaders or powerful people.

The author neglects to show the negatives of Open Source, or the "gift economy"; hence, this article is just another bias for one system over another.

Licensing changes, for example, are problematic. The "gift" is still Open Source by definition, but there are more restrictions or more barriers. Project forks are legal in cases of license changes, but who has the resources/contributors to continue with full development?

Large proprietary software corporations are afraid of the GPL and its variants, not the BSD. Large corporations have significantly fewer people contributing? Compared to Open Source? Let's suppose the author is right, how many Open Source contributors work on their projects full-time and how many work in their spare-time, instead of part-time?

How many people working on Open Source projects receive their dues in prestige and status? The article mentions only leaders of notable projects.

The "gift economy" wouldn't work so well without donations from generous people who work for the "exchange economy". Open Source is good, but it's best to have balance, and people with integrity.


Wrong definition of communism

Posted by: BaldBass on June 11, 2004 01:19 AM
There is no comparison between a gift economy and a socialist economy -- communism requires a forced redistribution of wealth and a decided lack of status among all people.

Sorry but this is plain wrong; you have been brainwashed by capitalist propaganda<nobr> <wbr></nobr>:-). Communism is built upon voluntary fair distribution of wealth and the status is built on something but money (prestige?).

It was never implemented, yet it sounded good enough in theory so many people fell for it in the beginning of the XX century. It would be interesting to learn more about this "communism madness" so maybe we can derive a lesson or two for software.


Re:Wrong definition of communism

Posted by: Anonymous Coward on July 16, 2004 08:16 AM
Actually, a basic form of ancient communism is often mentioned because of tribespeople having to stay together and help each other in order to survive. But I suspect a form of stratification would emerge fairly soon.



Posted by: Anonymous Coward on July 16, 2004 08:18 AM
Isn't this article pretty much a rehash of Eric Raymond's Homesteading the Noosphere?


The gift economy and free software

Posted by: Anonymous [ip:] on February 06, 2008 03:57 PM

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