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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.