Internetworkers: http://www.ibiblio.org/internetworkers/

["Josep L. Guallar-Esteve" <jlguallar AT maduixa.net>]

Fellow internetworkers,

I just received this article. I found i interesting for all of us,
Information-related people.

I guess it will provide some controversy and on-topic-ness to the most
off-topic list ever. Or maybe this is plainly off-topic, following the
open guidelines of this list.

Regards,
Josep

----------Article Follows---------
Tony Stanco: Why Microsoft is a Dinosaur (Apr 24th, 12:00:06 )

With the arrival of the Internet in the 1990s, the world has entered the
Intellectual Age. The Intellectual Age will be substantially different
from the Industrial Age, because many of the old assumptions will no
longer apply. For the software industry, the biggest change will be that
traditional corporations will no longer control software development.
 
Microsoft is the current undisputed fierce reigning king of the dinosaur
world, and it makes the most noise as it throws its considerable weight
around to the horror of all the rest. It is without question the
Tyrannosaurus Rex of corporate software development. 

But that streaking light in the sky during the mid nineteen-nineties,
which caused everyone to look up in stunned amazement, has not yet had
its full impact. When it does, the world will be a very different place,
littered with dead and dying corporate software dinosaurs. 

CORPORATE DNA WAS BEST SUITED TO THE INDUSTRIAL AGE
Most people find it surprising to learn that the corporate form was
invented. But it was. It was created by legislative action to solve a
particular problem that became apparent at the beginning of the
Industrial Age. The problem was how to finance huge capital projects
that were then becoming increasingly common. 

Prior to the development of the corporate form, families, or groups of
families financed most commercial enterprises. With the arrival of the
Industrial Age, however, the financial ability to provide the required
capital assets (such as, for things like railway companies somewhat
later) was beyond the means of even the wealthiest families. The
solution to this problem was not difficult to see, and it was not long
before people began to bring in more investors to the enterprise, each
individually shouldering a smaller and more manageable burden. 

While this first level thinking solved one problem, it originally
created another, because everyone who invested early in the era was
personally liable for the whole company, even though the managing group
made all the decisions alone. To solve this second level problem, the
concept of limited liability was created. This concept changed the
prevailing law, and permitted outside investors to be liable only to the
extent of their initial investment. With this novel legal change, the
basic structure of the corporate form was born, and has been extremely
successful ever since. 

What is important to remember about the corporate form, however, is that
it was invented for a very specific purpose -- the financing of the huge
capital projects that defined the Industrial Age. 

INTELLECTUAL AGE DOESN'T HAVE HUGE CAPITAL REQUIREMENTS
Unlike the Industrial Age, the Intellectual Age is not marked by huge
capital projects. Instead, the Intellectual Age is characterized by the
use of a person's intellect. It is essentially about brain power. As
such, the Intellectual Age promises to be an incredible period, based
fundamentally on the inalienable rights of people, rather than revolving
around inanimate property rights, because people power will be the
central economic focus of the new age. 

As a quick check to realize that the Intellectual Age is quite different
from the Industrial Age, ask yourself when was the last time that
Boeing, for example, had to worry that a fully functional, competitive
airplane would appear out of nowhere from a rebel band of workers
without any capital? Now, ask yourself the same question but replace
Boeing with Microsoft and airplane with operating system. 

GNU/Linux and the international free software community are solid proof
that the old industrial rules no longer apply. They reveal that a
decentralized team of developers from around the world working over the
Internet and without access to a corporation's capital resources can
perform at a higher level of proficiency than the corporate software
leader with 25 billion dollars in the bank. 

NEW COMMERCIAL FORM IS NEEDED
It is not really surprising to witness the huge success of free software
development, because the activities of the Intellectual Age are
fundamentally different from the old Industrial Age. So, there is no
rational reason to believe that the specifically tailored organizational
form of that time was ever really required for this one. In fact, the
corporate form has already shown itself to be quite harmful to the
Intellectual Age, because it creates malformations in efficiency. 

These inefficient malformations are familiar topics to everyone in the
free software community, and revolve around the question of
"intellectual property." 

WHAT IS PROPERTY?
In the Industrial Age, property rights were a necessary requirement, for
they were the foundation of the financing function of the corporate
form. It is not very surprising that entities born in the Industrial Age
see everything as property by analogy, even when the thing in question
does not really have the true characteristics of property. 

The defining characteristics of physical property are scarcity and
exclusion. As such, the use of a particular piece of property by one
person excludes the use of that property by another. In a world of
scarcity, efficiency requires that the person with the highest and best
use for the property should be given the exclusive use of it. Such
social ordering is a very rational way to maximize output in a world
constrained by physical scarcity. In fact, organizing the physical world
in that manner has been so wildly successful that it has provided all of
the physical infrastructure and material wealth of the last 300 years.
It has, therefore, created the foundation to support the Intellectual
Age that we are now entering, and so, it clearly had its proper place in
history. 

But for all its past success, it is still logically flawed to extend the
principles that work for physical things to intellectual ones. This is
because the distinguishing characteristics of physical things (scarcity
and exclusion) are not present in intellectual ones, and, therefore, the
underlying rationale that support the old industrial principles are no
longer present. 

THE TRUE NATURE OF INTELLECTUAL PRODUCTS
Intellectual products by nature are different, because they are
inclusionary, not exclusionary -- everyone can use them at the same
time. One person possessing knowledge does not preclude another from
having and using that same knowledge. In fact, efficiency in
intellectual pursuits is maximized by inclusion, because the interaction
of human minds (now greatly facilitated by the Internet) yields more and
better intellectual products. This is why, in the scientific community,
they publish their work and subject it to peer review. This sharing of
ideas refines intellectual products and creates the additional
efficiencies. 

So, this essential communitarian characteristic of intellectual products
is diametrically opposite to the fundamental characteristics of physical
products. While sharing creates efficiencies in intellectual pursuits,
sharing of physical property creates the "tragedy of the commons" and
the non-best use inefficiencies observed in the communists countries in
the last century. Therefore, physical products and intellectual ones
should be treated very differently, because of these differences in
their essential nature. 

SO HOW DID WE END UP HERE?
So how is it then that if software is more efficiently developed through
the inclusionary paradigm that the exclusionary paradigm of physical
property has taken hold? The reason is that the legal, business and
investment infrastructures supported the exclusionary,
intellectual-products-as-property paradigm that they were all familiar
with. The world arrived at this place fundamentally because of
intellectual inertia on the part of people in power when they didn't
realize that the true path had taken a sharp turn. 

Lawyers, politicians, investors and corporations convinced themselves
and others that if code is shared, then no one would be able to make any
money from it (e.g., the infamous Bill Gates' Open Letter to Hobbyists).
As such, they supported and promoted the idea that software is like any
traditional physical product and, therefore, should be organized, owned
and sold as such. 

To get the acquiescence of the developer community, whose support they
ultimately needed because developers actually do all the coding, they
proposed a Faustian bargain: "join us, keep the code you develop secret
from your colleagues, and we will pay you." 

This is the exact bargain that Richard Stallman opposed in the early
1980's, when he refused, and instead began the counter-revolution with
the GNU project and the GPL. 

It was this basic corporate-developer bargain, which most developers
accepted, that sowed the seeds for the division, subjugation and
inefficiency of the software industry ever since. Since software
corporations could not have enslaved the developer community without
developer obedience, if developers had stood together and resisted more
resolutely at the time, the fruits of developers' minds would not be, in
essence, corporate property, now. 

Once the legal, business and investment infrastructures began to support
this false software development paradigm, it would be a long time before
they were forced to confront the fundamental inconsistencies, and
ultimate inefficiencies, of the proprietary paradigm again. 

As fate would have it, the Internet, GNU/Linux and the Microsoft
antitrust trial would all converge at the same time to spotlight both
the problems of the proprietary model and the solutions available from
free software. The antitrust trial revealed how innovation suffered when
one corporation accumulated too much power from the exclusive ownership
of key portions of secret code. And the sudden and unexpected success of
GNU/Linux showed how effective and efficient free software development
is, even without money or corporate sponsorship. It thereby raised the
obvious question, "If free software could do all that without money,
what is it capable of when it is generally supported and paid for?" 

NEW PARADIGM SEEKS TO BREAK FREE
So the world is once more confronted with the question that it could
have and should have resolved 25 years ago before Bill Gates sent it off
in the wrong direction with his Open Letter to Hobbyists. The question
again is, "How do you pay developers to develop free software given its
superior development methodology?" 

The solution, obviously, has to be consistent with the principles of the
Intellectual Age and to support the general inclusionary paradigm
implicit in all intellectual pursuits. As such, it cannot include the
traditional corporate structure, which relies too heavily on traditional
notions of property. Just as the corporate form solved the pressing
problems of its day, a new commercial form, therefore, is required to
provide the new organizational infrastructure for our new age. 

FreeDevelopers created the Community is the Company (CommCo) structure
as a democratic, international, community-wide solution
(FreeDevelopers.net/company/CommCo). It is fundamentally constructed to
be consistent with the inclusionary paradigm of the Intellectual Age. Is
this the complete answer? Probably not, but it is at least a beginning. 
With the world again looking for a proper solution, it will eventually
find it. And when it does, Microsoft and all the rest of the corporate
proprietary software dinosaurs will be mentioned only in history books
as a folly at the end of the 20th century that slowed down the world's
technological progress for 25 years. 

For information on why software also needs a new commercial organization
for reasons of morality and justice, see the Declaration of Software
Freedom (http://FreeDevelopers.net/freedomdec/index.php) and the
Explanation of Why FreeDevelopers Used the Declaration of Independence
as a Model: Is Software Law or Literature
(http://FreeDevelopers.net/press/whydecl/). 

Tony Stanco is a former securities attorney from the Securities and
Exchange Commission, Internet and software group. He left the Commission
to found FreeDevelopers.net, because proprietary software must be
defeated before it puts all of us in cyberchains. FreeDevelopers.net is
an international, professional organization of GPL software developers.
All software developers are invited to join FreeDevelopers.net. 

Copyright 2001 Tony Stanco

Verbatim copying and distribution of this entire article are permitted
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-- 
Josep L. Guallar-Esteve

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