Here’s a short essay I’ve written. The magazine of the Aurora tower in Sydney (would you believe?) approached me to write something for them. They’re even paying me!
Readers of my piece on open source software (pdf) that I discussed on Troppo a month or so back (now published in Policy) will recognise it as having similar themes to that piece. Comments appreciated.
One for one and one for all
When next you get depressed about planes flying into buildings, and the other myriad miseries we poor humans inflict on ourselves, just take it from me that maybe there’s still something to that old idea about human progress after all.
Two miraculous new ways of working have emerged that are steadily making the world a little better every day. They have their enemies of course – as the saying goes, no good deed goes unpunished – but their success is unstoppable and growing.
The first has allowed millions to lift themselves out of poverty for a ridiculously small outlay. The second is building a software infrastructure for all that is freely accessible for an even smaller outlay – nothing.
The first miracle – micro-credit – arose from the observation that many poor people in the third world could escape from poverty with the tiniest of breaks. The first micro-credit loan in the mid 1970s was US$27 lent to – wait for it – 42 poor people in Bangladesh.
The second miracle is Linux, or more accurately, open-source software (OSS). It’s software that kind of writes itself, is usually available without charge, and is often technically superior to the software you have to pay for. It will be instrumental in supplying computers to the third world for under US$100 each. And it’s the major competitive threat to software giant Microsoft, whose internal documents describe it’s achievements as “simply amazing”.
These innovations are sufficiently striking to have inspired their own millenarian mythology according to which they will usurp the domination of profit and self-interest. The truth is both more mundane and more interesting. The miraculous qualities of these innovations come not from the assertion of selflessness over selfishness, but rather because they provide a deft new alchemy between the two. And, though it’s a well-kept secret, that’s the miracle of capitalism also.
As Adam Smith knew, and as the deregulators have sometimes lost sight of, capitalism at its best, is the individual in the community. Let me expand on this last claim, and the new dialectic introduced between these recent innovations between the individual and the community.
II. The individual and the community
Who wrote these words?
What are the pangs of a mother, when she hears the moanings of her infant that during the agony of disease cannot express what it feels? In her idea of what it suffers, she joins, to its real helplessness, her own consciousness of that helplessness, and her own terrors for the unknown consequences of its disorder; and out of all these, forms, for her own sorrow, the most complete image of misery and distress. The infant, however, feels only the uneasiness of the present instant, which can never be great. With regard to the future, it is perfectly secure, and in its thoughtlessness and want of foresight, possesses an antidote against fear and anxiety, the great tormentors of the human breast, from which reason and philosophy will, in vain, attempt to defend it, when it grows up to a man.
These words reflect the passion, sympathy and wisdom of Adam Smith, the patron saint of capitalism. In awe of Isaac Newton’s reduction of motion (whether as on earth or as it is in the heavens) to a few simple laws, Smith sought a similar understanding of human society.
The Theory of Moral Sentiments in which the above quote appears poses an idea of society as an interlocking set of communities each bound by moral sentiment. Ties of sympathy radiated through society and held it together from the closest bond imaginable between mother and the newborn child she tends, to the progressively weaker bonds of family, friendship, acquaintanceship through to strangers and to foreigners.
Smith’s economics of selfishness is situated within a society that is literally shot through with the bonds of human sympathy. Given peace, the rule of law and a healthy community, the benignity of Smith’s new liberal economics then proceeded again according to the “Newtonian Method” from Smith’s single principle about human economic behaviour – our innate tendency to “truck barter and exchange”.
It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.
This dialectic between loyalty to the group and to oneself is alive today. Dotted throughout our market system – which relentlessly rewards the pursuit of self-interest – are networks of communities large and small acting collectively.
Families and firms are collective entities. Of course neither are communal utopias. But most of us associate our own self-interest with our interest in these collectives.
And sociability and peacefulness are the cultural ground within which markets grow. In addition to the ways in which capitalism provides avenues for peaceably acquiring riches there’s a huge system of government and law which keeps the peace and some semblance of justice. Of course there are rogues. But we catch and punish a sufficient number that wrongdoing doesn’t make for an easy life. Ask Rodney Adler or the late Rene Rivkin and Christopher Skase and his less late wife Pixie who seems to have finally wangled her way out of exile.
The closest real-world example of the rule of pure self-interest is not with market deregulation but in the anarchy of the third world’s failed states where the collapse of the most basic elements of law and community channel self-interest into theft and violence. Who’d build for the future when it can be confiscated at the point of a gun?
In 1974 Bangladeshi Economics Professor Muhammad Yunus observed a poor countrywoman and calculated that, if she could raise less than thirty cents, she might escape the poverty imposed by middle-men who manipulated the prices at which she bought her raw material and sold her finished furniture.
Bemoaning the failure of his American economics Ph.D. to highlight this travesty, Yunus founded the ‘Grameen’ (meaning ‘Community’) Bank. But how could it make these loans and get them repaid when its borrowers had no collateral to put up and Bangladeshi culture was shot through with corruption and debt evasion?
The secret was lending to individuals, but doing so within groups of people – particularly women all of whom went co-guarantor. People might walk away from a loan to themselves, but these ‘solidarity groups’ helped transfer skill and share risk as well as radiating both the financial pain and the social shame of default.
These groups, the desire to increase borrowing as businesses grow, and the ‘training’ that borrowers get, enable the Grameen Bank inculcate a culture of trust and repayment and a default rate of around one percent.
Group and self-interest coalesce a deft and miraculous new combination.
IV. Open-source Software (OSS)
Open-source software kind of writes itself. How?
Source-code is the tool humans use to build and modify software. It is written in a ‘computer language like ‘Visual Basic’ or ‘C++’ which is an amalgamation of formal logic and natural written language.
To run on a computer source-code is ‘compiled’ into ‘binary code’ – instructions to a computer written in gazillions of ‘1’s and ‘0’s. ‘Proprietary software’ firms like Microsoft and Adobe typically conceal their source-code to ‘cover their tracks’ and frustrate would be imitators.
In the early 1980s MIT programmer Richard Stallman was incensed that the culture of sharing and peer review that characterised science and academia was increasingly being frustrated by source-code secrecy in an area where it could do so much good. He was infuriated by the inefficiency of his inability to tinker with the proprietary software in a prototype laser printer that Xerox had donated to his lab. After all, he only wanted to improve the software for his own use and then donate his improvements back to Xerox.
But Stallman’s crusade for the source-code freedom was looking increasingly Quixotic. Where source-code was available for a program or a set of standards by which programs interoperated, it could be ’embraced’ by proprietary software producers, and then ‘extended’. If users adopted the extensions for their enhanced features or just to interface with existing software the extending firm could then sell its extensions less the source-code effectively privatising an open-source program or standard.
Stallman turned the tables on this tactic known as “embrace, extend and extinguish” by developing the ‘copyleft’ licence. Where software is ‘copylefted’ your right of access to it, and your cognate rights to access, modify and/or redistribute the source code are tied to your agreement that, should you further distribute the software, you will grant to those to whom you have distributed it, the same freedoms. As we see later, this ‘leverages’ the original software making it difficult to access without buying into its maintenance and development.
V. New ‘high trust’ ways of working
For Adam Smith progress was a process by which increasing human autonomy, capability, wellbeing, productivity and virtue all grew together. The move from the pure hierarchy and coercion of slavery towards greater worker autonomy for instance sharecropping and wage labour was progress in this sense.
So too in our own day, modern ‘just in time’ or ‘lean production’ management has taken things further still in ways that are strikingly similar to Grameen Bank’s modus operandi. In both cases, progress is made, not by strengthening surveillance and coercion from above but by relaxing it and assuming that, properly treated, people are well motivated.
The challenge is then to develop institutions within which they can be empowered to pursue their own interest in higher functioning activity. This is often done within ‘teams’ or groups. Just as ‘lean production’ uses ‘teams’ or ‘quality circles’ to harness people’s creativity in improving their productivity (as well as providing better surveillance and sanctions against shirking than can be provided by management), so Grameen Bank’s ‘solidarity groups’ provide the institutional structure for realising Yunus’ philosophy of building and harnessing trust.
[W]e knew we had to trust our clients. . . Today commercial banks assume that every borrower is going to run away with their money. . . . In contrast, Grameen assumes that every borrower is honest. There are no legal instruments between the lenders and the borrowers.
Open-source too belongs in this in this optimistic story of human progress. Its unique economics are captured in the words of the traditional marriage vow to love honour and obey.
Firstly, ‘hackers’ or programming enthusiasts usually produce the original core programs that are built into OSS. Not implausibly for hobbyists they often describe themselves as motivated by the love of programming well.
Secondly, as in science, academia and the professions, reputation – one might call it ‘honour amongst peers’ – is also central in motivating and organising further coding. Again, note the parallel with Smith who argued that our near-universal desire for others’ deserved approbation was a central ‘moral sentiment’ on which society was founded.
But the clincher is obedience to the ‘copyleft’ licence which simultaneously protects the software from being ’embraced, extended and extinguished’ by proprietary software and undermines the incentive to hoard code. (Because, according to the copyright licence under which you have gained access to the software in the first place, you can’t sell your enhancements without granting the buyers the right to distribute what you’ve sold to others as they see fit.)
In the economic environment thus created the ‘chain letter’ of OSS grows progressively stronger through the process summarised in the hacker slogan ‘give a little, take a lot’. By giving a little back to the OSS project, (any enhancements that they have created for love, honour or more usually their own use) OSS users can take a lot (the use of the existing and developing software). If your new coding is accepted within the OSS project, you avoid the cost of rebuilding it back into new releases of the core software, or worse still having others add incompatible enhancements.
Now the biggest companies around IBM, Novell, Hewlett Packard are joining in out of the goodness of their selfish little hearts. They now do the lion’s share of OSS development. Why? It enables them to better meet their customers’ needs. So they sell more hardware and consulting services.
Yet another case of one for one, and one for all.
As I mentioned at the outset, as ever, those that threaten change have their enemies. Micro-credit has a long list of enemies in the developed countries – from local religious leaders to the husbands of wives Grameen threatens to set free to the moneylenders it is displacing. The enemies of OSS are probably more formidable.
The chief threat is the subversion of both public sentiment and government policy by the self-interest of the rich and powerful, most particularly in an absolutist conception of intellectual property. Taken literally it implies that we owe royalties to the estates of inventors back to antiquity upon whose shoulders we still stand.
Where software initially grew and flourished without software patenting, judicial decisions have now established software patenting and the result is an extravaganza of new patent claims, creating a legal minefield that suppresses software investment particularly by smaller firms and those writing OSS.
Still, it’s hard to believe that their enemies can possibly do much more than slow the inexorable spread of OSS and micro-credit. Of course neither is a panacea, and neither will displace older practices, like traditional money lending and proprietary software. Nor in a pluralist world should they.
But we can be grateful that these new economic forms are already thriving and that their peculiar alchemy of self and collective interest plays to what Abraham Lincoln so memorably described as the better angels of our nature.