Subject: Re: the walls have ears
From: "Stephen J. Turnbull" <>
Date: Tue, 22 Jun 1999 10:25:38 +0900 (JST)

Attention conservation notice:

Jean Camp argues that failure of the world to approximate the ideal
competitive market, and political suppression by threatened elites,
can stifle development of open source software.

I ripost that (a) it is a misconception to suppose that ideal market
conditions are even approximately necessary to achieve desirable
outcomes, and (b) that, like samizdat, it will not be possible to
suppress open source because it is both libre and gratis.

>>>>> "Jean" == Jean Camp <> writes:

    Jean> It is always The Ideal that the market work and Motherhood
    Jean> is Pure.  In reality: Is there full information, is everyone
    Jean> is an educated and empowered consumer?

"Here's the news:"

The market does _not_ need full information or (fully) educated and
empowered consumers to work.  This has been known for a long time; the
conditions called "pure" and "perfect" competition are sufficient, not
even nearly necessary.

Those conditions remain prominent in the textbooks because we do not
know why or how the market can achieve the excellent results in does
in a world replete with ignorance and malice.  We do know that it is
connected to _distributed processing_ and to the _dominance of self-
interest_ among the motives that people do possess.  (The market as
far as we know would work terribly in a dominantly altruistic
society.)  Correct design of the market institution (implementation of
the interaction of supply and demand) also matters, but that is still
very much an art.

    Jean> Attention span (necessary for education) is not going to
    Jean> become more plentiful.

Surely you jest, writing that on a list devoted to free software

Attention itself will not become more plentiful (per person), but the
decision-maker will be using less and less of it to sort and filter
information in mechanical ways.  I.e., measured in _efficiency units_
it will increase (per person).  That's why software is valuable; it is
the core concept that drives the whole industry.

It is true that the kind of attention required for education (on
either side of the desk) is more "concentrated," and the leverage will
be lower.  Still, as a professional researcher == student, I can
assure you that software tools not only enhance my learning experience
but also make learning each bit noticably more efficient (on average).

    Jean> How can the ideal happen?

I don't care.  I don't think any practical person should; we don't
even need to approximate it to win.  That's the Good News according to
Adam.  Which has been verified by empirical study in macroeconomics
(the October Revolution and following history of Russia vis-a-vis the
West), microeconomics, and via laboratory experiments.  No miracles
necessary; just add traders.

Microeconomics is _not_ about goods and services.  It is about
computation.  You know, like knapsack problems and register coloring.
And it is about how to implement those computations in society using
the minimum resources outside of the staggering excess of brainpower
possessed by every human being, so excessive that (for this purpose)
it can be considered a free good---but only if used in a distributed
processing system.  In a phrase, "free trade on markets."[1]

    Jean> I do believe that there is some inderstanding among the
    Jean> elites that open software is something new and something
    Jean> that will change social power dynamics.

Speaking from Japan, the elites here are completely unaware of _open_
software as a force.  What they see as a threat is _any_ software,
since it empowers people to communicate directly with each other, not
via human networks of "connections."  Perhaps even more important is
that since software is at bottom mechanical, processes that software
deals with must be well-specified.  So much for the vaunted Japanese
"ambiguity."  It is not by chance that Japan leads in the development
of "fuzzy appliances."

This leads to the interesting phenomenon of Pentium III-based systems
being marketed to housewives and children as facilitating their
"television lifestyles."  Yow!

    Jean> All the 'good' open source results threaten someone.

And benefit others.  Since it's libre and gratis, it will be
impossible to suppress those who benefit.  Cf. samizdat, which was
much more expensive (aside from the personal risk involved).

    Jean> But I do NOT believe that this is why the market has failed
    Jean> to embrace open software OR that it will fail to do so in
    Jean> the long run.

We haven't held the midterm yet.  I see no need to talk of "failure".

By that I mean that the dynamics of innovation in markets with
substantial network externalities (in particular, most non-custom
software) are either U-shaped or S-shaped.  When the market
penetration of an innovation turns downward, it's pretty much dead:
the positive feedback will reinforce the downward tendency.  On the
other hand, in the S-shaped pattern after introduction penetration
will grow slowly at first, then have a period of explosive growth,
then slowing down when it reaches its equilibrium level.

In certain fields (C compilers, HTTP daemons, ISP OSes), free software 
appears to be approaching equilibrium levels.  In others (corporate
desktop, personal publishing, wordprocessing), we see the slow steady
growth at low levels of penetration that could still turn downward
into a death spiral or knee up into substantial market share.  I think 
that these are all optimistic symptoms.

    Jean> But only in EM fields are boundary conditions interesting.

You really ought to think more carefully before posting these one-
liners.  Just what do you think the "marginal" in "marginal cost"
means?  Not all boundary conditions are constants; some are functions.

    Jean> PS Thanks for figuring out my agenda, comrade. I needed one
    Jean> with a little conspiracy flair.

I find that it aids communication to try to figure out what the other
person _meant_, and discuss that meaning, rather than attack the

[1]  It's not a panacea.  The market, left alone, can produce undesirable,
even downright ugly, outcomes.

What we do know is that the market is so powerful in achieving
efficiency that attempting to ameliorate bad outcomes by interference
with the market mechanism (ie, other than direct tax and transfer
policies) normally costs the losers multiples (and I don't mean "1" or
"2"---the price of rice in Japan runs from 5 to 8 times the world
price; the price of sugar in the U.S. 2 to 3 times the world price) of
what the beneficiaries gain.  Tinkering with markets by imposing price
or quantity controls, or destroying markets by centralizing
allocation, has been shown over and over again by well-intentioned
(usually) experiment to be equivalent to blindfolding the surgeon
before handing him the scalpel.  We're all blind in this area....

Other (better-informed) experiments (eg, the emission permits markets
and the spectrum auctions) have shown themselves quite effective in
achieving fairly good allocations at low costs.  In fact, many of the
bad results in those areas (IIRC the cellular rights in Los Angeles
were sold for a song, and not a Rolling Stones megahit, either) were
directly due to mistakes made in design (the consultant to one of the
big winners in the spectrum auction told me that he couldn't believe
his eyes when he saw the rules; he told his client that that
particular loophole would surely be closed).

Don't tell me that the concentration of the industry is evil (or the
level of pollutants too high); whether that is true or not, achieving
an traget level of concentration was one of the design parameters, and
the auction (market mechanism) did that very effectively.

Intellectual property is an institution, similarly artificial to
spectrum and emission permit auctions; it has shown itself effective
over the years.  Open source shows that we may be able to amend that
mechanism.  I have great hopes for it, but all experience with
material goods urges caution.

University of Tsukuba                Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
Institute of Policy and Planning Sciences       Tel/fax: +81 (298) 53-5091
What are those two straight lines for?  "Free software rules."