Classic economics are primarily concerned with the balance of supply and demand in the marketplace. Balancing these two factors form the basis for current market operations based on individuals making production and consumption decisions in an open exchange. This open market supply-demand law is taken as one of two assumptions in this post’s thought experiment.
The second assumption is that our workforce is becoming increasingly automated; direct human involvement is gradually being replaced by automated tools and processes. A direct result of this scenario is that the distribution of humans in producer and consumer roles will be highly skewed towards the latter which will make up a substantial majority.
Given these two assumptions, this post explores, via thought experiment, the following question:
What, if any, benefits does an open source philosophy have in this scenario?
The primary concern in this future economic situation is to be able to continue to effectively cater to human consumption while maintaining individual rights and dignity. To that end, providing the necessary tools and resources to producers to maximize their productive output would be a major focus.
Open source would likely provide a series of benefits outlined below.
- Shared core resources: limit the need to “reinvent” technologies as well as free producers to focus on non-overlapping markets. Essentially, these shared resources would begin to function more like scientific discoveries instead of proprietary technology. By creating a “shared core”, producers would be encouraged to focus on specialization and to build up core competencies - their comparative advantages against other producers. Individual entities focusing on core competencies utilizing and fostering shared resources.
- Reduced property barriers: core discoveries and inventions are provided with open access for other producers to build off of. It is worth noting that this would be for most but not all resources and at the discretion of the individual producer. Through making these “building blocks” generally available, barriers to entry are lowered significantly. While proprietary structures may be built around these available resources, and while closed source alternatives may be created in the market, a “default open source” would alter the playing field and allow more competition in. This is a matter of creating value rather than capturing value, which is an important distinction, and it is likely that, because of the permissionless nature of open source, the created value could be quite high.
- The first and second benefits listed above are closely related and only differ really in their emphasis: the former emphasizes specialization while the latter encourages market entry - both important in avoiding both monopoly and perfect competition.
- Collaborative competition: common resources and reduced direct overlap pushing individual production centers to collaborate with different segments of its vertical - shared general input, specialized focused output. Independent entities would also likely be tied together by the need to support the open source projects that they rely on. Should these entities form “niche” market strategies and compete over core competencies, they might create a more fine-grained network of smaller companies and products; the smaller the operation, the greater the need to work with your immediate supply chain network and market participants.
- Quality superiority: stronger and more resilient technologies that quickly adapt to new requirements. Rapidly evolving economic situations require equally evolutionary technology to be able to effectively support a business operation. In this scenario where a small minority is required to be hyper-productive, having the most adaptive and resilient tools is a major factor in success. The strong but flexible nature of open source software would likely be one of the first steps towards making those resources that best leverage productive output readily available.
- “Sweat equity”: ancillary benefit for non-direct production participation. While the other benefits listed above would be direct benefits for primary producers, this one is open to general participation. Project maintainers might pursue opportunities to allow outside collaborators to earn ownership of the projects through contributions to the codebase or the broader project. This would essentially be an indirect way to extend the opportunity for inclusion in productive ownership. Equity could be established by individuals working, “sweating”, towards improving the shared open source tools. It is important to note that there would likely be a distinction between this benefit and the official means of distributing consumable resources to non-producers. Additionally, this is not a requirement and would be optionally extended by maintainers as it would not be essential to maximize production. However, it would create an environment in which consumers who had been squeezed out of production could attain a production-side economic voice without being a product or company owner. This could also help to foster strong human connections and a continued respect for dignities and rights.
Also, it is worth expanding on the expectation that open source will primarily benefit the producer minority in this scenario. Open source would primarily impact producer-producer interactions and not producer-consumer or consumer-consumer interactions. It would mostly be a factor in market share competition while the producer-consumer relationship would likely generally remain unaffected.
Additionally, this post does not touch on what form the actual means of value distribution to consumers would take given the high skew between producers-consumers in the marketplace - open source is not likely be the facilitator. Options for this will be discussed in a separate post.
In summary, this thought experiment covers the scenario in which automation increasingly dominates production and what effect open source would have on this economic environment. An open source “default setting” would lead to shared core intellectual property encouraging comparative advantage maximization and reduced barriers to market participation. Collaborative competition and stronger production tools would also likely be observed results as well as the ancillary option for non-producers to participate in shared resource ownership.
All in all, open source could have a positive impact in a situation calling for unbridled productive output.
 COSS Company Value Creation and Capture Fundamentals