Linux Is Capitalist!

In 2000, Microsoft’s Steve Ballmer made a questionable remark: he referred to Linux (and the open source/free software community) and its development process as “communist.” He said that “Linux is a tough competitor. There’s no company called Linux, there’s barely a Linux road map. Yet Linux sort of springs organically from the earth. And it had, you know, the characteristics of communism that people love so very, very much about it. That is, it’s free.” Ballmer’s statements show his ignorance of economics and the nature of human action.

The praxeological origin of economics is based on human action. Action is characterized by the purposeful use of a scarce resource in order to attain some end. Insofar as individuals plan how to use their scarce resources to reach their ends, they are behaving in an entrepreneurial way.

Free market capitalism is not characterized specifically by the existence of companies, but by individuals who, thanks to private property, plan the most efficient way of attaining their ends. Companies are in many cases the most adequate unit of calculation for carrying out entrepreneurial action but this is not always the case. They are not the prerequisite of capitalism, but an organizational consequence of it.

Whether it is a person changing a tire, selling books or buying a DVD, entrepreneurial human action permeates these activities; they are all driven by the desire to reach a particular end. By reaching a particular end, the acting human is better off now than he was before. Thus, one must be careful when saying that something is “communist.”

Just because a product is free of charge it does not mean that it is communist. Communism means complete state ownership of every resource within its reach and thus the impossibility of human action without the authorization of the Central Planning Board; it means the absolute lack of private property, including body ownership and labor. Thus, when Ballmer exclaimed that Linux had the characteristics of communism, he completely erred.

Linux is not socialist. The organization and development process of free software is nothing but people acting freely to satisfy their intellectual needs. Economic science has nothing to say regarding any individual plan itself. Whether that plan is accurate for achieving the end is something that will only be revealed ex post; ex ante, all the plans upon which human action is based are the best ones for the agent. This Misesian insight is crucial when understanding the nature of human action. It serves to propel the idea that whenever an individual reaches his proposed goal, he increases his welfare. In other words, human welfare is the result of human actions, and not necessarily a monetary magnitude. Welfare is related to an increase in utility, one which is purely subjective, and not necessarily with the profits of a company.

Linux and free software programmers often do not receive any financial compensation whatsoever. Indeed, the “Free software community” is a group of people who voluntarily use their time and skills. But just because they donate time and labor it does not mean that this is communism. On the contrary, they freely direct their human action to the fulfillment of their ends, without any centralized imposition about what had to be done; people are exchanging their scarce resources (time and labor) to satisfy their ends. In the case of the Linux programmer, the end can range from fixing a software bug to adding a new feature or enhancing documentation. Where is the communism here? How is this socialist? Linux is a market phenomenon, just as charity is.

Charitable activities imply people freely giving their money, time and skills towards a cause that they think benefit others. It does not matter one whit whether the final product (an operating system kernel, a house, a dollar, an ounce of gold, a meal) is free. Presence of coercion over the means of production is what determines if a particular exchange really is free or not.

And as we mentioned above, communism implies that the invested money, time and skills (any means of human action) must be state owned. If Mr. Ballmer were right, then the state must own Linux and direct the time and labor of the coerced "volunteers." As much as he would like to believe that, the development of free software is not communist.

Although Mr. Ballmer would probably deny it, Linux is a product of freedom and private property and then of capitalism, just as Microsoft is. Both use scarce means (time and labor) to offer a product (software) that is valuable to consumers. If a product is priced at $0 and another one at $100, this still does not imply anything except that they focus on different ends: one group prefers to offer the software free of charge and another prefers to sell it. And this does not change a thing. Whether you are a business owner investing billions of dollars into free software development and support or a simple hobbyist contributing in your spare time, everyone involved with Linux creates value. And this creation of value is based on entrepreneurial action, not by the government’s interventionism or communism.

Let it be heard loudly that Linux, and indeed every voluntary transaction, belongs to the realm of the peaceful and non-coercive free market.