Why I Don’t Subscribe to The Economist

02Aug07

The conventions of popular business writing can be a real barrier to understanding the economics of commons. This thought occurs to me as I look at the online edition of The Economist.

They have written an entire little hymn of praise to the genius of Steve Jobs and his feat of saving Apple. They’ve written this story without ever mentioning Free BSD, KDE, or even just “open source software.” The nearest they come to mentioning the role of the intellectual commons in Apple’s turnaround is an admiring mention of Job’s skill in using “technologies from outside.”

The Economist clearly wants to tell a story about a heroic entrepreneur whose personal leadership and vision is the vital factor in the success, nay, the very survival of his firm. His genius saw opportunities where others saw only doom. He perceived new truths where others were lost in darkness. He fully deserves his millions of dollars a year in compensation. And if you follow his magic “Four Principles of Management,” conveniently distilled for you by The Economist, you too can ascend to the mountain top of wealth and glory!

The intellectual commons have no place in this tale of the heroic entrepreneur. But just for fun, let’s quickly sketch out an alternative version of the story that includes the assistance which Apple received from the open source movement. In this version, the Market, in its typical blind, mechanistic fashion, has generated a matrix of network externalities that have firmly enthroned a Microsoft monopoly on the computer desktop. With its irresistible power, Microsoft is well on its way to extinguishing Apple entirely, when Microsoft receives some forceful hints from the Federal government that ruthlessly crushing its last, desktop rival might provoke some kind of regulatory retribution. So Microsoft stays its hand, loans Apple rent money, and even works publicly to make its monopoly Office products run on the Macintosh.

But so powerful are network externalities that even this reprieve isn’t sufficient to save Apple. In desperation, and despite his every business instinct, Jobs finally is finally convinced to turn to the open source community for a modern, high-quality operating system. He does not take this step because his vision and genius guide him to “network innovation” as The Economist describes it, but because he has simply run out of other options. Apple needs serious technical help in order to turn around and has no money to pay for that help on the market.

The story gets good at this point, as the open source ugly-duckling turns out to be a prince. The intellectual commons, represented by the Free BSD and KDE projects, give Apple the best, sexiest operating system it’s had in years. Miraculously, the commons do this while letting Apple divert resources from OS development to new products like the iPod that lead the way to surging new profits. Participating in co-operative, open source development, rather than continuing with proprietary development, is the miracle Apple has needed all along. Apple not only survives, but expands its desktop market share in the teeth of Microsoft’s monopoly. It’s like watching a man slowly win a tug-of-war against a car.

So there you have two versions of the story of Apple’s turn-around: an open source version and a heroic entrepreneur version. I can’t honestly say which one is closer to the truth since I am not privy to Apple’s inner workings. But I will say that the heroic entrepreneur story provides no useful content, the “Four Principles of Management” notwithstanding, and basically just panders to the fantasies of business executives: if you’re lean, mean and smart enough you will get rich no matter how the market structure of your industry has stacked the odds against you.

The open source story, the story of the little guy who was forced into a last-ditch strategy that was way outside of the box and, miraculously, finds a way to beat a behemoth — that story can be just as entertaining as the other. But on top of entertainment, the story of Apple and open source actually communicates something about the new power of open source development in the Internet economy. And that information really is useful content.

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