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The problem with the computer industry under capitalism - Free Software the answer?

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The way the computer industry functions today is a perfect illustration of all the faults and massive inefficiencies of capitalism, where the primary goal is not serving the interests of society. Developing, improving and distributing software takes place only where big profits can be made. This stands in sharp contrast to free software, where human knowledge and the produce of human labour is used to the advantage all of society.

The problem with the computer industry under capitalism - Free Software the answer? This article deals with computer software. That may sound a bit abstract to some of our readers, but it is a subject that is relevant to everybody who uses a computer, for example to read this very article. You should care about the way the computer industry functions today and the way it imposes severe restrictions on us since you may one day no longer be allowed to listen to your MP3's or read your Microsoft Word documents. You may think you will be able to continue these simple tasks forever because you believe you actually own and control most of what is stored on your computer. However, according to big business that is not the case.

Not only do you not own that copy of Microsoft Word, that video game, or even that MP3 player, but like most people using commercial software (be it pirated or paid for in a shop), you also don't own any other way of accessing your information. To this you can reply: "But I will always have my computer because it is mine, and nobody can stop me listening to my music collection!" Maybe so, but not necessarily. To understand that, however, we must first delve into the murky world of software licences.

A "software licence" is a form of contract and has become the most common form of software distribution today. When installing a new programme on your computer you may recall having to click "I Agree", or "OK", or something to that effect. That was you signing a contract that you probably never read in the first place. For the moment we are going to take a rather simplistic approach and divide all software licences (contracts) into two, distinct categories. We will call them "Closed" and "Open". Let's start with "Closed" licences, as they are currently the most common type.

Closed licences are usually fairly restrictive with regard to what you are (and are not) allowed to do with the software in question. When you buy a copy of, for example, Windows XP or Windows Vista, you are typically only allowed to use one licence per computer, you are not permitted to pass copies on to any friends, you are most certainly not allowed to resell it, and you are in no way permitted to make changes to the software. 

A licence to run

Let's take a moment to examine our MP3 player a little closer. Actually, we don't own the programme that plays our Britney Spears album, even though we paid good money for both the programme and the album in question (whether Britney Spears is worth much money is another question altogether of course). But what about our little iPod itself? Surely you can own one of those? Again, the answer is both yes and no. Although you may have bought the actual physical little box, you have only licensed a copy of the programme running on the device. All we have paid for is permission to use the programme.

The important thing to note here is that most closed software licences don't actually sell you anything you can keep; they merely give you permission to run the software under a very specific set of circumstances. A computer programmer can write a little computer game and decide to license it for sale with, for example, the clause "this game may only be used when wearing a dark red jumper and yellow trousers". Legally speaking, those without dark red jumpers and yellow trousers are not permitted to run the programme, even after they have paid money to the programmer. Here is where the distinction between licensing (renting) and purchasing (buying) software becomes important. When people say "I am going to buy a copy of Photoshop," they actually mean "I am going to buy a licence to run a copy of Photoshop, and hope that I meet all the criteria stipulated in the licence contract." This form of agreement is called an end user licence agreement or EULA.

Purchasing implies ownership, and we all know that although you can do whatever you want with a car you own, you should not try to add new wheels or a spoiler to a rental car. We have come to an agreement with the rental company that we hand over some money in exchange for which we are allowed to use the car. However, if we abuse the car then the owner has every right to stop us from using it. It is the same principle in the computer world.

At this point one can object: "So what? I run Microsoft Word. It does what I want. Why should I care? They cannot come into my house and take it away from me." That brings us to the next part: control. To illustrate this point, we need to go back to our example of the MP3 files. An MP3 file is in essence a compressed version of a song as you find it on an audio CD. The way those MP3's you are playing seem to magically compress all that music into a small file was originally developed and published by a German research organisation called the Fraunhofer Institute. It is their so-called intellectual property. But even though they are giving you instructions on how to use their method for storing music, that does not mean you can do whatever you want with it. For example, any product that makes money out of MP3's must pay a royalty to the Fraunhofer Institute. This German organisation invented and patented the MP3 compression algorithm and now they are making about €100,000,000 in licence revenue per year.

That is all well and good, and not a real problem, you may say. After all, you are not the one paying these royalties to them and you are happy to just use your media player on your computer, which usually includes the licence to play MP3 files. The problem is that it is perfectly within their legal right to actually stop you from using it. That means that even though we know how MP3's work, the people that own the intellectual property rights to MP3's always control who may use them. So, perhaps one day they will decide that they don't want anybody using them, and that everyone should move on to MP4. And then MP5. In this way the Fraunhofer Institute always retains control.

Of course you can say: "Well, when that happens I will just switch to a different product. They know I would switch, so they would never do such a thing." The problem is that software companies use a more subtle tactic to both keep their user base and still force them to upgrade (and thus make more profit). For example, if you write a text in Microsoft Word and save it, Word will save it as a "Microsoft Word Document." Here is where the problems start. Nobody in the world really knows how to open a Word document, except Microsoft. There is nothing illegal about that; it is their own standard they use to open and save their documents. The issue is now that anyone who wants to be absolutely sure that they are correctly opening a Word document is required to use (and pay for) a copy of Word, sold only by Microsoft. Sure, some people have done an excellent job of guessing how they work (OpenOffice.org, for example) but they are never 100% sure. We are now required to pay someone money to be able to communicate with each other, or listen to our music.

In the case of Microsoft Word, the situation is even worse. Microsoft has the nasty habit of changing their own file formats every few years. If you have recently bought a copy of Microsoft Office 2007 and you save your document in the latest .docx format, then your friend who you are sending your document to will not be able to open your file at all if he is still running an older version of Microsoft Word. So even if you decide to be a good citizen and pay for a licence of Microsoft Word, there is no guarantee that you will always be able to exchange documents with friends or colleagues as different versions of the same programme can be mutually incompatible. The only solution, apart from manually selecting a better documented file format like RTF, is to keep upgrading (and paying for) your software, but even then you never have an absolute guarantee that your documents will appear exactly the same on your friend's screen as on yours.

Closed and open standards

At this point it is useful to say a few words about something called "Standards." A standard is a way for something to work. MP3 is a standard. DVD is a standard. PDF is a standard. HTML (the language of the World Wide Web) is a standard. In the non-computer world, the Phillips head screw is a standard. Standards allow you to buy a wheel that fits a car, and a nut that fits a bolt. Most of the time people can simply look at a standard - such as the Phillips head screw - and say "Okay, now I can make a Phillips head screw head screwdriver, because I can see how this thing works." Unfortunately, in the world of computers it is possible to have things called "Closed Standards", where it is impossible to "see" how things work. If the person who designed the system does not explicitly tell you how something works then you will not be able to imitate it. For example, if you wanted to create a programme that could save Microsoft Word documents then, as we pointed out above, the only way to do this is to guess how the Microsoft Word format works. This is especially troubling since many government institutions use this format as their de facto standard, so in effect tons of crucial information are stored in a format that nobody really knows how to open or save, except one company called Microsoft.

This use of closed standards results in what is known in the industry as "Vendor Lock-In", where as a customer you become so dependent on a vendor for products or services that moving to another vendor would be too expensive or too much of a hassle. This is a well known strategy of large software houses. It is one of the reasons why Bill Gates managed to become a billionaire, not because he was such a genius but because with his predatory tactics he was able to tie millions of computer users to his company (more about this in our article Bill Gates, saviour of the world?). You must keep buying products from the same company if you want to keep up to date software, and it is too bad if they decide to no longer support a feature you really need. Some banks are still using ancient versions of the OS/2 operating system because the company that once made their proprietary banking software, which only runs on this old operating system, ceased to exist so these banks are now stuck with it.

So, how can we actually have complete control over the files we save? Well, as we said before, some companies publish full specifications of their file formats - such as Adobe with their PDF files, and the Fraunhofer institute, with MP3's - allowing us to create tools to, say, play our MP3's, or convert a bunch of MP3's into an audio CD. Even though companies still retain the intellectual property rights to these formats, we have (as a gesture of goodwill) been given complete blueprints on how to use them. So, should we all just use well-documented formats? That would be a step in the right direction but it is not enough to become truly independent of third parties keen to make a profit. As we found out earlier with the example of the MP3 files, if you use someone else's method for storing information (be it music, photos or essays) they still retain the right to decide who may use their method and to charge royalties. Companies in a capitalist world are in the business to make money in the first place after all.

Who then can I actually buy software from, and be able to do with it what I like? Actually, some people are giving it away. There is the example of PDF files, which is a truly open standard. Every software programmer can find out how the PDF format works because Adobe, the company that created the standard, has given complete instructions on how to use, create, save and print so-called PostScript documents - all without having to pay any royalties. This will remain the case forever, so even if Adobe goes bankrupt, we would still be able to read and write PDF documents. This is not the case if you have bought a song from, for example, an online store like iTunes, which usually comes in a restricted format from Apple that you can only play on an iPod and not on any other MP3 player.

The second type of software licence we mentioned at the very beginning was "open" software. Most open licences, with some minor differences, allow you to add, remove or modify anything you like. They give the software away. You may initially have to pay for a copy, but when you click "I Agree" on a copy of Red Hat Linux you are, from then on, permitted to do whatever you like with the software. If there is a feature you want, then you (or that friend of yours down the road who is pretty good with that sort of thing) may add it. If you want to add lots of features and sell it to someone else, that is allowed too. Or you could just keep on using OpenOffice, an open source word processing programme, happy in the knowledge that you will always, no matter what, be able to get to your documents. The spirit of "Open" is that no single person should be dependent on any third party to use their own property.

Just as with closed standards, there are things called "Open Standards." An open standard defines how something works, but it isn't owned by anybody. Sure, there may be some non-profit organisation in charge of maintaining a reference, but no one needs to pay money to write a HTML web page, since it is an open standard.

Now imagine combining the power of open software and open standards. Anyone could communicate perfectly with anyone else, without being dependent on any third party. This is happening today. It is called Open Source, or to use a better term, "free software". 

Free software versus proprietary software

Free software represents a fundamental break with the closed model. You still get a licence to the software but the licence is intended to empower the users of the software. You are explicitly entitled to make copies (and encouraged to do so) and the software product itself is not seen as a private asset but as a public resource.

The term "free software" suggests a free lunch. One may think this simply means that you don't have to pay for the software. In most cases that is true, but not always. In this context "free" corresponds to the meaning of the French term libre, so it does not necessarily mean gratis. It is about freedom, not price. Or as free software advocates like to put it: free as in free speech, not as in free beer. It is a matter of the users' freedom to use, share, study and improve the software.

Such freedom is in stark contrast to how big business distributes and uses software. For these companies, control over software means control over its source code. Computer programmes are written in a human-readable language (source code), which is translated into the machine language format the computer executes. Machine language is much harder for people to understand and, by implication, modify. By keeping the source code secret, software companies are able to exercise control of how their programmes are used and what functions they can offer. An increasing trend is to use this control to ensure that their intellectual property is preserved. Free software is the polar opposite in which the licence is used to protect the freedom of the end users.

This freedom provides huge benefits to society. Access to source code means that the underlying functionality of software can be inspected, and therefore trusted, and also modified and improved. Flaws in the software can be more easily found and fixed in the interests of all and for the benefit of all. Parts of the source code can be shared among programmers and re-used in other related or new projects. This collaboration encourages sharing human knowledge and saves countless hours of labour in software development as everything only needs to be invented once. The freedom to run and distribute software to whoever needs it, means that all of society benefits, in many cases at no extra cost.

In order to protect these freedoms, various licences have come into existence. By far the most famous one is the GPL licence, which stands for GNU General Public Licence. The GPL was written by Richard Stallman in 1989, whose goal it was to produce one licence that could be used for any free software project, thus making it possible for many projects to share code. This GPL licence quickly became the single most popular licence for free software after Linus Torvalds, the founder of the Linux operating system, adopted the licence for the Linux kernel in 1992.

The advantage of the GPL licence is that instead of copyright, it imposes a strong copyleft on the software licensed under it. Basically this means that all modified versions of the software must in turn be licensed under the GPL. A piece of software that uses GPL code in turn has got to make its source code available for others. The copyleft thus uses copyright law to accomplish the opposite of its usual purpose: instead of imposing restrictions, it grants rights to other people, in a way that ensures the rights cannot subsequently be taken away.

Microsoft CEO Steve Ballmer once referred to the GPL as "a cancer that attaches itself in an intellectual property sense to everything it touches." Ballmer here, of course, wants to discredit the whole open source movement by spreading fear, uncertainty and doubt. The truth is that the GPL licence "infects" only derivative works of GPLed software, that is, if as a programmer you decide to distribute your software, which you have based on an existing piece of software. We would argue that the GPL is like a benign, liberating virus that infects all software that is written under the licence in order to ensure that the source code will always remain open and can be used for the good of society. The GPL was crucial to the success of the GNU/Linux operating system, giving the programmers who contributed to it the confidence that their work would benefit the whole world and remain free, rather than being exploited by software companies that would not have to give anything back to the community.

Conversely, the closed software approach embodies all the faults and massive inefficiencies of capitalism, where the primary goal is not serving the interests of society, nor innovating, nor improving or fixing software - all those interests come a far second to the primary goal of generating profits. Developing, improving and distributing software takes place only where big profits can be made. Flaws in Microsoft Windows only supply Microsoft with yet more leverage to restrict software, by obliging people to have a licensed copy in order to get access to essential security updates.

Proprietary software can neither be studied nor modified by the public and gives software companies the power to maintain big monopolies and making life difficult for their competitors. This stifles advances in technology - Microsoft has been many times the monopoliser but rarely the innovator. When the fruits of the labour of developers under private companies are restricted, and their source code kept a secret, the labour power of society is squandered wastefully as other developers are forced to start from scratch if they want to enter the software market. The task of protecting source code and concealing knowledge has become a big industry, yet these efforts are totally superfluous to free software, where human knowledge and the produce of human labour is used to the advantage all of society.

The collaborative process of free software has already proven its success by the millions of people involved and the hundreds of thousands of open source projects that have been produced, including spectacular success stories such as the Apache web server, which serves 50% of the Internet, and OpenOffice and Mozilla Firefox, which have tens of millions of users worldwide.

Contradictions in the free software movement

There are two major philosophies concerning the creation and use of freely available software, known as the free software and open source models. The term "free software" is older than "open source". "Free software" is used by the Free Software Foundation founded by Richard Stallman in 1985. The term "open source", on the other hand, has been developed by Eric Raymond and others, who, in 1998, founded the Open Source Initiative.

Why is there a distinction and why is it important? In order to tackle these questions, we have to take a look at the history of the free software movement.

The free software movement fractured in the late nineties into two camps: the free software movement proper and the open source movement. The tensions had existed for a long time beforehand and centre on the difference in philosophy between the advocates of each movement.

On the one hand, the free software camp tended to proceed from ethical or moral arguments about the harmful effects of proprietary software. This, coupled with the GNU Public Licence which was perceived as being unfriendly to business (and often said to be anti-commercial), prompted the creation of the open source camp. The latter sought to win the support of big business and so emphasized the technical superiority of the software resulting from the "open" development process.

This contradiction has been there from the beginning. Richard Stallman, founder of the free software movement had ensured that the licence that granted end user freedoms could not be used by business to undermine the original effort. One right that is not granted by the original GPL free software licence was to incorporate free software into commercial products. If a company does this it must make its own product also free software, which explains Steve Ballmer's "virus" remark.

The open source advocates pursued a strategy of winning support from big business and were successful in getting large corporations like IBM to back them. The free software community had shown how amateurs organised into loose teams across the globe can outperform even the disciplined legions of developers employed by Microsoft. The open source community sought to exploit this process but to remove the anti-capitalist ethos that seemed to bedevil free software. This led to the creation of several successful not-for-profit foundations such as Apache that can pay developers to work on open source. Unsurprisingly, the free software movement has found itself pushed to the periphery as its moral crusade failed to resonate with many people.

Linux = Socialism?
 Not quite correct, but a funny cartoon nevertheless

The true significance of the free software model is a political one. Thousands of computer programmers all over the world work together on a common project and they share their computer code in order to arrive at a good product that everybody is able to use. It shows in practice that even in this capitalist world it is possible to collaborate rather than be in competition with each other. It shows that it is a myth that people will only do things for money or for profit.

Having said that, it would be wrong to idealise the open source or free software model. What we see now is only a tiny fraction of its potential. It is not correct to say that open source equals socialism. Technology is not neutral. The fact that free software is still a very marginal phenomenon (most people use Windows or Mac, which is equally "closed") shows that there is a long way to go before we will be able to exchange our information in an open format, free of charge, without dependence on a monopolist player like Microsoft.

Software, a very profitable commodity

The problem with the computer industry under capitalism - Free Software the answer? As we mentioned above, it is not the software itself that is bought and sold, but a licence to use that software. Such a licence is a commodity when it has a social use value to society and when it originates from the expenditure of human labour power. In major software development, this expenditure can be massive. Many hundreds of thousands of hours of development time were necessary to create operating systems such as Microsoft Windows and programmes such as Microsoft Office. However, due the immaterial nature of software - unlike other commodities - it can be reproduced many times at virtually no cost at all and the original capital outlay can be recovered rapidly. In many cases, software licences such as the case of Microsoft Office, have gone on to become "cash cows", which continue to gather big profits via millions of sales, even though development may stagnate for many years at a time.

Most companies simply do not have such a big capital outlay to even begin to compete directly with Microsoft. Without a significant share of the market, such a heavy investment would not be rewarded. There is no "branching" into new projects possible like in the open source movement, and any software competing with Microsoft would have to wastefully start the technology from scratch and would then meet head on with Microsoft, well-known for its various anti-competitive and monopolistic practices.

Karl Marx explained the ever increasing "concentration of capital" inherent to capitalism. In the software industry, like all other industries, this means that the small players are forced out - "their capitals partly vanishing, partly disappearing into the hands of the conqueror", and this has left Microsoft with obscene profits and essentially unbridled reign over the industry. Microsoft is then able to perpetuate its own monopoly by ensuring that new PC's come with the operating system pre-installed, the use of non-free propriety formats such as Microsoft Office formats, and it can be certain that all new hardware comes with built-in support for Windows. This ensures an unbreakable dependence on the software in spite of any inferior qualities.

Since the beginning of the 20th century capitalism manifested itself as monopoly capitalism which was well explained by Lenin in his classic work Imperialism - The Highest Stage of Capitalism. In the present capitalist system, competition is generally presented as something inherently positive, which stimulates innovation, creativity and originality. That view is fundamentally false, and it is no less false in the case of Microsoft's monopoly on much of the software industry, which has provided the company with less and less need to innovate. Development of its products slows and its faults are tolerated. Microsoft prefers to protect its herd of "cash cows" than meet the needs of people, and it continues to place its efforts on eliminating competition rather than benefiting from it in a healthy way.

Socialism and Free Software

Large companies use their monopoly control to impose de facto standards. In itself standardisation is a very positive thing. When buying a new computer, it makes sense to have all the necessary software available without any further costs. It also helps that computers use the same formats so that documents, audio files etc. can be exchanged without problems. The negative aspect of this kind of standard is that the selfsame companies use these proprietary standards to further reinforce their monopoly. A significant part of the world economy now depends on these standards (Microsoft Word documents being the prime example of this) and the critical decisions are made by private companies who have no accountability at all.

This is where technology becomes political. The only power that is able to effectively promote open standards and free software in general is a political power. Right now the problem is that many open source projects are rather amateurish and end up nowhere because of lack of financing. Often (though certainly not always), hobbyist projects simply cannot compete with the commercial, closed and proprietary software that has thousands of professional programmers behind it. At this stage, for example, it would be very hard for most graphic designers to switch over to free software as in this domain it is simply not up to scratch yet. Their only option at this stage is to use specialised software from companies like Adobe or Macromedia.

The solution to the present chaos in the computer world is not to just convince everybody to switch to Linux operating systems or to only use open source software and avoid proprietary software. Of course that would be a step in the right direction, but we need to see the limits of a moralist approach like this. It is a myth to think that in a capitalist world you can somehow create a fair haven while the system itself only creates inequality and injustice. Free software can only be the "germs" of a new society, as it cannot involve the total production. For the free software movement to truly take prime position, society has to change. We need to change the capitalist mode of production and replace it with a socialist one, based on cooperation and sharing of information.

In a genuine socialist society (not the monstrous caricature that existed in the former Stalinist countries) there would be no reason for competition beyond the type of competition we see in sports. Instead various kinds of fruitful cooperation would take place. You can see that today not only in free software but also (partly) in science and, for instance, in cooking recipes. Imagine your daily meal if cooking recipes were proprietary and available only after paying a licence fee instead of being the result of a world-wide cooperation of cooks. A socialist society would seek to harness radically improved working patterns now afforded by technology and open source and free software foreshadow some of the possibilities of how society can be run democratically and efficiently.

In order to remove the existing fetter on technological development we need to enable radical change in the way software is produced. Imagine if the source code of Microsoft's and other private companies' software were made publicly available so that all software could be freely distributed and further developed to the benefit of the whole of humankind. The free software movement is a foretaste of how engineering - not just in software - might be organised once it is freed from the constraints of private profit.

To conclude with what we said in our article on Bill Gates:

"What is needed is a transfer of all available computer technology to a form of social ownership, linked with a democratic world socialist government that would finally put all available resources and technology to the public's use. That, in turn, requires a socialist transformation of society that would abolish the profit system and establish a worldwide democratically controlled economic system where production is based on the needs of mankind."

Credits

This article was first and foremost a collaborative effort. Thanks to Steve from Australia, Emil from Great Britain and Jesse from New Zealand for their valuable contributions and comments. Credit is also due to Sean Cohen, the author of the article Why Free Software Matters, which served as the basis of and inspiration for the present article. Please send any comments to maarten {[at]} marxist.com.


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