Why Wall Street Hates Open-Source

Now for the stupid reason Wall Streeters hate open-source.

To them, it smacks of socialism.

But open-source software actually keeps the government out of the software market.

There is no Moore's Law of Software. Software remains hand-made. As it grows more complex, it costs more to enhance and maintain.

This leads naturally to monopoly. In a competitive world, only one company can attain the scale to grow and protect a complex code base.

In the 21st century we don't have a really competitive software market, but a series of proprietary, monopolistic silos. Windows on the desktop: Apple's (AAPL) iOS in the device market, Oracle in the enterprise.

But thanks to open-source, we don't send the government after this power. We send the market after it.

Open-source lets a lot of companies work together and build a code base that rivals any proprietary giant's. Linux competes with Windows in the server space because it's open-source. Apache is the dominant Web server because it's open-source. Small companies have a chance against big companies because they can build from an open-source base.

The only reason Apple doesn't have a monopoly in the smartphone market and Justice Department officers crawling through every office in Cupertino, Calif. is open-source. Microsoft might never have gotten the government out of its affairs but for open-source competition.

There are some on Wall Street who like monopolies. Monopolies make money regardless of the quality of their work. But monopolies also become bureaucratic and slow -- more like government than real businesses.

Open-source provides the market discipline to protect against these excesses. It's the best protection we have -- better, in fact, than government -- because it adapts more quickly.

When some on Wall Street think of open-source, they make the mistake of visualizing Richard Stallman, the leftist idealist who created Free and Open Source Software (FOSS) through the Gnu Project and who founded the Free Software Foundation to advocate the "fourth freedom" of free code -- the freedom to get others' enhancements to it.

Even today, Stallman looks like a hippie. He could have been a millionaire, but he rejected that idea long ago.

But Stallman will be the first to tell you that FOSS is not open-source. The wellspring of open-source thought is Eric Raymond's essay "The Cathedral and the Bazaar."

Eric Raymond is a Republican and a self-described gun nut.

So get over your hatred, Wall Street. Open-source is on your side.

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