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The Third Way

September 18th, 2002 · No Comments

Apologies to those of you for whom this sort of evangelism is old-hat; this is an LFB column, and it seemed likely that this would be new to some of that audience.

Friedrich Hayek famously — if somewhat unusually — defined freedom as the condition under which each could deploy her own information for her own purposes. Free action, he wrote in The Constitution of Liberty, must rest on “data which cannot be shaped at will by another.” Of course, this was the late 50s, and Hayek was not thinking of computing freedom, nor of liberty on the Internet: he meant “data” in the etymologically precise sense of “given facts,” and the “information” he was concerned with was the “local knowledge” individuals possess about their own practices, circumstances, and ends.

Still, as a thinker obsessed with information networks in the most general sense, Hayek has a special relevance to the information age. He probably deserves to be the Internet’s unofficial philosopher emeritus. And, were he alive today, he might have some surprising things to say about the Net’s development. He might, for example, have argued that in certain very limited spheres, “the market” as traditionally conceived is no longer the best servant of freedom. The Internet has made possible a genuine “third way.”

Consider Microsoft. Those of us who are less than sanguine about government control of the economy have leapt to defend the firm from the antitrust cudgel — rightly so. If there is any sector in which government is particularly ill suited to make judgments about which types of innovation are “acceptable,” it is the fast-paced technology industry. But the enemy of my enemy is not necessarily my friend. Like any firm, Microsoft has an interest in the perpetuation of its own dominance. As in other markets, that means producing what will satisfy customer desires — but it may well mean more than that. If few enough people are repelled at any one time by Microsoft’s incremental steps to lock down their code — using the same gradualist strategy Charlotte Twight blames for this century’s growth of government — and to exert greater control over uses of their software, then they will do so if that helps the company, whether or not this is in the best interests of consumers.

Most of us have little enough interest in mucking about in the source code of our operating system, and it would be a mistake to conclude, as so many do, that a “market failure” exists whenever a minority preference in the market is left unsatisfied. But as Hayek reminded us, we often benefit most from the freedoms exercised by only a few. Neither is it only serious hackers who have reason for concern. As long as your files are stored in a closed, proprietary format owned by Microsoft, your access to it is contingent on their approval. Your data can be shaped by the will of another. If viable alternatives to Microsoft and the even more closed Apple (which, despite its fuzzy hipster image, rules its software/hardware axis with an iron fist) do not soon become widespread, we may find ourselves locked into a perpetual two-party system, in which the costs of defecting to a non-standard OS have become too high for most of us to seriously consider. If I may be allowed a more paranoid speculation, what might a surveillance state want surreptitously added to a dominant operating system whose innards are closed to prying eyes?

There is, however, an alternative. I’m writing this column on my laptop, which now runs on the non-proprietary Linux operating system. Linux is the child of the open-source movement, an empirically successful mode of production that flies in the face of our traditional economic assumptions. (Though it shouldn’t: we can see in retrospect that most cultural production in history has been “open source.”) Hayek and his fellow travelers always demanded of those who criticized the market: compared to what? For a long time, the only serious alternative was government control, a system palpably inferior to market control for all but a very few goods. Hayek saw the power of markets to coordinate dispersed information through an evolving, self-correcting spontaneous order in a way that governments could not hope to match. In the realm of information production, however, open source bests both state and market for the very same reasons. Proprietary control of production within a firm necessarily limits the number of people — and so the amount of information — who can work on a given project. Open source opens the floodgates. Don’t like the way a certain program works? Open up the hood and change it! If others like your change, it will spread through the consumer population with the speed of a benificent mutation, providing a foundation on which new innovations can occur.

Public policy could help the burgeoning open source movement. Why, after all, does the government squander hundreds of millions of dollars licensing proprietary software when a free alternative exists? There’s a more libertarian-friendly sort of political activism we can all engage in on this front, though — the sort you can do on your own, sitting at home in your boxers. Install Linux on your home computer. Not because the software is necessarily much better at present, or even because it saves you the cost of upgrades. No, do it because a world in which open software thrives — in which the network externalities generated by a large user base encourage other users to adopt the platform and developers to support it — is better for freedom. You can even keep Windows on part of your hard drive.

If all this sounds vaguely heretical, recall the old joke about two Chicago economists walking down the sidewalk. One sees a five dollar bill on the sidewalk, and bends to pick it up. The other cries: “No, no, it’s not really there! If it were, someone would have already picked it up.” We expect “the market” to produce optimal outcomes… and it does. What we sometimes forget is that we are the market, and its optimizing powers are constrained by our own knowledge and foresight. We appreciate, as advocates of state intervention do not, how well and how frequently “the market solves.” But it solves only those problems that consumers recognize as needing solutions. The problem, now, is freedom. If we do not pay attention to the ways in which industry incumbents threaten that freedom, albeit non-coercively, the market cannot protect it.

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