Tue, 24 Jan 2006

Zero-Sum Thinking

I stumbled on a couple of interesting musings this morning, starting with a column in Forbes provacatively titled "World's Worst Disease", through a blog entry examining zero-sum thinking in the business world.

While I wouldn't go quite as far as calling it the world's worst anything, I think it's an interesting perspective on how we think about the world and, in my particular case, about the open-source movement. If you're interested, read on...

Disclaimer: I am not an economist, I have not studied game theory, I just think it's fascinating and read a lot. These arguments are intentionally hand-wavy and imprecise. Of course there's a lot more to it than this. Notice there is no math. I just think it's an interesting perspective.

Zero-Sum is a term lifted directly from Game Theory. Basically it's the idea that for one party to gain something, it is necessary for another party to lose something. This idea is very useful in Game Theory because, well, that's the way a lot of games work. For one player to win a game of chess, the other must lose it.

There are plenty of real-world examples of zero-sum games. If I take a bigger slice of cake, you get a smaller slice of cake. If I mug you and take $50 out of your wallet, you lose $50. If country U wins the war, country I must lose it. Unfortunately, we tend to think in zero-sum terms even in areas where it's not always applicable:

  • In order to fund cause A, we'd have to take money from cause B
  • For me to be in the right, you must be in the wrong

On the surface these can be persuasive arguments, but they ignore the fact that resources can be created and destroyed. Funding one project may create funds or reduce the need for funds in another. Sometimes bad things just happen. In fact we do this so often that there's a name for it, the Zero-Sum Fallacy

The problem, I think, is that zero-sum games are the default mode of a consumer. To acquire food, I must lose money. To acquire money, I must give up my time. When we see people getting more and giving less than we do, we feel it's unfair because the game they're playing has better rules.

So, to open-source software. When people hear about open-source software their responses typically range from incredulity ("that can't possibly work") to downright hostility ("that will destroy the software industry!"). That's because, stuck in our zero-sum thinking mode, the open-source "game" looks like this:

  • Someone is getting something for free
  • Therefore, someone else must be losing something

The article The Myths of Open Source opens with a great quote from one John Alberg, a company founder, CIO and CTO: "It's been quite a surprise to me. The open-source model just seems intuitively wrong." Why? Because we're being raised in a world of zero-sum games, of winners and losers. But the fact is, the open-source software world is win-win.

If I'm working on some open-source software, I'm doing so because I need it for some purpose. This part makes sense - I have given my time, and gained a useful piece of software. You might not call this a 'win' exactly, but I certainly dont lose.

Now, it's time to throw in some economics: the marginal cost of producing software is negligibly close to zero. Having written the software, it costs me nothing to allow you to use it. Without affecting my situation, you very clearly win.

At this stage, it looks like more of a "breakeven-win" situation than a true win-win, but we're not finished. Software products are not closed, isolated individuals - they exist as part of an ecosystem of languages and tools and libraries which they can use to their advantage. Being open source means my software can be a part of that ecosystem, allowing me to achieve the results I want with less effort in less time. In the bigger picture, the open-source world is very clearly win-win.

Are there some bigger winners than others? Sure. People like to worry about "free-riders", who use open-source without contributing back. But that doesnt mean that anyone else loses (except of course for the mythical "loss of opportunity" or "loss of potential revenue", as if those things could be treated as tangible resources).

Why do I write open-source software? Touchy-feely-hippy-Ryan says: "I'd much rather play a game where everybody wins." Cold-hard-rationalist-Ryan says: "artifically inflating the marginal cost of software production reduces the game sum, hampering development and innovation and damaging the long-term prospects of an industry dependant on innovation for its continued existence."