greentheo

Silvio Gesell was an economist concerned with the prosperity of the working class. Unlike Karl Marx,  Gesell did not believe in taking back the capital resources from the rich by force. Gesell instead believed that the capital of the wealthy was only valuable because it was in limited supply.  Therefore empowering the working masses could be achieved simply by producing surplus capital.  Surplus capital drives down the demand for capital, and as demand drops so too does price.  As price drops and demand drops, interest and rent on that capital drops.

For instance, rent is high on houses because there are a limited supply of houses.  If one can control a large amount of houses in a limited supply market, he can set the price for rent as he wishes.  Karl Marx proposed to take the property back from the landlords and return it to the people.  In Eastern Europe and Russia this socialization of capital was achieved, but with disastrous consequences: nobody aspired to be a landlord; nobody wanted to take responsibility for the upkeep and maintenance of housing.  When profit is decoupled from individual

Under Gesell, the better solution would be for the working class to unite, pitch in, and build a hundred new houses such that the overall rent market either could not be controlled or had excess capacity[1].  In a housing glut rent drops to zero, freeing up a significant portion of worker’s wages to be used elsewhere.

Money can also be considered capital.  Under Karl Marx it is the job of the government is to redistribute wealth from the rich to the poor.  Money in this case is seen as a limited supply good.  Under Gesell, no redistribution is necessary.  The government simply taxes or devalues money (not wealth) periodically so that it is not worth hoarding.   Money must be spent or invested in order to obtain value.  Under Gesell the supply for money in circulation increases drastically, and interest rates must go down.  As interest rates go down general prosperity increases and the divide between the rich and poor decreases.

At the beginning of the 21st century we are now facing many challenges similar to the beginning of the 20th century.  Capital is in short supply, lending rates are low, and there is a sense of general panic in the market.  But, there is a bright spot in the economy which can’t be ignored: open source.

In the 1970s and 80s as computer programming was becoming more and more popular and accessible to the masses, a movement was started to provide hobbyists, academics, and enthusiasts with free software.  These innovative thinkers were responding to a perceived threat by the capitalists to their hobby and passion: computer programming.

At the time, a UNIX operating system computer cost around $10,000.  Hardly anybody could afford to buy a personal computer.  And so the free software foundation was started.  Today the largest legacy of the free software foundation is GNU.  At the same time Linus Torvalds created a UNIX like operating system which is now known as Linux.  Linux and the GNU software were given away completely free with the only restriction being that one could not capitalize on the it[2].  The price of the same system running Linux dropped by 80% to an affordable $2,000.  Today more than 12% of the commercial server market runs Linux, while an undoubtedly large percent of the non-commerical server market prefers Linux to the main alternative Windows Server.[3].

Over the last 20 years Linux has attracted millions of computer programmer-hours… all for free.  Many of these programmers collect a wage from installing and maintaining the software for a client, but they don’t make capital gains on the software.   This has allowed hundreds of thousands of workers to make a fair wage.[4]

In contrast Microsoft has kept their software closed, and therefore capitalized.  While its thousands of workers do make a fair wage, the real gain of Microsoft resides in the 1% of the company that benefits from the capitalization.  Furthermore the cost of Microsoft Windows is high enough that it excludes potential participants in a business that requires numerous licenses of Microsoft Windows from entering the market.

Aside from Linux, there are thousands if not millions of open-source software packages providing many of the daily services that an increasing number of people use.

The open source movement is not limited to software.  Imagine an economy where even jobs like engineering, teaching, construction, architecture and even restauranteering are open source, where those who most want to participate can contribute in the ways in which they are most skilled.  20 years ago few thought Open Source software engineering could ever be a profitable business model for anybody.  Now a very large portion of businesses rely on the Open Source software model to make it at all.

Open Sourcing and decapitalizing large pieces of our economy would truly be democracy in action at an unprecedented scale and it would provide prosperity such as we’ve not seen before for the average and lower class Americans whos main source of income is wages.

Go Linux!

1. it’s not that they give the houses away necessarily but perhaps they build them Amish style, a prerequisite for living in the community is to help raise barns or houses [↩]
2. without making significant modifications of their own [↩]
3. http://en.wikipedia.org/wiki/Linux#Market_share_and_uptake [↩]
4. It should be noted that some Linux companies do make a capital gain on their modified versions of Linux, though the free price of a nearly equivalent Linux package keeps their overall profit down. [↩]