Re: Way OT: Adam Smith and Software Markets

[pmorrison@4lpi.com (Jason)]

"Frank J. Lhota" <NOSPAM.lhota.adarose@verizon.net> wrote in message news:<mUK8a.23783$8f7.21516@nwrdny02.gnilink.net>...
> >   Unfortunately, as this points out in yet another way, the classic Adam
> > Smith free market works very poorly for software.
> 
> There is a simple experiment that can show that the market for software, for
> the most part, works fairly well. Do you have an old PC in your attic? You

<snip>
 
> In my time, I have constantly seen market pressure fuel many hardware and
> software improvements. The companies that failed to make improvements in
> their products have often suffered tremendous falls. (Remember WordStar, the
> MicroPro word processor that once held over half the word processing
> market?) I am not saying that we in the software industry could not do
> better, and I wholehearted agree that software development as it is done
> today needs much better quality assurance techniques. But one cannot deny
> how far we have come. The proof of that is just one attic away.


Getting back to Adam Smith, I always find it interesting when people
invoke his name in discussions because he's often quite misunderstood.
 For example, Smith said very little about corporations in the Wealth
of Nations, and it's hard to have a discussion about the software (or
any modern) market with out the effect of corporations.  I haven't
read it in a while, but as I remember he seemed to think they were
useful in only limited cases and were kind of a fad.  He didn't see
how an artificial paper entity could have the same strong
self-interest that kept individuals competing in the marketplace.

What he didn't get was that corporations distill the self-interest of
thousands of individuals, without the messy moral sentiments that were
so important in his philosophy.  I also think it's interesting how
often the Theory of Moral Sentiments is overlooked by those who preach
Adam Smith this, Adam Smith that.

Anyway, I guess the point I'm getting to is that the involvement of
corporations to such a degree would throw Smith off today.  Someone
above mentioned that economics is a scale with free market at one end
and command at the other.  This is an oversimplification.  For
example, if we go to the far end of free market, with virtually no
government intervention/regulation, I guarantee we'll find more
monopolies and much, much less competition than in a free market with
certain competition-promoting rules.  So if we impose some rules, like
antitrust regulations, labeling laws, etc., are we really moving
toward a command economy?

What does this have to do with software?  Well, the subject does say
"Way OT" ... But really, I just think that we need to recognize that
for better or worse, corporations change all these equations.  This is
part of the reason why, for example, I can't think of a single thing
I've done with Word 2000 on Win 2000 that I couldn't have done with
whatever version I had on Win 3.1 (Word 5, maybe?), and they both seem
to run about as quickly.  But then I was using a 386 40MHz, and now
I've got an Athlon 1400 MHz.  This seems sort of pathetic to me.

It might be possible that had the software industry been a collection
of individuals competing in a completely free market, things would be
different.  Then again, big projects often can't be completed by
individuals.  So we'll never know.  But it is safe to say that
whatever progress has been made in software, it's not really Adam
Smith's free market at work.