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> So using your analysis of the single worker, which I agree with, it actually makes a very big difference when applied to all workers. It doesn't, because it'
by gridlockd 6y ago
> So using your analysis of the single worker, which I agree with, it actually makes a very big difference when applied to all workers.
It doesn't, because it's still just 0.1%. That may be billions upon billions of dollars in aggregate, but per unit sold, it's still just 0.1%.
So, if your question is "how much cheaper could goods become by switching all production to free software?", then answer would be 0.1%, if we assume that 0.1% is the average share of software licenses in COGS.
In practice, software licenses averaged over all industries might be 1% or higher. Again, that might be trillions of dollars, but it's still just 1% per unit sold. Also, that money isn't evaporating, it's mostly going into the pockets of people who build that software.
Sure, there's a profit margin in software development, maybe 10% on average. So, if you eliminated that profit, you'd save 10% of 1%. You'd still have to pay for that development, even if it is free software. If you eliminate the profit motive, what governs development? Some form of bureaucracy. We already know bureaucracies are inefficient. So you would probably end up paying more to develop "free" software.
From an efficiency perspective, free software is strictly unnecessary, because the marginal cost of software is zero, the cost of developing it is a constant, and therefore its price naturally converges to zero as its development is amortized.
Let's say OpenSSL was proprietary and cost $1000. That would add $1000 to the cost of developing anything that uses it, until a cheaper competitor comes around. How expensive is it to implement SSL? Not that expensive. How many people use SSL? A lot! Do the math, make the business case, and you would probably find that you can turn a profit selling a competing implementation at only 10$. Why is this not happening? Well, because somebody already made OpenSSL free and it's "good enough".
It is a misunderstanding of market forces to assume the compounding effect of free software licenses would be greater than the compounding effect of cheap software licenses that the market produces all by itself.