In many ways it was (and is). Many research projects are government funded and produce FOSS. The entire industrial/academic space surrounding the development of

In many ways it was (and is). Many research projects are government funded and produce FOSS. The entire industrial/academic space surrounding the development of Unix, sharing of source code tapes, and the emergence of RMS and GNU were running primarily on government funding. The long-running jokes about Linux and beowulf clusters were echoes of the actual government funding driving many activities where FOSS interface with computational science. Now, you might have the mistaken idea that science or other R&D funding is easy to access like ticking a box on a tax form. No, you need lots of bureaucratic support and so to work under government funding is to get a job in a university or other research lab that is equipped to chase, win, and collect government funding. Your position is "soft money" and depends on either you (as a principal investigator) or your boss engaging this constant struggle to win the next contract that keeps you from losing funding and your position. Some of this money splashes around to student workers, graduate students, postdocs, or interns. A lot is spent on more permanent, full-time faculty and staff as well as other infrastructure and administration. The big shift I have seen in my ~25 year career is that the industrial participants in this environment have shifted from being primarily government-contract focused to being consumer-focused. The whole cloud/internet revolution has brought these new corporations who no longer depend first and foremost on government grants from the science or defense research complex. Earlier, we also saw shifts with enterprise, B2B-focused corporations and vendors, but I think they often had more overlap with the traditional government funding sources and also blended in a little more.