Economically speaking, at the highest levels, the product of human effort in a free market is value. The actions of a market can be considered a hill-climbing exercise in discovering the combination of factors that provide the greatest value to the greatest number.

Money has historically been tightly coupled to production. In the information age we have begun to see a decoupling. All the fascinating changes you talk about look to me like a product of that decoupling.

The key human resource in the information age is enthusiastic attention.

Money is useful as a quantifier of value because it affords measurement, feedback, planning, and improvement.

Money is also useful as an enthusiasm generator because it directs human attention toward problems whose solutions create value.

But on the Internet, which is the most frictionless medium yet invented for the exchange of ideas, ideas themselves are an attractor of enthusiastic attention. Those ideas can compete with money as an attractor. In other words, folks who love opensource programming do it even when they're not being paid for it. And, in general, ideas trump money: money follows ideas; ideas do not follow money.

In fact, on the Internet, a monetized model of production in which coders work for hire can be less efficient than a non-monetized model in which coders work on whatever interests them!

Why? The fundamental question in a market is "is this work valuable?" In traditional markets, we answer that question using money as a measuring stick. The answer is yes if the project attracts customers and profits are obtained. The answer if no if the project does not sell and the producers make a loss.

But on the Internet, you can take money out of the equation and still obtain the same feedback dynamic. A bad idea will not attract coders. A good idea will. And in this pure economy of ideas, you don't have the overhead of payroll, timesheets, sales, focus groups, and contracts. All that stuff is friction. Necessary in a money economy, unnecessary in an idea economy supported by the Internet.

That's why solutions developed in the opensource way tend to actually be better than solutions developed in the commercial way. In commerce, because enthusiastic attention has to be bought, money is friction that slows down feedback loops, and competition between ideas gets caught up in competition between companies. In the opensource world, competition between ideas can happen much faster --- evolution is quicker because there's less friction. Because the drosophila fly can reproduce in a day, it is more adaptive to a changing environment than, say, a redwood.

Coming back to the economic model, we see that open models can be a better, more efficient way for a market or a society to quickly discover good ideas and good designs. When you roll market research and r&d into a single process, product cycles no longer interrupt the game. The action keeps going continuously.

And that's why technologies developed in the open are better than technologies developed by companies.

Now, that doesn't always mean that all technologies deserve to be developed in the open. Technologies can only take advantage of the above argument when the field is fertile. It takes a rare set of circumstances for a set of actors to overcome the tragedy of the commons in the absence of government. Collective action only works when each participant can benefit by participation. And there have to be a lot of candidates working in a field before a critical mass can bootstrap into existence.

The opensource development model worked with SPF because everybody wants to solve spam. The Apache web server worked because everybody wants to publish content for free. Linux worked because everybody wants Unix on the cheap. RT works because everybody needs a ticket system.

But there are lots of things that haven't worked as well: where is the best-of-breed opensource account mangement and billing system? Where's the opensource answer to Adobe Photoshop and Illustrator? (Sorry, the Gimp still doesn't come close.) I'm sure they will come one day: we just need to wait for critical mass to build. For some technologies, that critical mass may take so long to build that by the time it's there, the problem has already been solved and commoditized in the old way of commercial production. That's fine too.