Case in point: At the World Science Fiction Convention this weekend, there was a panel on alternatives to capitalism, at which Cory Doctorow observed that some open source projects seem to be beating Microsoft at their own game -- competing effectively, on a very low budget (measured in any conventional terms), in markets (particularly for web servers) that Microsoft rather badly wants. Another panelist cut in at this point to observe that that's true -- but the open source guys are relying on an infrastructure, the Internet, which was built by capitalism. It would be uncharitable to name her, because she's absolutely dead wrong.
The seeds of the modern Internet are in a research program which a Pentagon bureaucrat named J.C.R. Licklider declared more or less by fiat. (It's perhaps unfair to call Licklider a burueaucrat; like many program officers in what was then the Advanced Research Projects Agency, he was an academic who took a few years out of his career at MIT to work for the government, but when he started the program, his office was in Pentagon ring D). For the next fifteen years at least, what are now the basic protocols of the modern internet were developed entirely with government funding, despite, at best, commercial indifference.
And the environment in which the protocols were developed had lasting effects. It doesn't cost blogger.com any more to exchange packets with a machine in Iraq than with a machine in Santa Clara because when IP was designed, the people who designed it thought they were designing a protocol for defense networks, and were concerned only with getting data where it needed to go, not with billing. Which is why blogger.com needn't try -- indeed, it would be difficult for them -- to charge extra. Any protocol which had been designed from the ground up for commercial interests -- and there were several -- would not have made such an obvious omission. (If you need evidence for that, just look at a cell phone contract). And it almost certainly would not have been possible, as a result, for Salam Pax to start his anonymous blog without making traceable payments.
Mind you, capitalism would have served up data services to consumers eventually. In fact, capitalism was providing them on its own before all the customers starting demanding that they support the protocols from Licklider's research project (and a follow-on project at a European, government-funded physics lab of all places, with the astoundingly pretentious name "world wide web"). Before the Internet became popular, 1995 or so, there were several consumer data services -- AOL, Prodigy, Compuserve. They had differences between them, but a few things in common:
- Data was published only to subscribers of a particular network. They didn't communicate.
- Publishers, e.g. Time/Warner, were charged serious fees for making data available to subscribers, and they had to use tools and data formats proprietary to each network to do that.
- The only way for subscribers to make something available for other subscribers to see was to say it in a chat room -- but content in the chat rooms was ephemeral, and they were heavily censored by company employees.
In short, these networks did not allow people to cheaply publish controversial stuff for the general public to read. And that should be no surprise: imagine proposing that to the executives of one of these services. There's real liability there, and it's not likely they'd make much money on it. Why bother? Better by far to try to lock up exclusives on interesting content with demonstrated marketability -- as Microsoft tried to do with its own take on this kind of service, the first version of MSN, which I once saw described as "a vast playground in which everything you do makes Bill money".
Ultimately, this model died, because the Internet was available as an alternative, and it was better for almost everybody. It was better for publishers, who got competition among hosting services, rather than having to deal with AOL as the sole gateway to AOL subscribers. And it was better for users, who get a far greater variety of stuff to read, and who get to publish. The only people it was worse for are network providers like AOL, who found themselves commoditized -- which is why they tried to build their networks differently as long as they had a choice.
But for the internet to be available as an alternative, someone had to build it. In the history we have, it they were paid by the government. And if it wasn't the government, it's not obvious who else it could have been. When content providers were investing in telecom at all, it was in cable TV systems which allowed users to do even less. And users were doing things for each other, but it's hard to describe those as "capitalism at work." There was FIDONET, for instance, an arrangement for exchanging files between dial-in bulletin boards -- but that was largely a hobbyist effort, not commercial. There were also ad hoc networks among various research groups -- BITnet, and various UUCP-based networks -- but the people building those were not, at the time, thinking commercially either. And both of those were hampered severely by the lack of a dedicated, full-time communications backbone which was quick enough for interactive use. The infant internet had that -- paid for entirely by the government.
The internet as it exists now is a commercial proposition, but it took a long time to get that way -- and without the government investment, what we got might well have been a great deal worse.
And if you see any irony in the actions of "big government" enhancing individual rights that were under corporate threat, you've been reading too many libertarians. A couple of good references for this history, by the way, are Janet Abbate's book, "Inventing the Internet", and Mitchell Waldrop's book, "The Dream Machine", on Licklider; both are good for the periods they cover, but I don't know if either is still in print...