The ancient Chinese saw the world as polarized between forces of Yin and Yang that needed to be kept in balance. Of late, our proprietary Yin seems to be going unchecked.

The dynamic of Yin and Yang for the ancient Chinese represented how the entire universe worked. Symbolically an outer circle represented the entire universe, while inner mostly black and mostly white shapes represented the interaction of two energies: "Yin" and "Yang" respectively. It was their dynamic interplay that caused everything to happen. More importantly, one could not exist without the other. Yang stood for the forces of light, peace, and serenity, while Yin stood for the forces of darkness, confusion, and turmoil. Nonetheless, the forces of Yang were disruptive and brought disintegration, in great contrast to the forces of Yin, which were conservative and gave shape to things.

The Yin and Yang that polarize today’s software market arise out the confrontation of proprietary with free software. Open Source is the Zen of this conflict and the dynamism of the “GNU/Linux market” is the touch point (if not the proof point) of the ancient Chinese mysticism. Think of it: Here we are in August of 2002, just two short years from the initial launch of Open in August of 2000 and just over three years from that fateful June afternoon at AndoverNet when I declared the idea of a pure IT publication for Linux utterly daft. At the time, not even the most ardent of the converted would have wagered that an operating system needing “instalfests” could become the fastest selling—not the bogus “fastest growing”—server operating system in a little over three years.

In yet another remarkable proof point of that ancient Chinese mysticism, the free and open collaboration behind GNU/Linux has taken us from rather apologetic reviews of Linux performance in our first openBench Labs reviews— when just catching up to optimization techniques of Windows 2000 looked to be near impossible—to solid reviews of superior performance on Linux. Getting to that point, however, required the addition of some of that proprietary tinsel, such as the Intel C compiler or Sun’s Star Office, which even Eric Raymond has urged Linux aficionados to adopt.

The need for that dynamic balance also played out in the colossal bursting of the mad Internet financial bubble over that same time frame. Long before PCs and day-traders populated the landscape, new technologies were agents of deflationary change in financial markets. From the steam engine, to the automobile, to the computer, new technologies have brought disruption into our economic lives. Whether these technologies made bountiful harvests more bountiful or mass-produced industrial goods more massively available, the immediate effects were deflationary. Only when that technology was broadly absorbed throughout the economy were the effects considered to be positive drivers of improved productivity.

The big problem, however, was lying beneath the surface. This problem is manifested by a geometric increase in the velocity and magnitude of the disruption accompanying the introduction of a new technology. By the time you get to the microprocessor revolution and the realization that “Moore’s Law” is real and not a fanciful imagining, it takes a seismic market event of Homeric proportions, like Y2K, just to absorb the impact of the change. Considering the flood of offers for $650-P4 PCs I’ve been getting in my email, the wheels of progress continue relentlessly to grind.

But that’s just hardware! With visions of MS sugarplums dancing in their heads, how many consultants over the last few years made a killing by telling their hardware clients that adding a software component to their product would insulate their gross margins? Who would have thought that a small group of die-hard Linux advocates would devise a scheme to make free software acceptable to risk-adverse CIOs. Nonetheless, they rationalized the Free Software ideal with for-profit practicality to devise in what they dubbed “Open Source,” a business construct that would draw in the support of companies such as IBM and HP and give the movement the kind of momentum that now makes it momentum unstoppable.

So there you have it. Here we are in August 2002 and every mom-and-pop hot-dog stand is sitting on dirt-cheap CPU cycles, dirt-cheap telecom bandwidth, and dirt-cheap software alternatives. Meanwhile all of the financial analysts keep looking for the high-tech sector to fix the problems of deflation and a growing lack of liquidity that the financial analysts have finally discovered—finding an iceberg is a lot easier after you’ve hit it. There is a flaw, however, in this picture: High-tech is the problem, not the solution. The only thing high-tech can do is dig the deflationary hole deeper.

The real solution lies with corporations outside of high-tech and the lower their low-tech status, the better. That’s because the not-so-simple solution is to find ways to consume the new technology and make it a driver for improved productivity. For these companies, all this discussion boils down to just a handful of options: make more things, make things faster, or make more things faster.

While making more things might well be considered as just another way to aggravate the deflationary spiral, when those things are foodstuffs and global population looks like it’s headed to 11 billion, more is not such a bad idea. Faster, however, is even better.

Suppose you are an investment bank. The speed at which you can tie a new customer’s IT systems to those of your bank’s to start moving transactions is critical to your bottom line. So your first instinct is to call the patent attorneys if you have an in-house middleware package that does that job. Now stop dialing and put down that phone.

Forget about your competitors and start thinking about the many enterprises that are not remotely interested in becoming investment banks, but that still have a critical need to move data quickly, cheaply, and accurately across disparate systems. So if you are one of the world’s premier investment banks, say Dresdner Kleinwort Wasserstein (DrKW) per chance, then sponsoring an Open Source project for an open adaptor that attracts the top talent from development and testing tools vendors, web services developers, and Enterprise Application Integration (EAI) specialists looking to speed systems integration will be a positive productivity driver for you.

By greatly increasing the gene pool of contributors, the chances of getting more broadly applicable middleware increase in your favor. That means the pool of potential customers has also gotten a lot bigger. So even if every one of your fiercest competitors adopts your middleware, the tide of new customers raises your revenue stream.

This same line of argument works as well with intellectual or “human” capital as it was called by Karl-Eric Sveiby and Risling Anders in their work on what they dubbed the emerging ‘Knowledge Company.’ In Sweden during the mid ‘80s, Sveiby and Anders began looking at ‘human capital’ versus ‘structural capital.’ One of their major contributions was the insight that human capital was something that could be applied to any company. Flash forward some twenty years and the Department of Defense (DoD) is asking how to define national interests and objectives—the ends of any defense strategy—in an information age.

The proof of the legitimacy of intellectual capital and knowledge management as fungible—if not tangible—assets comes with the recognition of intellectual capital as a strategic national asset. This is solely a factor of the value of information as an economic asset within the global economy. What the DoD recognizes is that intellectual capital is supplanting natural resources, which represented the strength of a growing industrial economy, today in relevance. Whether we are talking about software or any other instance of human knowledge, the DoD realizes that its free and open movement makes it a very powerful force.

Remember our mom-and-pop hot-dog stands sitting on dirt-cheap CPU cycles, dirt-cheap telecom bandwidth, and dirt-cheap software alternatives. They are the poster children for the DoD’s problem. Historically, the storage and transmission of knowledge required a physical artifact such as a manuscript, book, or newspaper. That limited the ability to store and transmit knowledge to the ability to store and transmit the medium. In the age of the Internet, we can now think of information apart from its physical form. As a result, idea of knowledge as the ammunition of a cyberwar is very scary for the DoD.

Resources are supposed to be limited. The military has always dealt with the logistics of amassing and moving manpower and materiel. As a result, a key strategy has always been to exhaust your enemy’s manpower and materiel. With knowledge—or information if you’re a mathematician or physicist—there is one huge problem here: The Second Law of Thermodynamics.

The Second Law of Thermodynamics is as magical as the ancient Chinese theory of Yin and Yang is mystical. It deals with the construct of entropy, which has a very unusual property. Unlike energy, which is conserved, entropy monotonically increases over time. What’s more, entropy is a particular kind of information.

Switching back from Richard Feynman to Karl Von Clausewitz, we now have the ammunition for a cyberwar exhibiting the fundamental characteristic of being inexhaustible! Once it is produced at a cost like a normal resource, knowledge can be used over and over again ad infinitum. What’s more, it only increases over time. The Second Law of Thermodynamics raises havoc with the theory of economy of scale. There is nothing in the science of logistics that can help the DoD prepare for a cyberwar.

And the headache only gets bigger. The economic problem surrounding the ability of information-based industries to produce more with fewer resources, less energy, and less labor is also a tactical and strategic problem for the military: the information age opens the doors to the resource poor. Knowledge can diffuse entrenched power structures and redistribute those capabilities to heretofore-weaker actors. So it should come as little surprise that the DoD, which is charged with creating a framework for formulating information age knowledge strategies, is at the forefront of understanding the power and philosophy of Open Source in all of its myriad incarnations.

Unfortunately, this can’t be said for many other components of the Washington bureaucracy. This is all the more a shame since it was James Madison who in 1787 said, "To give information to people is the most certain and the most legitimate engine of government.”

President Bush's counter-terrorism czar, Richard Clarke, addressed hackers at the Black Hat conference in Las Vegas a few weeks ago. There he told the attendees that they “have an obligation to find the vulnerabilities [in software].” Don’t get too encouraged by any semblance of openness here. Clarke left no question about what to do with that information: the hacker should contact the software maker first, and then go to the government if the software maker doesn't respond quickly. Not even full disclosure that would only warn about a problem’s existence without showing how to take advantage of it would be tolerated.

This was followed by the welcome news from deputy assistant attorney general, John Malcolm, that the government is prepared to prosecute individuals who pirate music and movies online. Stepping into the Lion’s den, Malcolm told the Progress and Freedom Foundation's Technology and Politics summit that the Internet had become "the world's largest copy machine." and the time has come to change public perceptions.

The only problem with this argument is the open question of whether there will be an attempt to round up all of the copy machines in a scene out of Elliot Ness and The Untouchables. This time it wouldn’t be the Volstead Act but the No Electronic Theft Act, legislation passed by the Clinton administration in 1997. Under this law, it is a federal crime to share electronic copies of software, music or movies if the value exceeds $1000 and offenders face up to five years in prison.

But things don’t stop here. With the help of Congressman Howard Berman, whose district includes part of Hollywood, the Recording Industry Association of America (RIAA) is threatening to wage a cyberwar of their own against miscreant file swappers. Berman is drafting a law that shields copyright owners against legal liability for employing high-tech attacks to stop file trading. Included on the list of tactics are the flooding of a file swapper with false requests so that others requests can't get through; redirecting the site to an empty address; and even placing corrupt or masqueraded files on the site. Clearly all of these tactics would be illegal under the current federal Computer Fraud and Abuse Act.

Speaking about the entire copyright issue, Stanford’s noted law professor, Lawrence Lessig, has a chilling warning for those who support the Open Source movement: “Government has a role in enabling the conditions for innovation. It has a role in ensuring those conditions survive. ‘We’ should start thinking critically about that vital role. Or before we know it, despite the best efforts of the open-source movement to 'crush' others, others will have co-opted government to a very different end.”