Can Your Business Compete with Free?

Profit has its uses, chiefly it is an incentive to invest, invent, and take risks. We tolerate profit because it drives innovation, increases supply, and improves our standard of living, all of which are positive social outcomes. However, companies pursuing profit-maximization can employ strategies that are admittedly very effective in making money but come at a societal price.

An example of this is Monsanto’s GM seeds that need to be repurchased each year or Microsoft’s monopolistic bundling policies in the past. The former is far more malicious in that we have a pressing problem (world hunger) that can easily be addressed with greater supply and lower cost of GM seeds. Well, individuals also need to get over their irrational fear of GM products.

This is why I would support a much shorter time frame for patents. Failing that, more research should be done by the government and then given away for free. Sure, there might be some adverse effects with foreign competitors piggybacking on one country’s research and dominating the market (as in China today), but the overall benefit for the whole world would be much greater. The current model in pharmaceuticals, although imperfect, is a good way of letting the benefits of advances trickle down while still generating profit for the inventor.

Perhaps what we need is a change in the way society judges success. Instead of idolizing Bill Gates, which to my dismay millions of Chinese youths do, perhaps we should venerate Bram Cohen or Linus Torvalds, people who created world-changing technology and then gave it away for free.

Btw, this whole thread of thought emerged from one idea. What if I made a variant GM crop without restrictions that could compete with Monsanto and then gave it away for free to the whole world? Most likely I would be sued. Perhaps my company would be bought out by Monsanto before it became too dangerous. Understandably, most founders would take the quick buck over the uncertainties in competing against an existing power. There’s also the worry of a hit squad taking out a competitor mafia-style.