If Karl Marx were alive today he would have a field day updating his theories on the crisis of capitalism to encompass the shifting morass that forms the economics of software.
With the current recession there has been a lot of debate about the use of economic stimulus with Keynesian theory: how government can effectively jump start economies by spending and helping money to circulate.
I can see how it works well for doing things like building roads and railways. There is a nice linear relationship. The technology is well understood. You spend 250 million on roads and you get real tangible economic value out the other end. I would appreciate it if some of that effort could be made around my neighbourhood.
We know how to build roads. Building roads employs lots of people including many without sophisticated skills. It generates a lot of good stimulus for an economy because low skilled, low income people have no choice but to spend all their income to live. Which means all the government spending recirculates quickly into the general economy.
Software on the other hand has many horrible properties that, in my opinion, make it dreadfully unsuited to Keynesian economics.
Firstly, people who are good at it tend to be in high demand already. So putting economic stimulus into software generally does not benefit people who need it most. Secondly, if you put money into the pocket of a high income earner they won’t spend it all – so the economic stimulation is lessened. The likely result is little or no tangible economic value out the other end.
There are lots of big problems with software:
- High quality R&D tends not to actually require much capital. Twitter was created in a couple of weeks of ruby on rails scripting. It is more likely just someone in the right spot at the right time having a flash of inspiration that creates the value. This will happen with or without government grants. In fact this is more likely to happen without the bureaucracy needed to seek government funding. Case in point – the Iguana Translator was not built by committee.
- Good quality software takes time to mature. The first version of anything always sucks. It usually takes a long iterative process for products to mature, to reach the point where they actually meet the needs of users. History shows that trying to force release cycles with aggressive time lines driven by grants tends to produce poor quality. The NHS Spine for example, is arguably one of the world’s most expensive failed healthcare interoperability projects.
- Software becomes obsolete very quickly. Just because companies have invested billions of dollars into what were important technologies does not stop these technologies from being completely without value today. Look at Nortel, or any other number of high tech giants from the past.
As CEO of a software company I prefer that my sales team avoids chasing government grants because it interferes with our long term objectives. I don’t like all the strings that come attached. I need a committee telling me how to run my business like I need a hole in my head. Many smaller commercial deals from organizations with real problems, make for a much more sustainable business.
As a citizen I would like to see my tax dollars spent more wisely. So if you are a government and you want to stimulate the economy. I humbly suggest that you keep away from funding software projects. Put your money into roads instead (hint my street could really do with a makeover).
Eliot Muir – CEO of iNTERFACEWARE