Some may claim that the Open Source development methodology contradicts Capitalism: after all, a final product is produced, and given away for free. This is while the general theme of Capitalism is to competitively create values that are sold in the marketplace.

A bit bucket once produced and finalised (a procedure that may require a lot of money, effort and time), can be later distributed free-of-charge by electronic means, without causing loss to the originator of the bit bucket. This is as opposed to physical products such as food or tools, which cost money to produce and distribute each unit of.

Thus, it economically makes sense to distribute software or other bit buckets free-of-charge. The fact that vendors of proprietary software do it for money, does not preclude a costless alternative by someone else. Capitalism has endorsed distributing cheaper alternatives to products for a long time.

For a more thorough discussion of the economics of open source software refer to Eric Raymond’s essay “The Magic Cauldron”.