Open Source developers have, perhaps without conscious intent, created a new and surprisingly successful economic paradigm for the production of software. Examining that paradigm can answer a number of important questions. It’s not immediately obvious how Open Source works economically. Probably the worst consequence of this lack of understanding is that many people don’t understand how Open Source could be economically sustainable, and some may even feel that its potential negative effect upon the proprietary software industry is an overall economic detriment. Fortunately, if you look more deeply into the economic function of software in general, it’s easy to establish that Open Source is both sustainable and of tremendous benefit to the overall economy. Open Source can be explained entirely within the context of conventional open-market economics. Indeed, it turns out that it has much stronger ties to the phenomenon of capitalism than you may have appreciated.