Destroying More Creatively

Judging from the mayhem in the streets in recent months, there are still people who worry about sinister giant corporations, the menace of globalization and that sort of thing.

The usual outraged suspects were out in force at the World Trade Organization meeting in Seattle last December, the IMF and World Bank meetings in Washington in April, and the World Petroleum Congress in Calgary in June.

Demonstrations always provide grist for the cameras, but they are looking awfully long in the tooth, don't you think? Most of us don't take much notice.

This is an unlikely forum to find a more effective method of assailing the global market system, but leaders in any field need to search everywhere for innovative solutions these days.

The first piece of advice is predictable: Get on the Web.

Second, forget about hacker attacks. They may disrupt e-commerce for a few hours, but that's about it.

If you want to wreak more havoc, here's a plan. Step 1: Select the world's most influential corporation. Step 2: Develop a substitute for its core product. Step 3: Give it away.

Sound far-fetched? Consider Linus Torvalds, who developed the Linux computer operating system as a student in Finland in 1991 and posted the code on-line.

This past May, as Microsoft Corp.'s legal battle with the U.S. Justice Department heated up, a Globe and Mail headline identified a bigger threat: Microsoft's Real Worry: Linux Open-Source Software.

You can also count on the capitalist system itself to cause collateral damage. As we saw last year, investors will eagerly throw money at the notion that some day, someone will earn a profit from applications based on free open-source code. Some people even bought stock in Corel Corp.--though God knows why.

Corel's shares plunged from near $60 in December to below $6 in June. Shares in Linux darling Red Hat Inc. plummeted from $140 (U.S.) to $20. Poof! More than $16 billion in Red Hat's market capitalization disappeared.

Undeterred, IBM Corp., Dell Computer Corp. and other heavyweights are proceeding with Linux initiatives.

Back in 1942, Austrian-born economist Joseph Schumpeter outlined a theory that may apply here: creative destruction. He used it to defend monopolies, arguing that they are a just reward for innovators. Besides, they are soon obliterated by new, more efficient monopolies.

But Linus Torvalds is no billionaire like Bill Gates. He's received some shares as gifts from Linux companies, and last year he joined Silicon Valley chip maker Transmeta Corp. He's mobbed at industry conferences. But he seems content as a modestly paid techie. It's creative destruction without the monopoly premium.

And it's a lot more effective than waving a placard.