Antoine Augustin Cournot may have been the first to plot it on a graph and get people who like equations with lots of jumbled numbers and letters in them excited. Good ol’ Alfred Marshall came along later and truly popularised the notion. But older geniuses such as Adam Smith and David Ricardo implicitly recognised it too. It’s common sense, really. The less there is of something and there more demand for it, the higher the price. Price and value, at least in economic terms, comes from scarcity.

In economic terms, educational institutions filter people with skills and limit the supply of those they qualify, thus maintaining the scarcity of qualified personnel. Thereby putting a market value on the qualifications - beyond what might apply because of a limited supply of talented people.

In the software industry, the same thinking applies. You can artificially create scarcity by controlling access to and so limiting the supply of software. This maintains profitability, just like limiting the number of people with qualifications maintains the value of your qualifications by limiting the supply of qualified folks on the jobs market.

Open source software development is based around a different approach. The notion is that anyone can read the source code of the software and, if they participate in the project enough, actually modify that code. In some ways, open source is an economic innovation - people work on it, but have no interest in maintaining scarcity. Value comes from increasing usage and participation, not limiting it. The more people make suggestions, the more people use the code, the better it becomes, the wider the pool of talent that is available to the project.

Sometimes projects stall or fail. Some succeed brilliantly. Sometimes egos clash, sometimes there can be political in-fighting, there are often technical disagreements, but, on the whole, open source works. The proof is in the software that has been written - millions and millions of lines of useful code that runs everything from operating systems based around Linux, complex web servers to word processors to Internet browsers such as Firefox, to languages such as Python or Ruby. The ‘net has allowed people to communicate easily, and the open source mode of public peer-review via the ‘net is now a rigorous, efficient and innovative model for software development. Everyone from IBM to Google participate. Not necessaruly for altruistic reasons, but for some good business reasons. Some more recent innovations such as Koders and Krugle, even aggregate this code into searchable databases.

From an educational point of view, the open source model is not just for writing software, but also for learning about how software is written. It gives people new to programming a way to see what the old pros do, to read the work of others and then contribute their own once it has reached a certain level of competency. A stint on an open source project is like an apprenticeship. Open source generates a lot of research, a lot of “how to” guides, a lot of discussion — in short, a lot of knowledge, as a result. By going through the apprenticeship you are “qualified”. The proof is in your publicly accessible work in, say, Krugle or in source code on SourceForge, and in the mailing lists archives at, say, Gmane.

By doing what they do online, in a peer-reviewed way, and contributing to functioning systems, open source programmers become “qualified”. Their quality as programmers is established by their online body of work. The results of their work is there for everyone to see. It is a fairly transparent and accountable process. The same could apply in other areas - web sites establish a reputation for quality, for example, as reviewed by other web sites. Writers the same thing. Services such as Technorati are examples of that process.

This somewhat anarchic new world isn’t perfect, of course, as many have pointed out. It is by no means a replacement for the pure, classical form of educational institution where eccentrics wander about in gowns and talk about topics only they know anything about. But in terms of more staid work qualifications, it is working. People from the open source world are being employed based on their work in open source software: often to carry on working in the same area. Google have done it, so have Microsoft, Redhat, Apple, and all sorts of other less well known companies. What does this mean? It means open source participation can get you a job. If it can get you a job by doing open source work, it is a qualification. After all, that’s the main point of the qualification, apart from adding letters to your name or making you sound important; to demonstrate that you know what you’re doing to an employer. But it’s a qualification that doesn’t come from an educational institution. To some extent, the existing system of academic qualifications has been bypassed.

The same approach could apply to other forms of education. Outside programming circles, the ‘net is also gradually turning into more than just a source of information, it’s turning into a social system, and, gradually, it is making a great deal of knowledge and networks of peer acceptance and review freely available to many more people. Flawed, but progressing. Web logs and other forms of peer-reviewed writing are examples. A great deal of that interaction can occur online - increasingly so with video conferencing, shared web sessions, and so on. For educational institutions, this means education - and the ways of garnering qualifications - are gradually turning open source too.

How so? Why couldn’t a journalist or an engineer do the same thing as an open source programmer - participate online, garner peer respect, do an apprenticeship and get “qualified”? Of course, scientists need to do experiments in labs, philosophers need time sitting around in Parisian cafes, amongst other things, engineers need to make sure their bridges stay up, but there’s no reason a great many of the functions of educational institutions won’t be gradually be rendered less important by online communities and new eLearning technology. Then, the economic innovation strikes - many more people with talent can garner qualifications in say, journalism, history, programming, science and parlay that into paid work via services similar to, say, rentacoder.com.

Then what happens to educational institutions? Some stay useful as filtering and research organisations, such as Oxford or MIT, but many less prestigious Universities start to see the value of their qualifications erode because there are more and more people getting jobs without them, having proven their stuff to the satisfaction of employers in the open source way. As more people with the talent and inclination enter the jobs market the supply of people with proven skills increases relative to the demand, the value of those skills - and related qualifications - goes down. Alfred Marshall would have recognised it and plotted it on a graph. Cournot may well have got there first.

Maybe existing educational institutions will start to suffer from “incumbent paralysis“. They will be unable to give up some existing income from the model of rationing qualifications so that they can create new business models around new technology; and absorb the new open source model of learning. But someone will. And the vital aspect of all this is how quickly eLearning starts to integrate traditional models of face-to-face education. And that has a lot to do with broadband uptake. But that’s for another day. I’ve probably already bored you enough already!