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I'm a free market guy. Shareware was oftentimes a great way to get software you would not have otherwise had. Freeware was hobbyists. I never saw limited functionality versions until the 1990s.
But throughout the 80s, we had a lot of good software from both of these sources, and "free software" was part of these. Nothing says you could not hand out source code with your shareware or freeware except that for most people disk space was still very limited.