The Allure of Capitalism: The Rise of Risk Aversion and the Fall of Innovation.
- Bookshelf
- September 30, 2023
"Whither is fled the visionary gleam? / Where is it now, the glory and the dream?"
William Wordsworth
Ode: Intimations of Immortality
Tech allure undeniably abounds. The pioneer journey, the migration from east to west with the dreams of wealth and utopia is eternal. Novelist Edward Bellamy once had dreams of a socialist utopia, writing in Looking Backward about a man who wakes up at a future time of peace, prosperity, and equality. But unlike the novel, it’s not clear where reality begins or ends.
A history of tech is the living dream; the 49ers and the Gold Rush and the aesthetic brilliance, the flowing pastures and valleys of Central and Northern California. It’s the confluence of money and poetry straining against the likes of Steinbeck and Kerouac, as if it occupies a deeply poetic place but the words just don’t fit. And as the words have slowly failed, the poetic energy has risen and is burning off with the many hopes of action, change and revolution. This is the pioneer myth.
Myths express nonsense and truth and can be socially positive when this tension persists. The Silicon Valley tech mythology is however increasingly alluring because it denies the tension, making the myth lived or literal. This literal interpretation of the tech mythos likely originates in the word “innovation.” Innovation dates back to Ancient Greek word kainos or “new” and the later Latin verb innovare. It appears in 13th century legal documents with negative connotations, implying to renew or alter, presumably to change needlessly or corrupt. By the 16th century, it is simply a noun that expresses action—the act of introducing, typically something new. It was popularized in technical reports from the late 19th and early 20th centuries, where it is used in the context of a new method or technique.
But what is new? When we look closely at common examples of innovation, in retrospect, many appear to be inevitabilities. The experience of “new” results from perceptual limits. The logical conclusions could have been drawn by seemingly anyone at some point in that era, and while history records winners and obscures or leaves out losers, there are a few notable accounts of losers that had similar ideas or inventions, losing only because of unfavorable circumstances—chance events, a lack of resources and networking possibilities, or a combination of both, that failed to properly frame the idea or invention as important. Reimann and Minkowski are not popularly aligned with the General Theory of Relativity though their mathematical work on extra dimensional spaces and non-Euclidean geometries anticipated it, bringing to the forefront questions about the geometries around us (if time becomes another special dimension, a mathematical construct, time, like space, must be malleable, and so on).
The internet seems remarkably revolutionary too. But was it just the next iteration? Industry had invented the means to communicate over great distances with the telegraph, the telephone, the radio, and the television. And what of the PC? Hundreds of years ago Charles Babbage, Ada Lovelace, Gottfried Wilhelm Leibnitz, and even the Ancient Greeks far earlier, had discussed or created programmable, gear-driven computing machines. Ideas don’t change, in other words, it’s the interpretation or realization of those ideas that has changed. As with human behavior/psychology, interpretations may be popular and revolutionary because of randomness or authorities, knowingly or unknowingly, that make it so.
I was recently reading the Paper Belt on Fire, a book that exploits this tech mythos and a good example of the modern spiritualization of innovation, straying from its rather mundane technical usage and avoiding any suggestion of its once derogatory usage. The book is a capitalistic hymn that praises the virtues of a technologized world. And it’s alluring. It always has been. This is why people flock to tech, binding capitalistic interests to dreamers; an old story that endlessly cycles, digitized Westward moving pioneers in search of a better world. But as with the pioneers before, this world was, on arrival, less perfect than imagined; in fact, it could be downright oppressive, yet some did find gold, and it’s to them that people look with lonely, admiring eyes as they hold the myth high up, forever in sight and far off. In its details, the book’s argument doesn’t seem mythical. It’s quite reasonable as if it’s outlining unassailable facts. And that’s the problem.
While I don’t have an anti-capitalistic philosophy—in fact, capitalism is, I think, the most efficient method to organize human behavior (that’s what economies do: organize humans, better than governments, which are largely subordinate)—I began to see the worries of philosophers like Jacque Ellul, Herbert Marcuse, and Allan Bloom throughout the book. More on that later.
For one, what makes money needn’t be very imaginative or impactful. It could be as the historical usage implies a needless renewal or rehashing of an idea or product that was fine as is. That’s the dream of the entrepreneurial or capitalistic space that the book would have you believe. To live this tech dream, move from the university, don’t let it profit from your talents, and change the world with your brilliance. Innovate as in the newfound spiritual sense of the word.
It is well meaning. And, as I’ve said, alluring. It begins by generalizing a debate that began with collegiate athletics. That debate has focused on whether the “student athlete” label is exploitative branding; in that athletes participating in major sports aren’t students in any traditional sense since they construct a very profitable brand for the school and yet don’t share in the profits. Paper Belt on Fire reframes this debate for the academically or intellectually gifted non-athlete. Is this also exploitative? Have we unfairly stigmatized alternative career paths? —needlessly relegating talented students to training grounds. If the reader accepts this, the author suggests that an entrepreneurial fellowship may be a suitable substitute.
I’m unwilling to immediately accept this, unlike the athlete’s position. Throwing a 100-mph fastball is a strong financial predictor. Solving a Rubik’s cube in record time may predict something, but it’s not future financial success. The opportunity cost, the money one misses out on, in opting to attend a university is negligible for even the most talented student unless they are from wealthy families or are famous and already well connected, at which point the university benefits more from their attendance (economically). And it’s these individuals, really a small percentage, that would benefit most from the author’s proposed alternative path. Of course, this isn’t agreed upon; elites are elite because of conspicuous status symbols, and the university degree is a classic example.
This might be changing in Silicon Valley, the main topic of the book, with its odd mixture of elites that can easily flaunt status while simultaneously attacking the institutions that create and support it. What we’ve observed in the past 50 years or so is that while the oil magnate, for obvious reasons, desires stable institutions, the tech culture has spawned comparably wealthy individuals from a unique “disruptor” culture. And from this almost occult source, an individual may have no problem benefiting from institutions and later outwardly undermining them. The tech world, however, never asks for permission to disrupt; that’s slow and archaic. It quietly changes the world without anyone’s permission, confident that the technologized world of apps, gadgets, and wearables magically overcomes basic human psychology and frailty, all but guaranteeing a utopian techno civilization.
Since I work in tech, and have maintained, I think, a healthy distance from the hype, I’m both sympathetic to the book’s message, the tech culture, and fear its broader societal implications. I will get into this below
Let's Make a Deal
In Paper Belt’s fellowship model, students bypass the university and the degree and are awarded money and resources to chase their dream idea, building real world skills, earning money, while possibly converting that idea into impactful products or technologies (something like a technocratic, borderless trade school). The book’s author, although now offering something similar through his own venture, had been working for Peter Theil who is the chief architect. It’s worth noting that the book is perhaps excessively deferential. As much a personal reflection on the author’s former experiences in academia as it’s an homage to Theil in the role of professor of capitalism, it emphasizes my main point: nothing is ever truly new or revolutionary; it’s our demand to inject this into the world that drives our recognition of the new — and subsequently the fellowship and the university have a lot more in common than it might appear. What we have is a superficial battle of mythologies.
The university has its allure as well. Historically, the main reason for attending a prestigious university was to embed oneself in far-reaching social networks, secret societies and shadow figures that increase the likelihood of future success—of being, that is, among the winners of history, the popularizers, or influencers in history’s grand interpretation game.
Increasingly, however, as the book rightly points out, these influential networks aren’t exclusively tied to academia, the uber wealthy or Ivy League admission. A college graduate, the reasoning goes, spends 4 years working on problems and developing skills that may have less value than 6-12 months of industry experience. The talented individual chooses to defer their payday, assuming that the university degree, rather than talent alone, is the best, most reliable commodity (“selling” the degree later is better than “selling” talent now, gambling on growing wealth immediately). If the gamble were de-risked — by creating something like a borderless Silicon Valley trade school, one that is nobly democratizing opportunity — an individual might learn more while preserving the prestige and social value gained through attending a traditional university.
Evaluate the Deal
From the other side
There are likely some purists that will maintain the unmatched value of a traditional education, though I remain sympathetic to the book’s criticism. Plato doesn’t contain value; rather, Plato is like a verb; his writings do work on our ideas and perspectives; broadly, an education is a commitment to willingly accept that work and to inevitably be challenged by the effects. Modern universities don’t uphold this lofty standard. Because they can’t, really. The student has become a quasi-consumer or customer (maybe this has been true for a while). Who pays for an unpleasant experience? So, we must in part discard the idea of a liberal arts education and its regenerative capacity, to save a society suffering from its ethical or moral shortsightedness.
The university as the problem, maybe it’s the solution.
The university is undoubtedly corporatized now in its activity. It is a brand, and it stamps that brand on everything that moves through it. Branding isn’t inherently evil. When we see est. 1859 or 1920 etc. stamped on a product, it signifies tradition. Amid destructive forces, we have pushed on, though the time that separates now and then is vast, we remain close as we were attached, still faithful to the cause. That’s alluring. It’s a powerful myth to embrace.
Unboxing the iPhone evokes a different myth and I find it subtly pernicious. This is tied to the same myth that we are to chase in forgoing the university. Make the world better through invention and innovation. On face, it sounds great, but in a world of profits “better” is vague. Our issue is not modern. It’s a classical Ancient Greek philosophical dialogue on whether things are inherently virtuous (good) or virtuous because the gods demand it.
The iPhone may have made the world better (if we could agree upon “better”). However, we can’t be sure the whole thing isn’t just one big marketing ploy, meticulously engineered in boardrooms and scientific laboratories. We love it and the effects it has had on the world because the gods demanded it. What about innovation then? True innovation. Is it what society needs or given historical data and predictive modeling, what’s been financially successful, barely straying from the sure bets. Here, the pernicious myth clearly emerges. An idea may be massively profitable if it sheds its unremarkable origins, which is possible through mythmaking.
Ridesharing existed. Taxi companies were digitized. The narrative wasn’t right, though. It was far too fragmented for anyone to notice and care. It was like a useless appendage. Lyft and Uber made an old idea accessible and made it cool and countercultural, mythologizing the perils of the taxicab driver. Economize your life, bring in the new world order. Its sells itself.
Getting Real
Suddenly, the idealism is gone. Are the most societally impactful ideas profitable? I don’t think so. In physics, 20 to 30 years or more might pass before scientists agree on basic terminology, which I don’t mean mockingly. The deepest ideas aren’t initially transparent. Science, at the highest level, is embryonic and pre-mythical. To construct myths, there must first be a language in place. Historically, the university was like a language workshop.
There we would dream in this marketplace of ideas, free from profiteering. However, if everything is plainly economical, as our modern society has become, the classical, intellectual space of academia does seem a bit foolish. Like a myth we’ve outgrown. Why not profit from your ideas and talents? Why delay? Why not travel the world? Why miss out?
Bloom warned of this in his Closing of the American Mind as well as Jacoby in The Last Intellectual, although each remained optimistic that their writing was a call to action and not a fond remembrance of a hopelessly bygone era; the historical record nevertheless seems to favors the latter, at least in the sense that the university has lost its patent, so to speak, on virtue, and society is free to discover virtue wherever it may be.
Other writers like Marcuse (One Dimensional Man) and Ellul (The Technological Society) found the trends concerning as well, seeing in the 1950s and 60s evidence of aggressive, mechanizing forces that would continue dissolving borders until at last humans would become aimless and one dimensional or unfeeling cogs in the machine. And while there’s some 1960s dramatic flair, the message remains relevant.
It’s particularly relevant to the any commentary on the book (Paper Belt on Fire), because the author subtly is implying, if the university isn’t the only way, then modern society can dispense with the game where we have long pretended that the university is precious and discover virtue though pure capitalism (let’s clarify, however, it’s the cool Silicon Valley variety—get filthy rich, do good, don’t be evil).
But as this academic space crumbles, an entrepreneurial space, or a space of goods, must move in. It’s human nature. As professors had worshiped Shakespeare, this space must establish its heroes, spiritualizing the tech—hyping every new technology as groundbreaking or revolutionary. All of which hides the fact that our sense of wonder and mystery and ethics has been hijacked by whatever makes money
A Dream of Better World has a Price
I began this article by focusing on a few examples that discredit this message, suggesting that groundbreaking technologies (from our vantage point) have emerged from a string of logical steps, mostly incubated in a university setting where the intent was not to make money.
If we dispense with the pretending that academia provides, we can’t freely pretend, that is, detached from profitability. We can’t stumble serendipitously. We can’t meaningfully interpret failure as anything other than a billionaire’s talking point in a TED talk—failure, then, is what led to riches, not deep, impactful ideas.
Uncontrollable forces are acting, and the book captures this sentiment. There should be alternative paths free of stigma. A university is not for everyone, though it should be for someone. The world is, however, enamored with economic status symbols and personal branding. I fear, with the book as evidence, that it’s not long before the university is unfashionable. So last Spring.
In this technologized world, the choice is between marketable and worthless. But marketable is, just like “innovation,” a deceptive word. We could easily replace marketable or innovative with predictable or algorithmic nowadays. BOX.
If you find an idea that’s worthless, keep it close. It may lead to a new and better world. It may be the place of innovation. And if you’re young and enterprising with a vision for change, stay in school where you’re still free to pretend with authenticity.
BOX
If someone has capital (money) to invest, the goal is simple: limit risk; break even or, ideally, get a return on the investment. Inventor and investor both want to make money. So, as the investor is increasingly aware of financial successes (e.g., products that sell) there’s a stronger understanding of what will sell. In this way, true innovation isn’t needed to master the game.
Bayesian inference is a mathematical too that accurately models behavior and far from the implication that a model may predict successfully while saying nothing about the brain, research supports a popular theory that Bayesian inference is how brain networks actually work—creating our thoughts, memories, emotions, and by default, consciousness as well.
Bayesian Inference involves computing a prior probability distribution (e.g., the brain makes an educated guess based on experience). The guess is then corrected based on current evidence (e.g., I might say, oh, it wasn’t my friend; it just looked like them from afar). Mathematically, the updated prior is named the posterior probability distribution. It ensures that in the future I, for example, may be more hesitant to wave to my suspected friend, unless they are at a distance where it’s more obvious.
Mistakes may be “bad” but in nature “bad” is just energy. In energy (or evolutionary) terms, the error I made was costly; updating the initial probability distribution (the prior), the Bayesian strategy goes, is about future energy efficiency. As economic markets become well connected, and as with Instagram, we are obliged to monetize even experience and identity. Nothing’s hidden from the economic market. And we have no reason to expect innovation. Our expectations must be tempered: 10% better, 5% reduction, 3x faster—incremental low risk improvements that are highly profitable.
What movie will sell? à What movies did sell? What app should I invest in? Is there precedent? Is the new product sufficiently different? What was historically a guess, like Thomas Edison tinkering in the laboratory, is now a data problem.