Competition ≠ Innovation
Athena’s Owl Takes Flight When Darkness Falls[1]
One of the more pernicious aspects of modernity is the way in which we label and frame interpretive narratives. For example, every Econ 101 student learns that economics is fueled by incentives and the primary operational free market (or capitalist) incentive is profit. What most economists don’t understand is that such labels are products of Victorian capitalism and largely catalyzed Marxist analysis. The taxonomic warfare of Marxism is but a product of Victorian capitalist classifiers, and as such, there’s no meaningful taxonomic or analytical difference between Marxist and Victorian capitalist economics such that the two are effectively variations of the same perspective. Such taxonomic and analytical fungibility applies across the social sciences; for example, Victorian analysis holds hallowed the belief the existence of applicably homogenous groups of people corralled into economic “classes,” which reductively describes something meaningful (culture, motivation, aspiration) but essentially describes nothing.
One of the stimulants of modern cognitive dissonance is the argument that competition drives innovation. We hear it from corporations, economists, politicians; the argument drives our anti-monopoly laws and policies and soothes our pangs at the chaos of modernity by assuring us that the diversity of choices is but signal of competition that assures innovation. This chaos is but prelude for the best of all possible worlds.
And yet it’s becoming socially acceptable to observe the stagnation. Economists have noodled on the perplexing data for over a decade; if your instant access to porn and kitten videos is such an improvement — efficiency, productivity — then why doesn’t it surface in economic data? Why does a macro perspective on the American economy and technology actually show little progress over the last generation?[2]
My favorite examples are mostly aesthetic. If you reviewed Egyptian art from 3000 BC to 300 BC, you’d notice an unsettling similarity through the centuries. The Egyptian aesthetic barely budges over thousands of years. Now compare it to Greece from 600 BC to 300 BC; not only does Greek statuary change dramatically over that period, but it changes nearly every generation so much that an amateur would notice the difference. The Greeks move from essentially copying Egyptian statuary — little definition or humanization, uncomfortably vertical, a brace always behind the legs — to what we’d recognize as modern art — muscle definition, flexed toes, mischievously curved lips. The Greeks both removed the model’s clothes (an aesthetic innovation) and removed the brace (an engineering innovation), and in doing so we witness the separation of Greece from Egypt and the birth of Europe.
While the Greek aesthetic could express complex ideas (for the Greeks, statuary was as much a philosophical argument and mathematical display as it was a naked dude), the Egyptian aesthetic was but an increasingly wan copy of an ancient brand of authority and confidence. The sameness of Egyptian art reflects the stagnation of Egypt and serves as prologue to the invention of the Middle East. The Sphinx watched as Egypt regressed from cradle of civilization to hapless victim of whatever army was passing by.
We live in the dusk of aesthetics. Has there been a time in the last two centuries when a building built this year looks no different than a building built a generation ago? Where a shopping plaza from a 1990 movie looks like a plaza built last year? You would not mistake a building built in 1960 for one built in 1990, or one built in 1960 for one built in 1930. You keep going back until you get to about 1800 before a generational aesthetic may expand beyond 30 years.
Similarly, many cars from 15–20 years ago blend in seamlessly with cars manufactured today. Is there a car built today that embodies a 2020s aesthetic the way a DeLorean or Testarossa or Countach did the 80s aesthetic or a Corvette or Mustang did the 60s aesthetic or the Thunderbird did the 50s aesthetic? (I could keep going … Packards, Model Ts…). Again, there’s a clear aesthetic difference every twenty years; once could easily tell that a car was designed and built in 1970 or 1990 and one wouldn’t mistake a car from 1980 for one from1960. From the beginning of automobile manufacturing, the aesthetic changes dramatically every twenty years … until now.[3]
And so, from economic data to technological innovation to a 1978 Ford Pinto (that is clearly not from 1957 or 1997), we seem to live in stagnation generation. But, if we have more competition than ever (we do have more companies than ever), then whither this stagnation?
Competition doesn’t birth innovation. Large companies stake out their fiefdoms, dig moats through regulation and seek rents in order to create legal territorial monopolies. With the vast rise in corporate debt since the 1970s, companies buy shelf space and distribution channels to impair competition, and if that’s not enough, then they buy the competition. Once the nation is divided into a few large fiefdoms, corporations settle into a malaise of quarterly earnings growth and shareholder propaganda through financial engineering and marketing.[4] Any innovation is limited to marketing and the edges of design such that the bulk of corporate efforts are directed at convincing innocent customers that they need something that they didn’t even know existed and that they need a new one each year because it’s now in a slightly different shade of red. Innovation doesn’t show up in macro-economic data because a different shade of red doesn’t improve productivity.
Many companies appear to have monopolies — Facebook, Microsoft, Google. But they don’t count because we’ve sacrificed common sense on the altar of Victorian taxonomies. Google isn’t a monopoly because, while it has a monopoly on digital advertising, it has a minority of all marketing. Obviously these new categories (“digital marketing”) aren’t real enough to matter, and thus the new fiefdoms are secured. And from behind these castle walls, these companies feign competition (Bing) and innovation (AI) to distract peasant consumers from the reality of extractive feudalism.
Necessity
Necessity is the mother of invention, but the inventions of our time are finangineering, of which Enron was the Thomas Edison, and targeted marketing in order to ferret out every last unsuspecting consumer.
Real innovation comes from real necessity, and the greatest necessity is resolution of existential crisis. For this reason, start-ups are more often the drivers of innovation for there is no greater existential threat than facing the possibility of one’s own non-existence. Similarly, Apple in the 1990s suffered with each year the slow drive into irrelevance as Windows secured its increasingly greater monopoly.[5] While staring at the precipice of non-existence, Apple reinvented itself.
It is in such darkness that perceptions of acceptable risk can change dramatically, that priorities become clearer, that vision sharpens and opportunity comes into focus.
Athena was the patron goddess of Athens, and she represented wisdom but, it shouldn’t be forgotten, she was also the goddess of war. This combination, so curious to moderns, produces a goddess of wise violence, of creative destruction, of victory through pain and sacrifice. (The Greeks had another god, Ares, for stupid violence.)
Athena’s owl, a symbol of Athens and stamped onto its money, is typically represented by its large eyes, enabling its keen perception once darkness falls. And yet, Athenians would remind you that the owl takes flight at night to kill. It is a keen predator, and its great innovation is to see in the darkness when others cannot.
tl;dr
Stop saying that competition causes innovation. Macro evidence doesn’t support that assumption. Instead, threatened a company with death, and it will seek a new life. Of course, failures will happen. And the owl eats mice.
Of course, you realize that “company” could be replaced with “culture” or “nation.”
[1] Yes, I improved Hegel’s “The owl of Minerva takes its flight only when the shades of night are gathering” (from The Philosophy of Right). You’re welcome, Hegel.
[2] The internet hasn’t done much for productivity or efficiency. Economic data shows that the last great improvement in retail efficiency was Walmart in the 1990s, not Amazon in the 2000s.
[3] The Tesla Model S? It’s a 13-year-old design based on a 15-year-old Mazda design. That’s the equivalent of a car being manufactured in 2000 looking like a car from 1985.
[4] At IBM, we were working on a fairly major AI project with a very major consumer brand. The project would take years to bring to market, but within months, the marketers had already taken out an advertisement … for a product that wasn’t even fully defined and was years from delivery. The ad? A full page in the Wall Street Journal. IBM never took out an ad for the people of Main Street who’d actually buy the product; their consumers were Wall Street analysts.
[5] By July 1995, Apple’s market cap was well under $1.7 billion while Microsoft’s was $181 billion. Today, Apple’s market cap is about $1.9 trillion while Microsoft’s is $1.5 trillion.
I know … tyops. The secret to my writing is that I never read it.
