Debunking the Free Market Myth #2

Myth #2: Free markets are imperative to innovation. My favorite line from pro-market people is that socialism prevents innovation, whereas free markets and capitalism generate innovation. Now, before we go further it should be noted that markets do have a positive effect on innovation, predominantly technological innovation. This presents two very different questions we need to address: do free markets facilitate more, less, or non-significant amounts of new innovation. Two, is technological innovation all its cracked up to be?

There are two sets of logic at work here, one implicit and the other explicit. Adam Smith proposed that the division of labor that rapidly intensifies in capitalist economies (i.e., factories divvy up tasks to increase production, efficiency, and control human error as best as possible, while also differentiating vertically -- management -- to facilitate control, coordination, and communication across employees) also drives innovation in technology. The reason: people who work at the same job, doing the same tasks are bound to simplify them, know them best, and begin to find shortcuts that lead to time-saving innovations. The explicit argument is this: market-based incentives (i.e., wealth, fame, power) motivate people to innovate, which ultimately benefits them while benefiting everyone. This logic returns to the old "rational-man" model presented in the first myth earlier, and assumes pure self-interest is the best panacea to society's ills.

I don't know about you, but I have worked in offices, restaurants, retail, and other places...I don't recall any employees I personally or impersonally knew innovating. Perhaps it is because of a lack of incentives, as any time-saving or increase in productivity will only benefit the owner of the company or means of production. Marx also pointed out that people who are separated from the entire process of production -- that is the creative side of producing, the productive side, and seeing the finished product -- experience high levels of alienation, which is just a heady word for dampened motivation. Moreover, the person does not see their work, their company, or their employees as anything other than means to their own extra-work satisfaction: job = salary; company = necessary evil; co-workers = enemies, or friends against the man.

On the other hand, market-based incentives may produce global motivation to innovate. Yes, and no. First off, turn on your TV at any hour of the day and you will find products for three easy shipments of 19.99 that were invented to simplify some aspect of life or maximize another. This is not progress in my opinion; though, there are people filling their lives and apartments with crap right now. Secondly, how do you explain the wheel? Or penicillin? Or space travel? All three of these present innovations of import that lacked capitalist motivation, even if one could argue that money and fame were secondary or tertiary motivations. The wheel: necessity is the mother of innovation; penicillin: the pursuit of science is filled with competing interests, but it was an accident borne out of the search for knowledge; and space travel: it was a political attempt at proxy warfare against the Russians, while also meant to boost nationalism and patriotism. As Marx noted, people are naturally creative animals; we will innovate regardless of the money involved because we enjoy it, because we look to solve problems, because we like to simplify life, and because it does produce benefits to us and our groups. One might point to the rapid advances in technology as indicative of the superiority of capitalism in driving innovation, but this ignores two important facets. The first, is technological innovation all its cracked up to be will be tackled below. The second: how do we define time, history, and pace. If we look at the long view, since the plows invention followed closely by the emergence of writing some 5,000 years ago, technological innovation has moved very rapidly in relation to the 3 million years plus that humans lived in hunter/gatherer societies; another way is to look 12,000 years or so ago when humans became sedentary...again, technological advance has been rapid in relation to the slow, gradual socio-cultural evolution of humans. The point is, certain forces drive innovation outside of self-interest. Population growth and density; resource scarcity; centralized and consolidated forces of control/coordination; and improved means of production/distribution. Indeed, we are focused much more intently on the last of these five forces, but the first two are just as relevant across time and space. More people mean more ideas and more people to bounce those ideas off of; density leads to new problems of production, distribution, and coordinating space; centralization/consolidation make dividing labor up, resolving conflicts that arise, and fostering a larger integrative identity beyond the family and religious possible; and you know what improvements in productive and distributive forces leads to. These are general, ubiquitous characteristics. Capitalism harnesses them as well as any economic system, save for those intent on destroying its citizens.

How we harness it varies though. Capitalism, as its proponents correctly assert, does so through economic innovation, whereas political, religious, educational, scientific, legal, or kin-based innovations are also possible and have been used. None seem better than the others; they both present unique challenges and consequences when implemented. Capitalism is really good at producing choice while intensely limiting it: rather than treat people globally as citizens, kinsmen, or part of a larger moral community, or atomizes people and objectifies them as consumers. This is bad; it is our modern malaise.

Thus, we can look at part two: is technology good. Yes and no. More food, more efficient farming and production, medicine, more leisure, etc. are all positives to a certain extent. But, no...absurdly myopic focusing on materialism is never good. Self-interest becomes a self-fulfilling prophecy: the mantra of the rational-man model becomes accepted by all. Then, people treat each other as if they are means to their own satisfaction; corporations see people as means to their collective goals; and, in the end, morality and ethics become buzz words that are not to get in the way of the machine. Having more stuff leads to the need and desire for more stuff...plain and simple. I dare you to dispute that. And, if you think having and desiring more material things, you should see my students, talk to them, read their papers, analyze their thoughts, and consider their futures...then get back to me.

Moreover, call me cold or call me prescient. Improving people's lives is one thing, prolonging them with little birth control regulation means growing the Earth's population to catastrophic rates. Having people live longer, but get sicker more often taxes the entire society and its infrastructure. Prolonging the life of children born terminally ill, regardless of what your religion tells you, does not shore up a society's long-term survivability. I don't think people get how close to the precipice modern society is, but you can only tempt the forces of nature for so long before she will strike (no society is invincible...look it up; its an historical fact). I am not calling for death squads, or eugenic programs: I am calling for a rational discourse that actually tries to plan  out the future of this country and world in such a way that we balance, even if they are a bit skewed in our favor, our needs and the Earth's. We could plausibly do it; but, constant material innovation might not be the answer. There is, for instance, a finite number of silicone chips; a finite amount of iron; a finite amount of fresh water; a finite amount of fossil fuels. Each new person will use some of this finite number. So, in other words, imagine I have five friends over. We order two pizzas with eight slices each. We each get three slices, with two left over. For every person I invite over, the number and size of slices decreases. At some point, their is a crisis as the number and size of slices cannot meet their function: feeding and satiating us. This is a reality that population size has an effect on. We cannot simply genetically modify the pizza every time to increase slices and sizes.