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19th century philosopher Karl Marx said in the opening passages of the communist manifesto:
“Socialism is when no iPhone.” Nearly two centuries later, the inscrutable genius
of these words can finally be scruted.
If you’ve ever wanted to learn about socialism there’s a good chance you’ve heard some
version of this take before. You’ve probably been told something along the lines of: socialism
does sound good in theory, but in practice, without the guiding hand of the profit motive
there would simply be no incentive to innovate. Capitalism may have its flaws, sure, but hey,
at least it’s good at innovating and in the long run that means most things will eventually
be solved by the market. Socialism, on the other hand, means saying bye-bye to innovation,
no innovation means no iPhone and suddenly it’s back to playing brick breaker on your
mom’s blackberry.
You’d think with such a simple yet crushing argument there’d be no socialists to speak
of. No countries run by communist parties, no postmodern cultural neo-marxists taking
over college campuses, no old men with magic bird powers.
But the reality is that innovation is not only consistently stifled under capitalism,
there is no reason to think it wouldn’t flourish under socialism. In fact, there’s
plenty of evidence that it would.
But before we get to that let’s briefly touch on innovation under our current system.
Nobody disputes that capitalism has seen the birth of many many discoveries. But a lot
of it is at best only tangentially related to our current mode of production. Capitalist
innovation is just not all that it’s cracked up to be. And speaking of cracked, take the
iPhone, the example of choice for those who defend our current economic model. The story
goes that Steve Jobs, luminary genius that he was, built Apple from the back of his garage
to the front stage of America, producing innovation after innovation along the way. The fruit
of his labor and superior intellect, along with his keen ability to respond to the demands
of the market, produced the device you’re probably watching this video on. So they’ll
say. To reject capitalism is therefore to reject this miracle of technology in your
hand and even so much as thinking to advocate for socialism on an apple device makes you
a hypocrite ripe for an Elon Musk twitter takedown.
Capitalism made your iPhone, you should be grateful and learn not to bite the hand that
feeds you.
But that perspective couldn’t be further from reality. Not only did “capitalism”
not make your iPhone, almost every single component that makes it a smartphone actually
comes from state-directed innovation. Microprocessors; memory chips; solid state hard drives; liquid
crystal displays; lithium batteries; touchscreens, all of these were not invented by profit-seeking
capitalists battling it out in the marketplace, but thanks to the funding and/or direct involvement
of governments in the creative process. Same goes for the GPS system, voice recognition
software, cellular networks, and HTTP and HTML protocols that together make an iPhone
an iPhone. All of these things exist thanks to the innovation that happened without price
signals, without market competition, and most importantly without private capital.
But that’s not all. The internet itself, the most important thing that makes the smartphone
smart and more than just a metal rectangle with pretty colors, is the fruit of government
innovation. The internet is arguably one of, if not the most life-changing innovation in
the history of humanity, and governments are so good at innovating that they stumbled on
the formula for it at least twice. Markets may have capitalized on these innovations,
but that just doesn’t count as innovation in and of itself. Selling something isn’t
the same as coming up with it. The reality of this device is that it took the concerted
efforts of a public research apparatus to make the iPhone possible, not the self interested
greed of a few profiteers. And while the iPhone is a great example of this fact, it’s by
no means unique.
This same story is repeated all throughout our society, including on more important things
than our twitter machines. Most crucially, our medical industry is entirely reliant on
the ability of the public sector to innovate. One study found that “NIH funding was associated
directly or indirectly with *every drug approved* from 2010 – 2016.” Without publicly
funded research, aka not the kind that follows market fluctuations, we wouldn’t have made
nearly all the medical advancements we have or saved nearly as many lives. These are not
innovations that make public researchers multi-millionaires, nor that have a good ROI, and yet they are
the bedrock of our modern health system.
Some innovations that support the capitalist economy even come from completely voluntary,
non-government funded, and entirely unpaid work done by brilliant people who just wanted
to do something one day and did. Companies like Facebook, Airbnb, and Netflix all rely
on thousands and thousands of lines of open source code, published freely and with no
expectation of compensation by random, passionate programmers. These companies are so dependent
on this free, voluntary, very un-capitalist code that back in 2016, an open-source programmer
un-published just 11 lines of code and most major websites you can think of started crashing.
But it’s not just that many of capitalism’s so-called innovations aren’t even the fruit
of capitalist forces, there’s a whole other, more problematic side to our modern economy.
Capitalism actively hinders innovation. There are a couple reasons behind this, but for
starters, capitalism naturally tends towards monopolies. It’s just what happens in a
winner-takes-all competition. Eventually the winners do take all and consolidate or form
cartels. In the absence of competition, large industries can reliably secure profits without
needing to do very much beyond periodically making small improvements to their products.
With that one sentence I’ve just described to you the entire innovation strategy behind
every Apple product. The reality is that if the only motivation for innovation is profit,
and that truly is the only one capitalism has to offer, once you take that variable
out of the equation there is no reason to innovate anymore. But even in the fantasy
world defenders of capitalism live in where monopolies do not naturally come to dominate
the economy, capitalism is still rife with problems that make innovation grind to a halt.
Generally speaking, capitalism only promotes and actively incentivizes innovation that
turns a profit. Any innovation, no matter how grand, no matter how many millions of
lives it saves, only sees the light of day if it can provide a good return on investment.
If something is good for a very large number of people but they all happen to be poor,
too bad, it’s not gonna happen. But that’s just a hypothetical example, it’s not like
you have to be poor for this logic to apply to you. We can actually see very concrete
examples of this kind of thing making everyone’s life just a little bit worse. For example,
instead of finding ways to make the most durable, long-lasting battery humanly possible, every
phone and laptop manufacturer makes batteries that can’t handle more than a few years
of regular use. While I am sure there are technical problems that make that difficult,
manufacturers would be putting a lot more effort into solving that puzzle if it wasn’t
so profitable to have bad batteries you’ll need to replace with a new purchase every
couple of years. What incentive does Apple have to sell you one iPhone when it could
sell you five? Capitalism does not reward those who produce the best products, it rewards
those that produce the cheapest and most profitable stuff, regardless if it achieves that with
a worse product or dirt-poor wages.
But it doesn’t end there. Another big failure of the capitalist model of innovation is the
conflict over information. In the quest to find new ways to compete, capitalists are
happy to shoot themselves in the foot and take our society along with them so long as
it means they keep the upper hand over their competitors. Relative profits matter a lot
more than absolute profits, so what is bad for the industry is only a problem if it upsets
its internal power dynamics. In theory, every firm should normally benefit from a database
cataloging the discoveries made by everyone else in their search for new innovations,
allowing everyone to build on the discoveries others make. If being the most innovative
we can be is the goal, there’s no reason to have secrets that someone else could use
to make something you care about even better. But every firm knows that sharing its proprietary
information could hurt its bottom line, even though the outcome for customers would be
a better product. It’s better to sit on a discovery you don’t know how to harness
yet, and might never figure out, than let your competitor swoop in and get there before
you.
Even though we would all benefit from more innovation happening faster and letting information
find the person who’s going to utilize it best, capitalism is incredibly inefficient
when it comes to doing so just because it’s a safer way to make money. Despite capitalists
always referring to so-called “free markets”, information has no freedom of movement whatsoever
and gets heavily restricted to avoid hurting each individual firm’s bottom line. Patents
are some of the more extreme examples of this kind of restricted flow of information and
we can see how dramatic those consequences can be beyond just hurting innovation. For
example, one of the big reasons that the COVID pandemic is still raging on and that new variants
keep appearing regularly is because of patents.
Patents are preventing vaccines from being manufactured cheaply and made widely available.
This matters because sharing this vital information on how to produce a life saving medication
would allow entire continents, most notably Africa, to lower a still very high COVID death
toll. Not only that, allowing the virus to propagate and find new hosts, which is what
keeping vaccine patents behind closed doors is doing, increases the chances of a more
infectious or deadly mutation appearing. It is in our collective interest for information
to flow freely, but it’s not in the interest of profits, so it just doesn’t happen.
But enough about capitalism, now let’s see how innovation fares under socialism and what
incentives motivate.
For starters, under socialism, the profit motive is virtually eliminated through any
of a number of processes, be it central planning, free association, and/or the general elimination
of private capital. As we’ve already seen, this means there is no longer a need to satisfy
both the need for usefulness and the need for profit when innovating. Just the most
important one matters, innovation doesn’t need to be profitable to be worthwhile and
that already solves a lot of problems. This can also make socialist economies incredibly
risk-seeking, contrary to what you’ll often hear. Funding a project that doesn’t necessarily
need to return an immediate profit means casting a much wider net and therefore catching a
lot more unique fish. Capitalists will often tell you that risk is their bread and butter,
but the reality is capitalists are relatively conservative when it comes to investing in
risky projects since the cost of failure can be so high. But we can actually go a lot further
than just eliminating the profit motive.
Part of the socialist program is to grant freely and to everybody the basic necessities
of life. Housing, food, and healthcare being some of the most important of these needs.
Under our current economic model, someone who is lacking any of these is forced to spend
the great majority of their time working, not necessarily in a way that has anything
to do with their skills, just to stay alive. Only an infinitely lucky few will ever have
the opportunity to showcase their talent as part of their job and so an insane amount
of innovative capacity just goes completely to waste. It’s truly mind-boggling to imagine
how many people just as smart as Einstein spend their entire lives just barely scraping
by and toiling away to have their basic needs met instead of having the freedom to put their
genius to work.
But even that barely scratches the surface. Socialists also expect and advocate for extending
education, particularly higher education, to all who wish to pursue it. In our current
system, of course, this is a luxury only afforded to the wealthy or those willing to take on
the massive burden of student loans. Back in 2010, latest year with available data,
only 6.7% of the world had a college degree. Think of how many billions of people could
have their skills and talents developed by access to higher education and the kinds of
things they would come up with that would benefit us all. But it’s not profitable
to make education freely accessible so I guess never mind.
That’s not all. Since one of the main driving forces of socialism is reducing the time spent
working, there is also a considerable incentive to innovate in ways that can automate labor.
While capitalists give lip service to their own version of this argument, saying they’ll
replace all of us with robots one day to save money, they’ll often find that it’s cheaper
to export labor to a poor country than it is to actually develop the technology that
replaces a domestic worker. In other words, we keep working just as much and for less
money.
Ultimately, this kind of innovation gets stifled under capitalism but has no reason not to
flourish in a socialist economy where people’s wellbeing takes precedent on profitability.
Automating work is a top priority and this would be reflected in our innovations. This
philosophy also has the added benefit of giving more time for people to quote unquote “waste”
time, time not spent working and being lazy in the positive sense of the word, something
which we all know makes us more effective workers anyway. Leisure time is a critical
part of wellbeing.
But we can focus on concrete examples if you prefer to see how the socialist model works
in action. Over the past century, the world has seen multiple socialist projects. While
there is a lot to say about them, one thing that these experiments proved beyond the shadow
of a doubt is that innovation can flourish even when people are not motivated by profit.
The USSR gave the world the anthrax vaccine, artificial satellites, and one of the earliest
mobile phones. Cuba, despite a brutal American embargo cutting it off from virtually every
country in the world, has produced all these biotechnological innovations including a vaccine
that can stop the spread of lung cancer cells. And these are just the shiny, high profile
examples. A friend has an old soviet hair dryer that’s still working just as well
as the day it was produced 40 years ago. Little things like product longevity go a long way
towards reducing waste and resource consumption. These societies didn’t perfect innovation
by any means, there are ways in which their methods have their own problems, but they
prove that the weaknesses of the capitalist model can be overcome. Not only that, the
kinds of creative friction they faced were much more implementational than structural,
the way that innovation gets stifled under capitalism. These issues stem from how we
create socialism rather than the rules that bind it, contrary to the way the profit motive
is central to capitalism.
At the end of the day, the reality is that innovation isn’t the product of one ism
or another. Every innovation and every person behind it is the product of a long series
of events and influences, years of public schooling and libraries and web pages full
of giants with shoulders to stand on. It’s never the product of an individual genius
operating alone, much less the fruit of so-called free markets, and much more often the outcome
of incremental improvements made by thousands of people over time. Normal people trying
to make their lives just that little bit easier stumble upon the building blocks for the next
person to do the same every single day and there is nothing about capitalist markets
that make them good at incentivizing this. It’s all just people at the end of the day,
there’s no need to have private property for innovation. It’s just what people do.
Isms do not create things, workers do. Isms only decide who gets paid.
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