What happens when capitalists get their hands on innovation?

Does someone else recall how detested Bill Gates was in the 1970s and 80s? He really didn’t contribute anything to the home computing community other than avarice, trying to claim ownership of BASIC, for instance.

I watched it all happen, as computing got taken over by college dropouts whose goal was to snatch up and lock down and own all the potential that was emerging. Those guys aren’t legends of computer history, more like mediocre businessmen who got lucky and stole ownership. The real contrast is with Jobs, who was all flash and no substance, and Woz, who really is admirable and brilliant (seriously: his code for the drive controller was beautiful and elegant and clean, and blew me away when I started taking it apart).


  1. jrkrideau says

    What happens when capitalists get their hands on innovation?

    They exploit the blazes out of it, invent heroic legends about themselves, and do their damnedest to quash any potential rival innovation?

    Oh, and in many (most?) cases the capitalist is free-riding on publicly funded basic research which they, somehow, forget to mention in heroic legends.

    Or wait, is this a trick question?

  2. methuseus says

    I would go so far as to say that both Gates and Zuck deserve to be rich because of the businessmen they were. But they need to be taxed to hell to make up for the innovation they stifled.

    We really need something like Bell labs creating stuff on the public find and giving it back to the public a la transistors and the like. Of course they didn’t give away everything, but enough that it didn’t stifled innovation elsewhere.

  3. PaulBC says

    Most of the technological innovation doesn’t happen at the application level. A lot of what the end user sees as novel is an old idea that was waiting for hardware and infrastructure to support it. (I remember seeing a presentation about “video on demand” in the mid-90s, for instance, when it would have been laughable to deliver it over home internet–then dominated, I think, by 38.4k modems.)

    It’s not all hardware. For example, when Google appeared as a student project using PageRank, it delivered more relevant results than existing (and then-impressive) search engines like Alta Vista. (Arguably, Google innovated effective ads monetization as well, but I’m not sure the world is a better place for that).

    As a colleague pointed out to me once when I was asking what exactly Uber had “innovated”, the underlying technology is GPS systems that make it possible for anyone to find their way around in a city. I hadn’t really thought about that before ite was pointed out. The playing field was leveled between any driver and an experienced cabbie long before this highly complex and useful technological leap was applied to destroy jobs.

    I am still not sure what Facebook innovated. I do know that I needed to get on it, eventually, because the rest of my remote family had stopped communicating over a private blog. It is in some ways more convenient, though it discourages long-form writing. I have often spent more time editing a post so it doesn’t get put behind the fold than I did writing it in the first place.

    Capitalism is all about maximizing shareholder value–and not customer value or benefit to employees (even when they’re shareholders, because they’re never the important ones). I was thinking about this in the context of the billionaire discussion. The only goal is to set yourself up as a rentier, and that’s what the system incentivizes. It’s interesting that people contrast it with communism, because it is easy to envision forms of market economies that do not look like capitalism in its current pathological form (big shareholder is king, everyone else be damned, and the law enforces this).

  4. PaulBC says


    I would go so far as to say that both Gates and Zuck deserve to be rich because of the businessmen they were.

    Eh, nobody “deserves” to be rich, and nobody should feel good about being rich in a world where large numbers of people are literally starving.

    What I will say about entrepreneurs is that the ones who aren’t grifters like Elizabeth Holmes can often provide a useful organization-building service that other people might not have the ability or inclination to provide. It may also be that these personality types require a “special prize” to work hard, because they are a very special kind of cry baby, so the value to society could conceivably be optimized by setting ludicrous incentives instead of just forcing them to take a normal salary.

    How ludicrous? Not at the billion dollar level. There is no way that this is a reasonable personal fortune, but if the only way they’ll do their thing is if that can get “rich” in the process, so be it. The numbers just have to be reset down to reasonable levels (a lot of this is comparative anyway) and we should ask why the profits of a major corporation accrue as concentrated private wealth instead of going to the consumer as lower prices, the employee as higher wages, or to the public sector that enables so much of the business in the first place.

    Even with reduced riches, do they “deserve” it? No. At least no more than a lottery winner deserves their prize.

  5. kome says

    The older I get, the more I genuinely wonder if there are any actual unique benefits to a capitalist economic system. I’m guessing “no” based on all the current evidence.

  6. David C Brayton says

    I’ve been working with start ups since I started my legal career back in the 90s. Really, it cannot be underestimated how important luck, happenstance and simply being in the right place at the right time means to the success of a company.

  7. PaulBC says

    kome@7 I doubt there are “unique benefits” to the system we have now. Unless your goal is the accelerated concentration of wealth.

    I think if you go back to the basic principles of a market economy (minus the religion of shareholder returns and quarterly targets) it works well for a limited domain of private sector goods and services. I think the market can set a fair price for consumer goods and guarantee better availability that some kind of centrally managed alternative (obviously this point was heavily propagandized to me during the Cold War, but I don’t think anyone would call the former Soviet Union a consumer’s paradise). The market sucks for asymmetrical situations like health care (inelastic demand curve coupled with a consumer who cannot reasonably be expected to understand costs and benefits, particularly in an emergency). The mixed economy has succeeded when it’s been applied competently (assigning to public and private sector appropriately). Unfortunately, the 1980s brought us Reagan/Thatcherism (“privatize everything!”) from which we’re still recovering.

    Even financial markets are not inherently evil. It is useful for someone with a good new idea to be paired with the money to implement it, and there is no central arbiter to say what ideas are good. However, that ideal case is the exception, not the rule, since anyone who specializes in the “financial industry” is mostly interested in gaming it to their own advantage.

  8. jrkrideau says

    @ 7 kome
    I genuinely wonder if there are any actual unique benefits to a capitalist economic system

    To the successful capitalist, yes; to others, not particularly. An economy with free markets has good points, as far as I can see but capitalism, meh.

  9. garnetstar says

    Gates “succeeded” not by innovating or making a better product that rose to the top in a “free” market. I remember well how all he did was viciously and ruthlessly attack and undermine all the competition and drive them into the ground. His only contribution was his relentless depth of viciousness.

    And, as even Steve Jobs (!) told him, Gates’ product was inferior. It still is (it’s really bad), compared to what there used to be. Imagine putting out a product so bad that Steve Jobs reprimands you in public for it lacking quality!

  10. garnetstar says

    methuseus @4, I used to work at Bell Labs. Sigh, those were the days.

    The Labs were destroyed by “deregulation, letting the private sector bring its efficiency and free-market values to the benefit of the consumer!” Thanks, Reagan.

  11. PaulBC says

    Yeah, the Bell Labs model was a good one. (Or IBM or Xerox PARC.) I think Google in its dreams would like to be this, but we live in a different era.

    I actually think the concentration of “wealth” can spur valuable research in certain specific cases. For example, the money used by the merely affluent (not rich) to build private master baths in their McMansions could be used more effectively if lumped together and applied to cancer research. (I strongly believe so.) (And economic stimulus, multipliers, yadda yadda, I’m not buying it. You can live well and live modestly, and even the construction industry can be better stimulated with public works like fixing bridges that we know are on the verge of collapse.)

    If the money is concentrated in a large corporation with a research lab, they may very well do some good with it. So it may not be the case that every corporation should work as a non-profit, sharing profits with employees and customers. But if the concentrated wealth is going into privately owned superyachts it is really hard for me to see the case for any public good. Yes, we employed some ship builders whose greatest ambition in life is apparently to win a smile from from those richer than they’ll ever be. But in a different kind of economy, they could still be fully employed, and it wouldn’t be on wasteful crap.

    If the money is going into schemes to wait out the coming unrest in a lavishly outfitted missile silo it is just time to say enough is enough. You can steal from public on the basis that it does some mysterious good in the form of the invisible hand. But if you’re planning your getaway, then you’ve basically admitted that you’re a thief.

  12. methuseus says

    You’re right. I only meant they deserve it in the sense that they earned it through the capitalist system we are stuck in. Yes, both have stifled innovation in many ways. No, they don’t deserve multiple billions of dollars.

    Is CERN like Bell labs for the EU? I’m really not completely clear on how that works, but, to be fair, I haven’t looked. I wonder if the old Bell labs could even happen again in the USA at all anymore.

  13. PaulBC says

    methuseus@16 CERN is publicly funded, isn’t it? A closer US equivalent might be the national lab system (often associated with nuclear bomb building, like Los Alamos, but they do other things). There are a lot of university labs too.

  14. aspleen says

    Bill Gates didn’t “extinguish” free software with MS-DOS, it was merely IBM’s choice for its line of PCs over Digital Research’s CP/M operating system, which wasn’t open source either.

  15. nomdeplume says

    Unfair to Jobs. The genius of Apple needed both of them to complement each other.

    And I don’t imagine the phrase “the genius of Microsoft” has ever been used except sarcastically.

  16. a_ray_in_dilbert_space says

    Bell Labs was a corporate R&D lab that was trying to invent the communications system of the future while understanding the communications system of its present. It wasn’t just transistors. They also had Claude Shannon laying the foundation for Information Theory, error correction… They won a Nobel Prize for being the first to observe (though not fully understand) the cosmic background radiation–an echo of the Big Bang.

    This was at a time when industry actually understood the value of basic research. The spirit of Vannevar Bush held sway in the private sector as well as the public.

  17. petesh says

    @19: I agree. Jobs was a remarkable asshole, and capable of, uh, appropriating a good idea when he saw one, but he also saw this tech world coming — when he oversaw the first Mac (even the poor old Lisa) he already wanted to make the iPad, if not the, um, sainted iPhone itself. And I remember way, way back, he had a direct line run from the office to his house so he could efficiently work remotely, well before the Web; I forget the date, but I remember recognizing the future of my work. The real irony of his career is that Mr Apple became a billionaire via Pixar; but that was another instance of his seeing more potential than others did. And, of course, being over-compensated for it.

  18. says

    Eh? I don’t pay a tax when I turn on my computer? “Just anyone can’t set up a server” correct me if I’m wrong but they can and always could? But most people don’t want to (just like most people don’t want to pick parts for a computer even though they could, they just want to grab one off the shelf). Convenience and ease of use, and getting everyone on the same page (no pun intended) are valuable.

    but if anyone wants to turn EC’s soundbite into something comprehensible, your labor would be somewhat valuable. And, if they knew what they were talking about and could back it up and expand on it, having that linked directly in their tweet would have been convenient. Part of that is the fault of the design of twitter, of course. It’s not designed for memetic construction.

  19. says

    Seems related: I also learned the sad history of the great idea of The Semantic Web after I came up with basically the same idea and googled to see if anyone else had ever thought of such a thing.

    They’ve failed to make it for about as long as I’ve been alive.

    Probably because of a crucial thing that I never would have thought of: they want to change…the whole internet to run on it.

    Like…just make your own website that does it, stop waiting for everyone else. We’d have it by now.

    So baffling.

  20. says

    *just have to put that scare word “control” in there: if they made their own website, they’d have ~control~ over it. That’s why they could make it how they wanted.

    Instead it seems they’d rather start by trying to somehow change something they do not have control over? Just baffling.

  21. ck, the Irate Lump says

    PaulBC wrote:

    it delivered more relevant results than existing (and then-impressive) search engines like Alta Vista. (Arguably, Google innovated effective ads monetization as well, but I’m not sure the world is a better place for that).

    Google also initially delivered ads in a more honest way, clearly separating them from the search results unlike the other search engines at the time which had started returning ads as search results, making it difficult or impossible to know what was an honest result and what was returned based on a purchased keyword. That made Google a far more pleasant search engine to use.

    It’s worth noting that Google has moved away from this since achieving monopoly, and now ads are delivered as search results with only a tiny tag indicating some of the results are ads.

  22. patricklinnen says

    The way I look at it, Gates and Microsoft were reviled as evil purely because they got there first. Cannot think of any company suing them, from Apple to Oracle to Sun, that would not have staked for profit anything that MS did first.

    And there was plenty of stuff non-Microsoft companies did that could be Microsoft evil, but were excused because not Microsoft.

  23. Ishikiri says

    Capital has perverted the very meaning of the word “innovation” into “value extraction.” Because under capitalism, extracting value and hoarding it is the most super fucking awesome thing that you can do.

    @kome, #7:

    “The older I get, the more I genuinely wonder if there are any actual unique benefits to a capitalist economic system. I’m guessing ‘no’ based on all the current evidence.”

    It worked out well enough for my parents’ generation, who for the most part got their fully financed houses, cars, ample pensions, and decent healthcare. My generation on the other hand is having a hard time imaging a happy future for ourselves or our children, despite having done as we were told and graduating from college, with many of us (not me, thankfully) being crushed by student debt. And when enough people feel that way for enough time, building guillotines and organizing firing squads start sounding like good ideas.

  24. says

    @#26, patricklinnen:

    The fascinating thing is that they really, really didn’t get there first. I can’t think of a single Microsoft product which wasn’t either purchased and rebranded or a knockoff of an existing product written by somebody else. (MS-DOS was purchased and was originally QDOS, Excel is — like all spreadsheets — just a rework of VisiCalc, there were GUI word processors before Word, Windows is a direct steal* of the Mac OS, etc. etc. etc..)

    *And before we get the usual “but Apple stole the Mac OS from Xerox!!!!1!” nonsense: no, they did not. Just for a start, Apple paid Xerox for the rights to use anything they saw in a tour of PARC, so no matter how you try to complain, the Mac OS literally cannot be theft from Xerox — unlike Microsoft, who got access to the Mac OS source code while promising not to make a knockoff and copied it more or less directly to build Windows 1.0. But more than that: Apple invented a whole lot of things we now take for granted which Xerox did not have at that time, like overlapping moveable windows and absolutely anything to do with the filesystem as a GUI. Although Xerox did eventually build a GUI OS (which failed in the market), at the time that what eventually became the Mac OS was written, their stuff was laughably primitive, and a lot of the stuff Xerox built into their GUI was taken from what Apple and Microsoft had already made public.

    Oh, and nomdeplume is right at #19: Jobs had basically no programming skills whatsoever, and was unquestionably a jerk. Nevertheless, he was a better judge of usability than Woz or arguably Bruce Tognazzini. (Also, a lot of the things people blame Jobs for were actually decisions made by the people who forced him out of the company in 1985 — the big one being the inflated price of early Macs. Jobs wanted to sell the original Mac for $1000 less than the price point of $2500 which was eventually used. It was Sculley, Jobs’ replacement as CEO, who insisted that the Mac should be sold at a massive profit and marketed as a “premium brand”, and that decision was the very first one announced at the first board meeting after Jobs was kicked out. Sculley and the MBA executives he appointed — who outlasted him — were the ones who nearly tanked the company during the early 1990s.)

  25. petesh says

    @25: Yes, Google originally (arguably) was not evil. They did not actual remove “Don’t be evil” from their Code of Conduct, but in 2018 they moved it down to the end.

    It’s about time they dropped it altogether: “Google’s secret cache of medical data includes names and full details of millions – whistleblower”

  26. John Morales says

    The Vicar:

    I can’t think of a single Microsoft product which wasn’t either purchased and rebranded or a knockoff of an existing product written by somebody else.

    Altair BASIC.

  27. rydan says

    And yet free software is doing just fine. I’m writing this from my Ubuntu laptop. Funny how Apple avoids any criticism when they are far worse given their entire OS is actually based on free software that they charge for.

  28. John Morales says

    rydan, Apple used to have its own OS (as part of its walled garden), but it was a clunky old thing and they switched to the NeXT system in due course (based on Mach and BSD). It was never based on free software.

  29. slithey tove (twas brillig (stevem)) says

    tangential comment follows:
    Gates hacked up software to run an open hardware platform that was a struggle for the user to get drivers to integrate all the different peripherals into a single personal computer system. Giving uSoft [ie micro-] a perrenial market of offering specialized “drivers” for each device to integrate into their OS, which also get update annually adding and removing features. Keeping customers continually confused how to operate these “boxes”.
    Apple (probably Jobs) were adamant about keeping every hardware addition fully proprietary to ensure the user would never experience glitches with an Apple system. This drove the price of each addition astronomically as there was no competition from secondary sources. Also limited its usefulness to only what Apple thought was useful.

    In short, both screwed the same technology in opposite ways.

    I always had the sense that Woz was the genius of Apple, crafting the Apple II prototype for Jobs, who snatched it to market it as ambrosia. This is only my distorted opinion watching those two from quite a distance, so don’t listen to me, and it’ll be pointless to correct me.

  30. Kagehi says

    Not sure MS-DOS is the go to example of MS attacking free software. One of their more glaring examples of this kind of BS was when anyone attempted to create software, free or otherwise, which could open, or save, .DOC files. MS literally made changes to their code, and the internal layout of the files, to break compatibility (often not even adding new features of any kind of the latest update of Word), just to disable the ability of third party developers to figure out how the F the data was laid out in the files, and just load them, never mind write one. This basically had, any maybe still does (I don’t imagine for a moment they have really stopped), the effect of making it mandatory for you to own Word, just to read your own documents, even though there was no freaking sane reason to do this (especially in cases where the machines people wanted to read the damn things on literally didn’t have a version of Word available for them).

    I swear that their developers probably spent 5% of their time on “new features”, 2% of their time actually fixing bugs, or security holes, and the other 93% of the time doing every single damn thing they could to keep people from using their own flipping documents, video, etc. on, “some other machine that isn’t running our proprietary software!” They even tried to pull this BS with web pages (until eventually they realized that,”everyone else actually having pages work, while almost everything not made for IE broke in every other browser“, was a failing strategy, which was sending everyone fleeing from their built in solution. How many pages, that are not 15-20 years old, and never updated, still have “best on”, or “made for” IE on them any place any more. Whoops! lol

    The same thing, to a certain extent, finally happened with Windows itself. How many things are using Windows “Lite” versions, instead of Android, of some flavor? The, literal, only freaking thing that is saving them, at this point, is that Linux is still, sometimes “odd” when trying to deal with some things, as an OS, Apple is freaking expensive, and GAMES tend to be better, or only available, for some cases, on a PC, but are often just not available on anything else (unless its a closed, locked down, console, which doesn’t give you the level of control you need to do some of those things you can do with the PC versions). If Linux ever had some big, major, change, which removed all obstacles from it becoming the “go to” OS for this sort of thing, Windows would be dead, quite fast.