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“the entire earth will be converted into a huge brain, as it were, capable of response in every one of its parts.” The invention of film, wrote D. W. Griffith in the 1920s, meant that “children in the public schools will be taught practically everything by moving pictures.
History shows a typical progression of information technologies: from somebody’s hobby to somebody’s industry; from jury-rigged contraption to slick production marvel; from a freely accessible channel to one strictly controlled by a single
corporation or cartel—from open to closed system.
History also shows that whatever has been closed too long is ripe for ingenuity’s assault: in time a closed industry can be opened anew, giving way to all sorts of technical possibilities and expressive uses for the medium before the effort to close the system likewise begins again.
This oscillation of information industries between open and closed is so typical a phenomenon that I have given it a name: “the Cycle.
Vail’s dream of a perfected, centralized industry was predicated on another contemporary notion as well. It may sound strange to our ears, but Vail, a full-throated capitalist, rejected the whole idea of “competition.” He had professional experience of both monopoly and competition at different times, and he judged monopoly, when held in the right hands, to be the superior arrangement. “Competition,” Vail had written, “means strife, industrial warfare; it means contention; it oftentime means taking advantage of or resorting to any
In his heterodox vision of capitalism, shared by men like John D. Rockfeller, the right corporate titans, monopolists in each industry, could, and should, be trusted to do what was best for the nation.6
With the security of monopoly, Vail believed, the dark side of human nature would shrink, and natural virtue might emerge.
Delivering a better or more secure product, the mogul heralds a golden age in the life of the new technology. At
we may rightly feel a certain awe for what the information industries manage to accomplish thanks to the colossal centralized structures created through the 1930s, we will also see how the same period was one of the most repressive in American history vis-à-vis new ideas and forms.
Ford wrote, “the ideas we have put into practice are capable of the largest application—that they have nothing peculiarly to do with motor cars or tractors but form something in the nature of a universal code. I am quite certain that it is the natural code
“Mass production,” he wrote, “is an admirable thing when applied to material objects; but when applied to the things of the spirit it is not so good.”10
If the banquet revealed Bell on the cusp of monopoly, here is the opposite extreme from which it began: a stirring image of Bell and Watson toiling in their small attic laboratory.
It is here that the Cycle begins: in a lonely room where one or two men are trying to solve a concrete problem.
history of science is full of examples of what the writer Malcolm Gladwell terms “simultaneous discovery
The inventors we remember are significant not so much as inventors, but as founders of “disruptive” industries, ones that shake up the technological status quo. Through circumstance or luck, they are exactly at the right distance both to imagine the future and to create an independent industry to exploit it.
The outsider is often the only one who can afford to scuttle a perfectly sound ship, to propose an industry that might challenge the business establishment or suggest a whole new business model.
The Cycle is powered by disruptive innovations that upend once thriving industries, bankrupt the dominant powers, and change the world. Such innovations are exceedingly rare, but they are what makes the Cycle go.
everyone else to recognize the promise of the telephone represents a pattern
“All knowledge and habit once acquired,” wrote Joseph Schumpeter, the great innovation theorist, “becomes as firmly rooted in ourselves as a railway embankment in the earth.” Schumpeter believed that our minds were, essentially, too lazy to seek out new lines of thought when old ones could serve.
More generally, since the Civil War, the Republican Party and the telegraph industry had enjoyed a special relationship, in part because much of what were eventually Western Union’s lines were built by the Union army.
It also showed how a single communications monopolist can use its power not just for discrimination, but for outright betrayal of trust,
The Bell Company’s most valuable asset would remain, for some time, the principal patent, for actual telephones were more like toys than devices adults could depend on.
Western Union’s telephone network was designed not to pose any threat to the telegraph business. In an oft-exampled way, a dominant power must disable or neuter its own inventions to avoid cannibalizing its core business.
Schumpeter is the source of a very simple economic theory that has proved itself particularly virulent. At the most basic level, Schumpeter believed that innovation and economic growth are one and the same. Countries that innovated would grow wealthier; those that did not would stagnate.
innovation was no benignly gradual process, but a merciless cycle of industrial destruction and birth, as implacable as the way of all flesh. This dynamic was, to Schumpeter, the essence of capitalism.16
He described innovation as a perennial state of unrest: a “process of industrial mutation … that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” In the age of carts, what matter...
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To understand Schumpeter we need to reckon with his very peculiar idea of “competition.” He had no patience for what he deemed Adam Smith’s fantasy of price warfare, growth through undercutting your competitor and improving the market’s overall efficiency thereby. “In capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts,” argued Schumpeter, but rather, “the competition from the new commodity, the new technology, the new source of supply, the new type of organization.” It is a vision to out-Darwin Darwin: “competition which commands a
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“Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.”*
His thesis is that in the natural course of things, the new only rarely supplements the old; it usually destroys it.
The old, however, doesn’t, as it were, simply give up but rather tries to forestall death or co-opt its usurper—à la Kronos—with important implications.
We must try to understand Theodore Vail, for his basic character type recurs in other “Defining Moguls,” the men who drive the Cycle and populate this book. Schumpeter theorized that men like Vail were rare, a special breed, with unusual talents and ambitions. Their motivation was not money, but rather “the dream and the will to found a private kingdom”; “the will to conquer: the impulse to fight, to prove oneself superior to others”; and finally the “joy of creating.” Vail was that type. As his biographer put it, “he always had a taste for conquest … here was a new world to subjugate.”18
Bell was overmatched in every area—finances, resources, technology—except one: the law, where it held its one all-important patent.
The Bell patent is an example, perhaps the definitive example, of such a seeding patent. Had it not existed, there would never have been a telephone industry independent of the
For right at Bell’s darkest hour it was saved by an unlikely and unexpected cavalry charge. Western Union came under attack from the financier Jay Gould, “King of the Robber Barons,” who had been quietly acquiring stock and preparing a hostile takeover. Now fighting for its own independence, Western Union was forced to look upon its tussle over the telephone as a lesser skirmish, one it no longer had the luxury of fighting.
Western Union might not have fully realized that the telephone would actually replace, not just complement, the telegraph.
Recall that telephone technology was at the time both primitive and a luxury. For that reason, it is possible that Western Union thought it wasn’t such a big deal to let Bell establish a phone service, imagining it was simply letting Bell run a complementary but unrelated monopoly.
The First Bell Monopoly was a service for the rich, operating mainly in major cities in the East, with limited long distance capacity. The idea of a mass telephone service connecting everyone to everyone else was still decades away.
His most famous work, Capitalism, Socialism, and Democracy, published in 1942, reads, in part, as a repudiation of the market and a lauding of socialism. He praises Marx and asks, “Can capitalism survive?” His answer: “No. I do not think it can.” It
In White’s hand was something unexpected: a telephone. It was fitted with an extremely long wire that ran out of the stadium and all the way to Hoboken, New Jersey,
What was planned now sounds quite ordinary, but at the time it was revolutionary: using the technology of radio to reach a mass audience.
Sarnoff, White, and Hopp were in no sense inventing radio broadcasting. They were, rather, trying to bring to the mainstream an idea that amateurs had been fiddling with for years.
The power of an open technology like radio broadcasting to inspire hope for mankind by creating a virtual community is the more remarkable considering that radio was yet far from reaching its full potential as a communications medium.
One must stress that it was not merely technological wizardry that set people dreaming: it was also the openness of the industry then rising up. The barriers to entry were low. Radio in the 1920s was a two-way medium accessible to most any hobbyist, and for a larger sum any club or other institution
Compare the present moment: radio is hardly our most vital medium, yet it is hard if not impossible to get a radio license, and to broadcast without one is a federal felony. In 1920, De Forest advised, “Obtaining the license is a very simple matter and costs nothing.
The choices were dizzying. “A list of all that can be heard with a radio receiver anywhere within three hundred miles of Greater New York would fill a book,
By its nature, early American radio was local, and hence the roots of “localism” in broadcasting.
“The Policy of the Company,” wrote Reith in 1924, is “to bring the best of everything into the greatest number of homes.” In tune with Victorian convictions about human perfectibility, radio was employed as a means of moral uplift, of shaping character, and generally of presenting the finest in human achievement and aspiration.
And so, this is radio broadcasting in the 1920s: On one side of the Atlantic, in the geographically vast United States, isolated clusters of local and mostly amateur operators, inspired by the enthusiasm of the hobbyist and a somewhat vague though earnest idea of national betterment. In Britain, a private monopoly, with national reach, arguably elitist but unquestionably and systematically dedicated to bringing “the best of everything” to the general public. In either setting, the medium would never be more hopeful or high-minded.
Before long, Burch had founded the Mesa Telephone Company to wire the entire settlement, and in so doing became one of hundreds of such small telephone companies springing up across the nation under such names as the Swedish-American Telephone Company, the Home Telephone Company, or the People’s Telephone Company.3 His fellows in the cause styled themselves “the Independents.” They were, by their own description, “an uprising of the people,” a social movement dedicated to “American Industrial Independence.
