Hear me out. What if it’s not capitalism as a whole but one specific facet. Debt.
> In the liberal fantasy, spearheaded by Adam Smith, bakers, brewers and butchers laboured within markets so cut-throat that none could make more money than the bare minimum necessary to keep their small, family-owned businesses running.
In a cash only capitalism world that you can’t conspire to have more than you earn. You earn what the market earns.
But debt suspends capitalism long enough for someone to “beat” the market. And when capitalism resumes you have this perverse player operating under exceptional circumstances.
> Joseph Schumpeter … Progress he argued, is impossible in competitive markets. Growth needs monopolies to fuel it. How else can enough profit be earned to pay for expensive research and development
I know this to be false. Almost all the big tech companies consistently FAILED to bring about innovation through research. They instead had to acquire SMALLER companies and teams that had the innovation.
YouTube, Android, Instagram, WhatsApp etc…
And almost every other innovation was gained at the startup stage not the monopoly stage.
I think it's unfair to think that growing a small service or operating system to a billion users doesn't require innovation. The skills and requirements to grow a company from 1 to 1,000, 1,000 to 1,000,000, 1,000,000 to a 1,000,000,000 are going to be different. It makes sense to me that there are companies who specialize in growing companies of a particular size. And innovating around the problems of doing so.
How is youtube's recomendation system, automatic subtitles (including translation), or content id system not innovative? These were key technological improvements required for the service to grow to a massive size.
A lot of that innovation benefits only YouTube . Also these other innovations (recommendation system, translations etc) existed before YouTube.
There are definitely innovations from the big companies but not “key” innovations.
In the article it looks at innovation from a national level. I.e new products and services, and methodology.
The scaling you describe is great but its only impact is within YouTube, and it’s not unique. Every other company of that size has also figured their own way to scale. No one was depending on YouTube for this.
Almost everything can be termed innovation, but we need to be mindful that we are trying to justify the existence of monopolies. Ie “society needs them otherwise we couldn’t figure it out”. With that the threshold for innovation increases quite a bit.
When was the last time YouTube did anything innovative? Aren't they just an ossified bureaucracy now?
The Soviets, too, innovated. Sputnik shock and all that. But at some point the structures were just too rigid - just like they have become in Big Tech capitalism.
Much of the Soviet space programme was down to the personal brilliance of Sergei Korolev and other such figures, and large dollops of intelligence taken from the Germans and the Americans. Definitely the greatest Soviet achievement, but Korolev died prematurely due to his time in a prison camp and their manufacturing sector often let them down.
YouTube is quite innovative, by the way, just not in the way it should be. Its comments sections change on a frequent basis allowing for ever more complex shadow banning and censorship systems. Its search algorithms also tend to exclude certain channels and big up others.
I can't remember the titles offhand unfortunately. Bear in mind that a lot of details didn't come out until the 1990s due to Soviet censorship. The BBC did a great documentary on Korolev about thirty years ago when some details came out.
Whatever one thinks of the Soviet political system, they did have some great achievements. Some of the ones that people forget include first probe and first automated rover on the Moon, first space station, first probe on Mars, first rover and picture from Mars (albeit scrambled), also first pictures from the surface of another planet (Venus)
NASA tried to claim recently it had the first sound from another planet (Mars) and airborne probe (helicopter). The Soviets had already transmitted audio from Venus in the 1980s and had a balloon there.
Surely though Schumpeter must have been right when it comes to new industrial projects where the technology is already well-understood, maybe research in universities or similar?
Yes, there are a lot of situations where that is true. And as you say industrial projects, and I assume you specifically mean heavy industries, like building a new type of airliner. I agree.
But when it comes to information technology those situations are far and few in between.
That's not really what Adam Smith proposes in "the Wealth of Nations" by the way.
Despite claims to the contrary, we live in a system where government and big business are coalescing. In fact, they make many decisions together behind closed doors at the World Economic Forum, which Yanis Varoufakis is a member of. (You don't get into Davos unless you are either a) invited from the inside or b) pay vast amounts of money to attend.)
> In the liberal fantasy, spearheaded by Adam Smith, bakers, brewers and butchers laboured within markets so cut-throat that none could make more money than the bare minimum necessary to keep their small, family-owned businesses running.
In a cash only capitalism world that you can’t conspire to have more than you earn. You earn what the market earns.
But debt suspends capitalism long enough for someone to “beat” the market. And when capitalism resumes you have this perverse player operating under exceptional circumstances.
> Joseph Schumpeter … Progress he argued, is impossible in competitive markets. Growth needs monopolies to fuel it. How else can enough profit be earned to pay for expensive research and development
I know this to be false. Almost all the big tech companies consistently FAILED to bring about innovation through research. They instead had to acquire SMALLER companies and teams that had the innovation.
YouTube, Android, Instagram, WhatsApp etc…
And almost every other innovation was gained at the startup stage not the monopoly stage.
Uber, AirBnB etc..