American Capitalism Created the Computational Revolution

innovators-9781476708690_lgWalter Isaacson is one of our greatest biographers. He has written three superb portraits of men who in large measure defined their age—Benjamin Franklin, Albert Einstein and Steve Jobs. Isaacson has both the empathy and knowledge to make subjects as varied as a universal sage, a scientific genius, and an entrepreneurial visionary come to life. He has now written The Innovators, a group sketch of people who have created our world of ubiquitous computation.

It is a finely etched and exciting picture. We learn that Ada Lovelace, Byron’s daughter, was the first to understand that computational machines could do any logical operation with the right instructions: she is the grandmother of software. And William Shockley was so paranoid that, even after winning the Nobel prize, he obsessed over who on the Nobel committee might have tried to prevent him from getting it. Isaacson also skillfully weaves important themes through the book, such as the ability of many innovators to do, in the words of the Countess Lovelace, “poetic science,” combining aesthetic sensibility with analytic acumen to create new products.

Unfortunately, in his explanations of what drives progress in technology and innovation, Isaacson slights the role of markets and of America. For the last fifty years innovation has come almost entirely from people living in the United States. Isaacson recounts thirty or so of their stories. Only one major protagonist, Timothy Berners-Lee, comes from anywhere else and he now works partly in the United States. All of the major companies created during the computational revolution in his pages are also born in the U.S.A.  Europe and Japan  are almost entirely free riders.

The American label that should be affixed to the computational revolution also underscores what else is missing in Isaacson’s discussion–the centrality of entrepreneurial spirit that imbues this nation and has largely disappeared from social democracies abroad. Isaacson acknowledges the usefulness of markets, but he does so in a list of factors, and he clearly does not think it the most important. Instead he emphasizes the need for collaboration, particularly between visionaries and practical engineers.

But the market encourages the combinations of personalities that are often chalk and cheese and rewards those that work. America’s entrepreneurism has also transformed other institutions that also exist abroad yet do not push out the frontiers of innovation nearly as much. For example, the culture of competition is the reason that in the United States, great universities double as business incubators. Isaacson also gives insufficient weight to U.S. financial innovations, such as the rise of venture capital firms and creative structures for initial public offerings, that have been pivotal in translating ideas into industries.

Isaacson’s neglect of the centrality of American market culture sadly reflects the myopia of our media elite. In accounting for economic growth, many economists do stress the role of technology.  But technological change is not just a product of scientific discovery. Men and women in business help make science productive. As Isaacson nicely shows, they often take wild risks and indulge odd hunches.  Most fail.

Entrepreneurs are more likely to endure such uncertainty if they are rewarded with not only money but respect. The ethos of celebrating wealth creation and admiring the power of the market is at great risk in America, particularly as Hillary Clinton, the leading candidate for the Democratic nomination, denigrates the role of business.  And there is no other nation on which we can now depend for innovation and economic growth that the culture of capitalism provides.