Friday, September 14, 2007


This was written back in July 2005, but the issue came up recently in a posting in Renegade Eye Blog, so I am running it again...

Apologists for capitalism like to lay claim for all the good things developed during the last 200 years. Wouldn't have happened without capitalist entrepreneurs, they say. And this is the reason that these entrepreneurs must be rewarded with colossal salaries and patent monopolies.

Trouble is, with this happy scenario, is inventors don't invent to become fabulously wealthy. There are legions of garage and basement-based inventors, and none of them are rich. Some like Edison and Ford do become rich, but in the beginning they weren't and yet they still invented. Inventing is their art, and like artists they will do so whether they are financially rewarded or not.

While financially successful inventors become capitalists as a matter of course, few inventors are themselves capitalists to begin with. The most common source of invention in the 19th and early 20th Century was the skilled worker. Edison and the Wright Brothers are the prime examples. Morse, Fulton, and Ericsson were artists. Watt an instrument maker. Edison a railway telegrapher. Kelvin, DeForest, (radio) Farnsworth, (TV) Bell, Faraday, Davie were scientists. Eastman (camera) an office clerk. Ford, and Howe (sewing machine) were machinists. Cyrus McCormack was a farmer.

Note that all great inventions are connected with a person's name. Inventions are made by individuals (Or two brothers as with the Wright Brothers and les freres Lumiere) and not by corporations. Corporate capitalism invents nothing. It might buy out someone's idea, or adapt an existing concept, but produces nothing new. Corporations develop ideas, but in a bureaucratic fashion. This explains the poor quality and impracticality of so much contemporary design. (1)The old inventors were practical people trying to find the simplest and most workable solution to a problem. The bureaucrats are merely looking for a marketing angle or a way of cheapening the cost, to which they will cheerfully sacrifice design.

Capitalism, and this is well known, suppresses inventions if they harm profits. Way back in the 1830's steam powered buses were running across England. The coaching industry and railways crushed the steam coaches by getting Parliament to enact the infamous "red flag law".(2.) Nicola Tesla found a way to transmit electricity without wires, his backer, J.P. Morgan, pulled the plug on him and a campaign of slander against Tesla was launched in the newspapers. A tacit agreement among the Big Three auto manufacturers in the US put the revolutionary Tucker car out of business.

Apologists for the corporate system claim that capital's promotion through advertising and large scale production brings new improved goods to the masses and as a result brings the price down. But people know a good thing when they see it and don't need to be propagandized into buying something. No mass advertising was necessary to switch from flint and steel to matches, or candles to coal oil lamps and then to electricity. Advertising is mostly a way of getting people to buy what they don't need or to get a larger share of the market for a product that is in no way different from that of the so-called competition. (Think of Coke vs. Pepsi)

While it is true that an economy of scale is needed to produce complex goods like aircraft, automobiles and large ships, it really doesn't apply to most items and services. Does the world really need and benefit from multinational corporations frying hamburgers, brewing beer, baking bread, manufacturing cheese, bottling soft drinks, or providing janitorial services? I think not. The quality of these goods and services is usually much better when delivered by small or local firms. If you want good beer you buy from a microbrewery not Molsons or Coors. Good bread is only found at local bakeries, mass production bread is only fit for pigs. MacDo burgers are crap and Kraft cheese has no taste.

1. Things have gotten insanely and unnecessarily complex. Why should you need a manual to operate your car radio-CD player? Why did they abolish the on-off switch for cell phones and pagers? Why are "help menus" so unhelpful?
2. The law by which any "horseless carriage" had to be preceded by a man bearing a red flag. This law, which wasn
't killed until 1896, effectively gave France and Germany a big head start in the auto industry.

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Blogger Werner said...

Hi Larry,

I really like this posting. One of my favourite inventors was E.H Armstrong the guy who, among other things, invented FM radio (and many other things common in radio technology, the superheterodyne and regenerative circuits being two of the most well known). RCA and it's head David Sarnoff tried for years to bad-mouth F.M. radio because they had so much at stake in AM during the twenties and thirties. Also television research was considered more important until someone realized that frequency modulation was needed for the audio section of TV. During the last years of his life Armstrong spent most of his time and money fighting for recognition against corporate thieves until he finally committed suicide in 1954. John Logie Baird, the Scottish engineer who is usually credited with actually inventing television in 1926, warned us "not to let businessmen get a hold of this thing". How perceptive ...

5:19 PM  
Blogger Graeme said...

Very good Larry. When arguing against capitalism with friends, I often run into the "entrepreneurs" defense. Now I have some more ammo to destroy their silly ideas. Thanks!

3:57 PM  
Blogger Renegade Eye said...

I'm interested in Sonia's response.

An anarchist can add that cooking and clothing, were invented before the state was invented.

6:52 PM  
Blogger sonia said...


I'm interested in Sonia's response.

I don't have any problem with this post. I don't care about capitalism one way or another.

If Larry wants me to argue with him, he would have to say something I wouldn't agree with (like claiming that a Venezuelan co-op has invented something worthwhile)...

9:48 PM  
Blogger Larry Gambone said...

Sonia, one sub-text in this article is that individuals (or brothers or partners) invent. Groups generally do not. What I expect from the cooperative movement is not an invention - say the level of a contemporary equivalent of the light bulb, but the improvement of techniques, most particularly in libertarian management and social solidarity. Existing technology could be adapted by coperatives to produce articles that are seen as not as important under capitalism, such as low cost housing. As for Venezuelan coops, most of them are only a few years old and expecting them to produce marevels at this stage is like expecting a 6 month old child to run a marathon race. Lets see what they do,10 years from now, should the Bolivarian Revolution not be drounded in blood by the USA.

12:08 PM  
Blogger Werner said...

New inventions come about sometimes as a cooperative process although it usually boils down to new researchers picking up where someone else has left off. One example would be the three engineers at Bell Labs in the nineteen forties who invented the transistor. This was a group effort although much of the physics goes back to the beginning of the twentieth century. The invention of aspirin was done in stages by at least four chemists starting in the early nineteenth century and took almost eighty years to finalize.

3:17 AM  
Blogger sonia said...


As for Venezuelan coops, most of them are only a few years old and expecting them to produce marevels at this stage is like expecting a 6 month old child to run a marathon race.

I remember those excuses. In 1920's, Russia was poor because of the ravages of the Civil War. In 1950's, it was poor because of World War II's destructions. In the 1960's, it was because of the arms race. In the 1970's, because of the bad harvests.

But the best excuse I heard in the Soviet Union was in 1982:

'Why is there no food in stores?'
'Because the tsar only made enough provisions for 65 years!'.

That was the only TRUE excuse I ever heard...

6:11 PM  
Blogger Larry Gambone said...

It is not an excuse. You are the one making excuses. You use any ammunition to throw at the Venezuelans whether it is valid or not. There is absolutely no comparison with the USSR famine of the 1920's caused by Bolshevik hostility to the SR and Mahknovist peasantry. The fact that these coops are so new is a perfectly valid reason for their not inventing any wonderful new techniques. The fact these coops exist - and are an inspiration to the rest of us who wish to get rid of this insane, authoritarian system is marvel enough. As well, as I pointed out, don't expect groups to create inventions. Quit being motivated by your prejudices.

10:51 PM  
Blogger Edie said...

I appreciated your comments on RE's blog.

7:57 PM  
Blogger Kevin Carson said...

Great post, Larry.

Your comment on how cooperatives are likely to innovate reminds me of Barry Stein. He gave a lot of evidence that incremental improvements in the production process, rearranging the configuration of machines or otherwise tweaking the process to reduce waste and idle capacity, had more of an effect on productivity than building a new factory with a new generation of machines.

F.A. Hayek made a similar observation about distributed knowledge. In "The Use of Knowledge in Society," he wrote that it mattered more for productivity for those engaged in the production process to use existing machinery as efficiently as possible, than what kind of machinery was used.

11:51 PM  
Blogger Werner said...

I've thought a bit more about this subject. I'm considering trying to put together a permanent forum for technologists and scientific types who might discuss issues related to science in society. To start with I could do a few postings on urban myths and fads of the "cell phones cause cancer" type and move on from there. Eventually I'd like to see something a bit like "Carnival of Anarchy" but with a more focused emphasis ... or something like that.

7:02 PM  
Blogger Larry Gambone said...

Sounds like a good idea. Something I would certainly want to read, if not contribute to

7:56 PM  
Blogger Renegade Eye said...

One word: SPUTNIK

11:50 PM  
Anonymous CV Rick said...

Really nice essay! I may refer to it in the future.

3:53 PM  
Anonymous Ice said...

Capitalists makes profits, good for them, dont be jealous, profits are signals to the capitalist as to what the consumer wants, the consumer is in charge voting with his dollars. Govt. intervention hurts the consumer aka the people. Communism, socialism are EVIL!!!!!

6:20 AM  

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