Should we thank the State for the Internet?

ARPAnetIn a comment on my post “recycling regress” Scott Lahti points us to an article by the author of The Ghost Map, defending Silicon Valley against the slanderous accusation that it’s full of libertarians. Scott describes the article this way:

Steven Johnson v. Libertarianism 101, if not 2.0.

Here’s the opening of Johnson’s article:

It’s no surprise that George Packer — one of the most gifted writers in the business — has hit upon a fascinating topic in his latest New Yorker piece: the emerging politics of Silicon Valley.… But for all the richness of the subject matter, in this case I think Packer has failed to capture the complexities of the Silicon Valley scene, in part because he’s using older conceptual frames that don’t adequately explain the phenomena he’s observing.

I’ve asked Scott to clarify the 101 versus 2.0 distinction, but I take his point to be that Johnson’s implicit image of libertarianism is out of date.

I see it less charitably. I see Johnson’s portrait of libertarianism as an attempt at a straw man, an indulging of the prejudices of his left-leaning readers. The irony is that Johnson’s accusing George Packer of the same move he himself makes: using older conceptual frames that don’t adequately explain the political philosophy he and Packer are both supposedly addressing.

When I say that Johnson attempts a straw man, I mean that he believes the caricature he draws is obviously indefensible, but the supposedly cartoonish opinions of his buffoonish straw libertarian can be defended with greater reason and vigor than Johnson imagines:

Yes, people who work in the tech sector today (particularly around the web and social media) believe in the power of decentralized systems and less hierarchical forms of organization. But that does not mean they are greed-is-good market fundamentalists. For starters, almost all of them recognize that their industry itself arose out of government funding (see ARPANET), and some of the most celebrated achievements of the digital culture (open source software, Wikipedia) involve commons-based collaboration with no conventional definition of private property whatsoever.

We have to do some translating here, but I don’t think any one of these moves is a stretch:

  • To believe “greed is good” means believing that self-interest and the profit motive can lead to beneficial results for society as a whole, so long as property rights are enforced and coercion is absent.
  • A “market fundamentalist” is someone who believes voluntary exchanges will produce better results than will the initiation of force and that therefore any government regulation that undoes or prevents peaceful and voluntary exchanges is unjustified both ethically and economically.

I guess that makes me a greed-is-good market fundamentalist. But how in the world does that put me at odds with “commons-based collaboration with no conventional definition of private property”? Does Johnson not know how popular both the open-source movement and Wikipedia are among self-labeled libertarians? Does he not know that Wikipedia was founded by a self-labeled libertarian, inspired by an Austro-libertarian professor‘s teaching of F.A. Hayek’s “The Use of Knowledge in Society”?

His best evidence that Silicon Valley techies aren’t libertarians is the claim that “almost all of them recognize that their industry itself arose out of government funding (see ARPANET).” And even that point is weak in at least two ways:

  1. Making the best of an existing system does not mean you endorse the cause of that system — or does Johnson assume that there are no libertarian tax attorneys, no policemen who are actually anti-crime, and no psychologists who oppose insanity? Stephan Kinsella is the leading libertarian theorist in opposition to so-called intellectual property. (See his monograph Against Intellectual Property.) He’s also a practicing patent attorney.
  2. Johnson is clearly implying that the actual history of the Internet is the only possible history of the Internet — that the free market would never have taken us into the Information Age.

As TS writes in his article about the related issue of space exploration,

In the end, regardless of what the state did or did not fund or invent, the take-away principle is the unseen. While everyone with a TV has been able to see the hordes of chemical rockets dramatically blast into the cosmos over the past decades, they were similarly unable to see the productive opportunities foregone and ignored via the reallocation of scarce resources.

Here’s what I wrote about the subject in the Journal of Libertarian Studies:

Pro-regulators and advocates of market intervention like to cite the Internet as an example of an infrastructure that required massive central funding and government planning — something the free market couldn’t have produced. Austrians usually counter this claim with the following question: Why should we consider the actual historical timing of the Internet’s emergence as the optimal timing for such a technology? What is seen is the blessings of a global information age; what remains unseen is the opportunity costs of coercively diverting funds from voluntary exchange to military R&D.

But there is another important fallacy behind the Internet argument. Because things did develop in a certain way does not mean they could only have developed in that way. Did the Internet become a reality because of government intervention, or did it come about despite government intervention? When exploring counterfactuals, we’re left to theory and conjecture, but radio history offers us strong evidence that government suppressed more technology than it promoted.

Wireless Internet technology is called Spread Spectrum because it sends multiple narrow signals across a wide band, or “spread” of radio frequencies. The technique is also called “frequency hopping” as a single message will move pseudo-randomly from frequency to frequency within the available band. The first patent for this technology was issued in 1941 to Hedy Lamarr, the Hollywood actress, and George Antheil, the avant-garde composer. Lamarr and Antheil never saw a penny because the government classified the technology. By the time the technology was declassified, their patent had expired. Spread Spectrum was independently “reinvented” by government-funded scientists in the 1960s.

Frequency hopping, and radio encryption in general, is a short step away from digital radio. Digital radio is an even shorter step to widespread digital networks.

Could we have had decentralized, nationwide digital networks decades earlier without government intervention into radio technology? We’ve already seen that the trajectory of radio content resembled the Internet before intervention; now we have at least the suspicion that the underlying technology could have developed toward a similar infrastructure. You can’t dismiss the idea as mere counterfactual guesswork without recognizing that the government-was-necessary-for-the-Internet thesis is also counterfactual guesswork.

We can’t know what the opportunity costs have been from eighty years of regulatory central planning, but we can know that the cost has been profound.

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One Response to Should we thank the State for the Internet?

  1. Tim Swanson says:

    Johnson has fallen for the correlation is not causation fallacy. Sure the first kids on the block that “invented” the intertubes were indeed funded by the government. But that is not to say all or even part of what makes the internet could not or would not have been invented by the private sector first or eventually at all.

    That is to say, in an alternative universe, one in which the FCC, NSF and/or DARPA did not exist (or were not working in this segment), the private sector could have arguably created packet switching, http/ftp protocols, email, so on and so forth. And not only would they have invented it via private means, but they would necessarily had to commercialize it sooner and make it profitable, thus this proto-hypothetical internet would arguably have been much more useful and productive earlier on than in our own timeline. It wasn’t until the late ’80s and early ’90s when organizations like NSF privatized the supercomputing facilities and the infrastructure was opened up to the commercial public, that it became useful. If the state planners had it there way, the net could very well still be a play thing for hobbyists and “serious” researchers — without hoi polloi riff raff clogging the tubes with tweets, Zynga farms and Likes. (See this write-up as well: http://mises.org/daily/2806/Against-a-National-Broadband-Policy)

    Another what-if that he fails to account for as well (classic “seen” and “unseen”) is that wireless telephony did not take off until the FCC got out of the way in 1985. They had monopolized the 900 mhz and 2.4 ghz frequency bands (along with the rest of the electro-magnetic spectrum) and once they opened those up we had a measurable amount of innovation that took place including most notably wireless telephones and WiFi. In an alternate universe in which the FCC or any gov’t agency was not in control of the airwaves at all, we could have a very different innovation growth rate, one that could have begun decades before it actually did. For example, the first mobile phone call was made in April 1973 yet WiFi (802.11) was not released until 1997. (I have written on this elsewhere: http://mises.org/daily/1881)

    There is nothing fundamental about “the internet” from either a technical or economic perspective that only gov’t agencies could have created and private industry could not.

    To highlight the inefficiencies and ineffectiveness of state planning in terms of technology (and how private capitalism created Moore’s Law) I highly recommend that interest readers peruse the subsection “Where Is the Beef?” in this article, specifically regarding the Soviet Union: http://prometheus-unbound.org/2012/06/26/article-debt-as-tall-as-dubai-or-how-the-singularity-is-not-a-guaranteed-phenomenon

    “More to the point, the Soviets had spent decades and large budgets to overtake the West in computing innovations, yet failed at every turn. In fact, it was not just one or two half-hearted attempts, it was a concerted effort directed from up top. Gorbachev himself made advancements in microprocessor technology a cornerstone part of Perestroikain 1985 (encompassing the 14th Five Year Plan).”

    “Just how much effort was put into their centrally planned machine industry? Consider what the USSR tech industry was like circa 1988:

    ” Machine building is the sector of industry on which Gorbachev is relying to ensure the success of his [Perestroika] strategy. The hub of Soviet [computing] industry, this complex employs over 16 million workers at more than 9,000 research institutes, design bureaus, and production and enterprises, and is responsible for designing, developing, and producing over one-fourth of the country’s industrial output. Of the 17 industrial ministries that make up the machine-building complex (detailed in foldout at back of paper), nine — collectively referred to as the defense industry — specialize in military hardware. The other eight produce primarily consumer goods and equipment for investment in the civil sector.”

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