Our society holds up invention as the spearhead of progress. Those who first discover an idea are the ones who receive the Nobel Prizes and earn their places in the history books. But in Man, Economy and State, Rothbard shockingly argues that technological invention is relatively unimportant in the progress of civilization. Instead, capital is the far more important, and limiting factor. In fact, he claims, "there is always an unused shelf of technological projects available and idle." Why idle? ". . . in order for the new invention to be used, more capital must be invested."1
The original inventors of steam power provide one quick illustration of Rothbard's counterintuitive point. Most of us learned about the invention of the (practical) steam engine by James Watt in the 1760s. But history records that the ancient Greeks had described steam-powered devices (e.g. Archimedes, Hero). This invention, as impressive as it is intellectually, was of little practical import. It remained an entertaining novelty during ancient Greek and Roman times unlike the central role steam power played in British Industrialization in the 18th and 19th centuries. Steam power's journey from amusing invention to productive powerhouse took over 1,500 years.
More relevant to our own times is the little known story of the computer mouse. It is fairly well known that this now ubiquitous device came along with the first popular Graphical User Interfaces (GUIs), Apple's Macintosh (1984) and subsequently Microsoft's Windows. What is not well known is that the mouse had been sitting in a lab for a couple decades before it became available to the general public. The transition from lab to living room did not happen by magic. It required the purposive use of capital, and a number of ingenious creative insights, to make an interesting but impractical and expensive device into a readily available necessity for the modern computer user.
Credit for original invention of the mouse goes to Doug Engelbart in the 1960s at the Stanford Research Institute.2 His original mouse design ". . . had three buttons, and used a pair of wheels . . . to translate the motion of the mouse into cursor movement on the screen." During the 1970s researchers at Xerox PARC (a research facility) improved on this original design. They replaced the wheels with a metal ball and metal brushes to sense motion. But this mouse continued to be difficult to use and was expensive to produce.
Then came the famous visit by Steve Jobs of Apple to the Xerox PARC facilities. (This was one of Jobs' requests in return for Xerox possibly investing in Apple). After seeing the Xerox mouse, Jobs charged the small firm of Hovey-Kelley with the design of a practical mouse… And, important to our point here, gave them a significant budget to do it.
A June 1980 memo from Hovey-Kelley to Apple outlined what they understood their mouse design would have to accomplish:
1. Resolution of 1/100 of an inch
2. Three control buttons would be located on the Mouse [later, one button]
3. Will not require a special pad to roll on
4. Inexpensive to manufacture
5. Reliable and manufacturable
Dean Hovey of Hovey-Kelley immediately realized that the way the Xerox mouse was designed had to be fundamentally rethought. The Xerox mouse had two huge flaws. It required a special pad because the weight of the whole mouse rested on the metal ball. This extra weight caused the metal ball to slide rather than roll on table surfaces. The special pad gripped the ball and prevented it from sliding. Jobs found this unacceptable, "I don't want to have to use a pad; I want to be able to do my mousing on my Levis." Second, the mouse tended to get dirty quickly, gumming up the works and making the mouse unusable until it was cleaned, which required taking it apart with a screwdriver.
Dean Hovey had two "A-ha" moments as his team went through a cycle of prototypes. Hovey was thinking about how he wanted the mouse ball to roll without slipping. He says, "I put my fingers around it like a little cage." That was all it took to make him flash on the solution. He needed a "ribcage" that would surround the mouse ball, bear the load of the mouse and just barely touch the ball to sense its motion without pressing it against the table.
The second "A-ha" moment was about the problem of dirt. Hovey's simple insight was this: "Well, we're not going to change the world, there's going to be dust and grit, so let's just make the mouse easy to clean." So he designed the ring that twists off allowing the ball to be removed quickly, cleaned and then replaced by anyone. Without using a screwdriver. This might seem a trivial insight. But bear in mind that the mouse had been getting gummed up since the 1960s and no one had thought to make this change until a serious capital investment was made in 1980.
The details of these two insights are only meant to give an idea of the kind of challenges that were faced to make the mouse a viable product. Further reading reveals that additional innovations and design were required for the shape of the mouse, the micro molding for the mouse ribcage, the mouse cable and connector, the rubber ball, the movement sensors and encoders and much else. (See, for example, these pictures of 27 mouse prototypes with different shapes and button placements). It is a tribute to the brilliant work of the original team that the mouse was quickly taken for granted, as if it had just dropped from the sky fully formed.
Hovey-Kelley had working prototypes by early 1981. A few decades in the lab and then, with the application of capital, a mere six months or so to transform the idea into the mouse we now know. Well, until the optical mouse came along as a further improvement.
Alex Pang, whose history I rely on here, writes "Underlying this argument [that the Macintosh was inspired by a 1979 visit by Jobs… to Xerox PARC] is the belief that commercialization is technically trivial: whatever work the Macintosh team did, it couldn't have been as important as the basic research done in Douglas Engelbart's Augmentation Research Center and PARC's Computer Science Laboratory. The Apple mouse's development reveals the creativity and energy required to turn expensive prototypes into mass-produced consumer goods."
Commercialization is not only viewed as "technically trivial," it is a word often combined with "crass." My dictionary uses these words in defining commercialization: "exploit" and "sacrifice the quality of." The mouse's story reflects in a small way the multitude of innovations made regularly in the market in the process of purposeful and creative investment of capital to take idle ideas off the shelf and give them life. In light of this, perhaps we may also speak of "creative" commercialization, "ingenious" commercialization and commercialization as "fulfillment" of potential.
Rothbard's theoretical point is well illustrated by the mouse: "knowledge can and does exist without the capital necessary to put it to use . . . technology, while important, must always work through an investment of capital."
To drive his point home, Rothbard relates Mises's point that less developed countries illustrate the relative unimportance of technology. "What is lacking in these countries is not knowledge of Western technological methods ('know-how'); that is learned easily enough. . . . What is lacking is the supply of saved capital needed to put the advanced methods into effect."3
If you are for technological progress, and its wide availability, then you should be an enthusiastic supporter of capital accumulation and its rational investment4 . That is, you should be for the free market.
- 1Rothbard, Murray N., Man, Economy and State (1962: Ludwig von Mises Institute, 1993), p. 489.
- 2My summary of the story of the mouse draws on the outstanding "Making the Macintosh" online history project by Alex Soojung-Kim Pang at Stanford. The story of the mouse, and much else, can be found at http://library.stanford.edu/mac/.
- 3Rothbard, pp. 490–1.
- 4Mises explains in his work on socialist calculation why rational investment requires private ownership of the means of production and in his work on interventionism why capital accumulation is stopped or reversed by government intervention in the market.
