Steve Jobs and Stagnation Theories

10/07/2011 02:09 pm ET | Updated Dec 07, 2011

Steve Jobs is dead and the eulogies rain down. This is a case where much that is said is absolutely true: He was a giant; he was a figure -- so rare -- that deserves the adjective "transformational." But, of course, given the occasion, and given the fact that nearly everyone has an Apple product near at hand, the hot air and exaggeration do get extreme, particularly on television.

Jobs did not invent the computer -- or the personal computer. He and Steve Wozniak, then mostly just himself, popularized it and proselytized for the machine itself and for a lifestyle that revolved around "personal" computing. He was central, but not alone. IBM did take a while to get onto the personal-computer bandwagon -- it sold all those mainframes, with all the central control that that implied (and as Jobs cheekily reminded us) -- but when it did move into the consumer business, its standards and its operating system software, from those geeky guys at Microsoft, dominated commercially for many years. Was Apple hipper? Yes. Was its software more elegant and sophisticated? Undoubtedly. Did everything it sold look better than the competition? Absolutely. But for several decades, Wintel machines outsold Apple dramatically. There were years where it looked as if Apple could not survive the onslaught. Jobs had his years in exile; and there were many doomsayers who saw market share as destiny. Today, most companies still use Wintel machines.

Not that it matters. Jobs won by essentially blowing up the traditional desktop personal computer with the iPod, the iPhone and the iPad, and reinventing the lifestyle. In each of those categories, Apple's blend of software and design -- so Jobsian -- prevailed.

Jobs' passing elicited a vaguely panicked air. What will Apple do now? What will we do now? After all, the country is suffering an acute case of nerves. To the man on the street, Jobs' Apple was a beacon of light in a gray, featureless landscape, like a superstar on a losing team. Jobs was the greatest of CEOs; Apple represented a paragon of corporate virtue, despite various governance issues. And now he's gone -- and if the commentators are correct (they're probably not) we might as well sell that Apple stock now and move to Shanghai. Now clearly, both the gloom and the celebration are exaggerated, at least on a national level. Apple isn't the only superior company -- in tech or elsewhere -- out there. And for all of Jobs' efforts and talents, and all the products sold by Apple, there remains what Tyler Cowen calls "The Great Stagnation" thesis that confronts us. Why are we in a funk? Technology has let us down. Cowen traces the beginning of what he sees as a stagnation of fundamental technological change to the '70s, right around the time Jobs and Wozniak were in the garage. Jobs was a pioneer of digital technology for consumers; and while all his often-magical efforts produced a sense of dynamic change, particularly after the Internet arrived, the effect of all that on wealth creation and productivity remains arguable -- although it's pretty obvious we'd be worse off without him.

The stagnation thesis has been much discussed since Cowen published what was really a long essay on the subject. The debate has swung back and forth. Some see the stagnation thesis as simple gloom mongering; others essentially echo it, like the libertarian-entrepreneur (he was a founder and CEO of PayPal) Peter Thiel in a recent essay at the National Review. But even Thiel admits that the evidence for stagnation, or as he says, "a slowdown," is "far from straightforward." More interesting, many others have used Cowen's thesis to speculate about cause and cure. Thiel's essay has its interesting moments, but it's ultimately unsatisfying because he decides to skip the "why" and head straight for the "what to do," as if the two weren't linked. There is a perfunctory quality to his "what." He thinks -- an odd position for a libertarian -- that the state should push science, admitting, "free markets may not fund as much basic research as needed." He cites the Manhattan Project and the space program. And he particularly laments that political leaders no longer listen to scientists and engineers. In fact, he ends up blaming it all on the '60s "Progressive Left," those "aged hippies no longer understand that there is a difference between the election of a black president and the creation of cheap solar power" and who engage in "endless fake cultural wars around identity politics."

And that's it. Thiel ends by admitting that "it is not easy to find a path back to the future." This is a little disappointing for a guy who's supposed to be so razor sharp.

Thiel's notion that politicians don't listen to scientists and engineers is pretty simplistic. It is odd to hear libertarian Thiel lament that the state has failed us by not launching the very kind of projects libertarians have always condemned. Jobs himself, a major technological figure, did not get involved in broad policy issues, but he brought tremendous technology to the masses and was an icon to a large part of the population that hangs on every development in computers, phones, music players. True, Americans do not send their children to college to become engineers in large enough numbers; but they do push them toward finance and business -- two areas that " '60s progressives" would presumably disdain. And for all the handwringing, the combination of market capital and state funding undoubtedly supports far more science and technology today than in the '50s or the '20s and the '30s. Apple is a good example. So is biotechnology. So is PayPal.

The stagnation thesis has generated a tangled web of explanations. Another argument for the slowdown involves the growth of finance beginning in the '70s, which attracted talent, brains and capital that might have gone to science and technology. That's problematic as well, particularly given the explosive growth of Silicon Valley in that time. Perhaps the breakdown in manufacturing has undermined engineering and technology. Perhaps the markets have made companies too short term. Perhaps the economy is simply mature, or too complex, or we're just dumber than we used to be. Perhaps stagnation is the result of the very trend that Jobs drove, that is, complex products for consumers rather than business or the military. In this argument, the rise of venture funding and the capital markets shaped technological products aimed at booming consumer markets, pumped up with deficits and cheap credit; gadgets for entertainment not tools for productivity. That too can be picked apart. Just about the only explanation that can't be dismantled -- it's too large and amorphous -- is the that we're just going through a cycle in which older technologies, Cowen's low-hanging fruit, have been exploited and we have to wait, patiently if nervously, for the next wave to hit. This sits uncomfortably with entrepreneurs like Thiel who believe deeply in the power of human agency. He calls it a "cargo cult mentality."

Lastly, there's the argument made by science fiction writer Neal Stephenson for the World Policy Institute in a short essay titled "Innovation Starvation." Stephenson's thesis is a little egocentric, if straightforward. Our predicament comes because science fiction writers no longer imagine a technological future for us all. (Thiel agrees, claiming that "science fiction has collapsed as a literary genre and blaming Woodstock and the hippies and the "cultural war over Progress.) Stephenson has a great nostalgia for the space program, for the '60s, and for the broad audiences that Isaac Asimov and Robert Heinlein had in his youth. He argues that science fiction once provided two drivers to science and technology: inspiration and what he calls the hieroglyph, which is "a plausible, fully thought-out picture of an alternative reality." But science fiction no longer generates that vision, and scientists and engineers are trapped in a kind of bureaucratic nightmare. How these two things fit together is a little hazy, but Stephenson sweeps past that:

"Researchers and engineers have found themselves concentrating on more and more narrowly focused topics as science and technology have become more complex. A large technology company or lab might employ hundreds or thousands of persons, each of whom can address only a thin slice of the overall problem. Communication among them can become a mare's nest of email threads and Powerpoints. The fondness that many such people have for SF reflects, in part, the usefulness of an over-arching narrative that supplies them and their colleagues with a shared vision. Coordinating their efforts through a command-and-control management system is a little like trying to run a modern economy out of a Politburo. Letting them work toward an agreed-on goal is something more like a free and largely self-coordinated market of ideas." Ah, politics again.

Hey, it's an argument, and one that has as much validity and as many flaws as so many others when it comes to the subject of stagnation. And it conjures up a final point about Jobs: He was a figure -- a post-'60s liberal, by the way, a member of the Woodstock generation -- who had his own poetic predilections, not only for design but also for communicating a vision. It probably wouldn't hurt to have more of that around, though it's not something they teach in engineering school.

Read more: Steve Jobs and stagnation theories -- The Deal Economy