Kevin Kelly, founding editor of Wired magazine and a leading infotech publicist, is famous for seeing technology as the driving force behind everything. Take this from his new book New Rules for the New Economy: 10 Ways the Network is Changing Everything. "Technology has always influenced the size of companies. The invention of the elevator made possible high-rise buildings, which brought thousands of employees together into one tightly coupled physical space. High-rise towers launched the golden era of the centralised corporation. Then telephones on employees' desks allowed the corporation to spawn branches in neighbouring cities and states..."
But Kelly is wrong about elevators, telephones and corporations. It was the legal creation of the modern limited company which occasioned the skyscraper and the offices within it-not vice versa. The introduction of the elevator and the telephone, as well as other devices not mentioned by Kelly (such as the mechanical calculator and the typewriter) followed socio-judicial developments. You just have to look at the dates.
Incorporation was first legalised in Connecticut in 1837 to aid the capitalisation of the New England textile industry. A similar reform of the old joint stock system was made in Britain to facilitate the first railway boom in 1844. Limited liability reached the statute book in 1856. Of course these legal and social developments are grounded in technology-the technologies of the industrial revolution. But it was not the application of steam which caused the industrial revolution; rather, it was the social reorganisation of capital and labour which put steam power, long understood but lying more or less dormant, to work.
The same applies to the elevator and the telephone. Powered elevators had been around since the 1830s but they remained largely unexploited. Otis introduced his safety mechanism in 1853 but it was not until 1875 that the modern geared hydraulic elevator made its first appearance. Telephones were also perfected at about this time, although people had been thinking about them since the 1830s. Bell, Gray and Edison brought no new science to the matter when they collectively engineered a breakthrough between 1876 and 1879. Likewise, typewriters were first patented in 1714, but the modern shift-key form dates from 1878. Mechanical calculators have an even older history. Pepys saw an invention for casting up sums in 1668; but it was not until 1887 that the key-driven machine made its appearance.
As with steam, these new devices required no advances in basic science. Even the most sophisticated among them, the telephone, depended on an understanding of electromagnetic waves and variable resistance which dates from the works of physicists such as Helmholtz and Maxwell in the 1850s and 1860s. So did these devices collectively blossom in the 1880s, as Kelly suggests, to father the modern corporation? Or is it not more likely that the modern corporation, proliferating since the 1850s and 1860s, promoted their development in the two decades which followed?
The centralised corporation actually goes way back in time. The Fuggers had a head office and branches in the middle ages. John Company exercised domination over an entire subcontinent, unmatched by even the most powerful of modern firms. By the middle of the 19th century, Western Union exhibited all the characteristics Kelly attributes to the post-elevator, post-telephone corporation. It employed thousands of people, had 2,250 branches and was worth $41,000,000-and it survives to this day.
Like all determinists, Kelly needs to simplify history. He needs to be selective and, indeed, amnesiac about old networks such as Western Union telegraph, to sustain his hyperbolic claims about the powers of new networks such as the web. Kelly has to misrepresent the history of electronic communication systems in order to make his case for a "new economy."
For example, Kelly chooses the year 1899 to argue that there were 2,000 telephone companies in the US, using many different, often incompatible systems. Although true, this is a distortion. The Bell master patents ran out in 1894. In the decade that followed, non-Bell systems sprang up, especially in the west, which was not yet connected by the Bell/AT&T long line network. Most of these were locally-owned rural systems with a few hundred subscribers. AT&T refused to connect to them and gradually bought them out. By 1916 Bell had wiped out 80 per cent of them. When telephone competition was reintroduced 65 years later, interconnection was mandated and highly regulated.
The historian Fernand Braudel has suggested that what is most intriguing about technology, even in a culture addicted to novelty, such as ours, is its comparative lack of autonomous drive. Braudel talks about technology being subject to social accelerators and brakes. It is the need to facilitate the capitalisation of enterprise or to entertain the new urban masses which explains the rise of modern communication systems. The A-bomb spawns the computer, the cold war the web. Without these social factors, technologies languish.
We have a tendency to suppress technological history. Despite the recent hype we are actually entering the 60th year of the digital age. The first digital encoding device was built by AA Reeves in ITT's Paris lab in 1938. The mathematics of digital sampling date back to the 1920s.
By ignoring and misreading the past, technicists misunderstand the present. Kelly's gung-ho analysis of the state we're in reads like a dispatch from a parallel universe. Here are some random notes from the real world where I live. Take computing: I often waste many minutes easing a badly-designed power jack into the back of the laptop on which I write. When it goes wrong-and it does-I enter the Kafkaesque world of "technical support" services, a world familiar to me from a lifetime of dealing with garages and service counters of all kinds. I recently bought a small plastic container filled with toner (a computer printer cartridge) at a cheap office superstore for the staggering price of ?52.
That same week, the police seized hundreds of paedophiles in an internet ring. It seems that "internet" and "paedophile" go together like "love" and "marriage." Meanwhile Doonesbury was running a storyline on how internet companies are a snare and a delusion-south sea bubbles of confidence trickery. And in general, the global economy continued to stumble.
None of this impinges on Kelly. His economic understanding is at cloud-cuckoo-land level. Our government is talking about road pricing but Kelly writes: "The cost per mile of driving will dip toward the free." He tells an elaborate anecdote about a cement company in Mexico which has transformed its business with infotech, but fails to mention the country's continuing social unrest. Kelly is blind to "green politics" and appears to believe that poverty doesn't exist: "How long can you hold out not having a phone? Only 6 per cent of US homes are still holding out." Holding out?
Kelly's is a world of wonder: "gift economy," "zillionics," "unimaginable forms of commerce," "an explosion of entities built on relationships and technology that will rival the early days of life in their variety." It is a world in which lettuces will have display chips attached to their packaging so their price can fluctuate on the supermarket shelf as the lettuce market moves. "Why should a phone company get paid only once a month when you use the phone every day?" The power of the network will allow them to charge instantly for service. Lawyers will be replaced by "expert systems software" but kitchen appliance repairmen and gardeners will command premium fees. Nothing, it seems, will ever replace the need for servants, but everything else will be remade. "As crackpot as it sounds, in the distant future nearly everything we make will (at least for a short time) be given away free."
And how do we reach this Land of Cockayne? By embracing late capitalism, of course. There will be "A thousand points of wealth." "It's a hits game for everyone." Contemplating this Burgess Shale of interconnected marvels, Kelly suggests that "resistance is futile." In fact, New Rules for the New Economy is less a contribution to the literature on the information revolution than a neo-conservative propaganda blitz in the form of an airport management primer for hurried executives. Kelly goes beyond the usual pastiche of assertion, anecdote and selectivity which characterises most techno-babbling. He has written a self-help manual with the curious purpose of rendering the reader more or less powerless in the face of these supposedly irresistible changes. He is sometimes stern ("Don't seek refuge in scarcity"), sometimes seemingly practical ("Invest in the first copy"), but often opaque ("The only side a network has is outside"), and on occasion positively Zen-like ("Touch as many nets as you can." "A hammer is part of a few networks, but a telephone is part of many"). A little computer graphic accompanies this last aphorism, showing a clip-art icon of a telephone in the midst of many circles while beside it a little clip-art hammer sits in only three. Readers might be forgiven for thinking that they are the victims of an elaborate joke.
But this is not a joke. Kelly's publishers think that the book is going to be "huge" and I fear that they are right. Which is why, despite it being the silliest book I have ever read, it must nevertheless be noticed. Technicists are like Jehovah's witnesses: when Armageddon, utopia or other predicted changes fail to occur, they just move on and predict again. Because they are amnesiac about history, they are undeterred by the record.
If you are a mover and shaker eager to discover where to bet your company in the 21st century, you would do better to pierce your tongue and look for inspiration among the crop circles than read New Rules. As for the rest of us, how about: "Just say no"?
New Rules for the New economy
Kevin Kelly
Fourth Estate 1998, ?15
