Stories
Stories
Everything Old Is New Again: The History of Technological Frontiers
It was a giddy time that presaged a new frontier, when a tinkering youth would become an international monopolist, and hundreds like him, eager for the quick riches that appeared inevitable, would start new businesses based on a revolutionary technology. Countless ordinary Americans poured money into public stock offerings capitalizing on the boom, only to experience financial heartache when the bubble burst.
Sound like the Internet revolution of the 1990s? Try the radio revolution of the 1920s. In a presentation to alumni at a recent reunion, HBS professor Debora L. Spar challenged the apocalyptic pronouncements of pundits who declare the Internet an unprecedented development heralding the collapse of national authority. "They assert that in cyberspace, governments wither away, that they no longer have any moral right to rule society, nor do they have any methods of enforcement," said Spar, adding dryly, "Ayn Rand is alive and well and living in Silicon Valley."
These prognosticators, from Spar's perspective, ignore the fact that there are precedents — technological breakthroughs in the course of history that were, for their time, as world-changing as the Internet has been in ours. The idea that anarchy is the inescapable outcome for cyberspace must be seriously questioned when one notices how other such revolutions have, in the end, submitted to governance.
"Over time, the revolution ends," said Spar. "The technologies become normalized, stabilized, and regulated." This transpires, she argued, not due to the govern- ment's desire to control, but the market's own need for stability.
Spar's research on this topic includes the maritime trading boom of the 17th century and the development of the telegraph, radio, and satellite television in the 19th and 20th centuries. In each case, she noted, contemporary reactions to the new frontier followed a similar pattern. The commercial opportunity attracts pioneers, some of whom resort to piracy to seize their claims. This leads to the assumption that governance is not just absent but impossible.
"There's a sense out there that this anarchy will remain," said Spar. That is, until the revolution moves to the next phase, when rules are demanded. The demands may stem from social concerns, as is now the case with privacy issues on the Internet, or, more intriguingly, they may come from the pioneers themselves.
"Once the pioneers have moved out there, claimed the loot, and put a stake in the ground, then they want property rights," Spar observed. "They don't want to be sitting out there with shotguns; they want to be running their business or mining their gold."
At that juncture, outsourcing protection to the state sounds pretty attractive to those former anarchists. Spar noted, for example, that the British East India Company pressed the British government to create a navy to curtail piracy, even though its own business had been established through just those kinds of tactics.
"The real winners here are the pirates, who then manage to get the state to cement their gains and become legitimate," stated Spar. For their respective eras, she asserts, Sir Francis Drake and Rupert Murdoch are kindred spirits who played such roles. More recent examples of pioneers inviting the state's protection include Amazon.com (zealously seeking government-issued patents for e-commerce innovations) and the trio of Netscape, Oracle, and Sun (bolstering the Justice Department's case against Microsoft).
Historically, Spar observed, breakthrough innovations have been followed consistently by commercialization, standardization, and regulation. She was careful to clarify the regulation phase. "What I'm talking about are the basic, underlying rules, which are primarily rules of property rights," said Spar. She thinks regulations will likely emerge governing the Internet in areas such as music downloading. However, she noted that the United States has failed in its attempts to protect encryption techniques as a national military asset. Content remains the most difficult area to control and thus promises to be the enduring freedom of this new frontier.
"That's the revolutionary part of the Internet, and that's the part that will shift the balance between states, firms, and society," Spar predicted.
Professor Spar's research is the subject of a forthcoming book, Pirates, Prophets, and Pioneers: Business and Politics along the Technological Edge, to be published by Harcourt Brace early next fall.
Post a Comment
Related Stories
-
- 15 Dec 2024
- HBS Magazine
Assets: Memory Full
Re: Dante Roscini (MBA Class of 1952 Professor of Management Practice of Business Administration); Dante Roscini (MBA Class of 1952 Professor of Management Practice of Business Administration); By: Julia Hanna -
- 10 Jul 2024
- HBS Alumni News
Next Level
Re: Gina Joseph (GMP 29); Rawi E. Abdelal (Herbert F. Johnson Professor of International Management Emma Bloomberg Co-chair, Bloomberg Harvard City Leadership Initiative); Linda A. Hill (Wallace Brett Donham Professor of Business Administration); By: Catherine O’Neill Grace -
- 05 Oct 2021
- Fortune
Launch Signals
Re: Quinn Fitzgerald (MBA 2017); Sara de Zarraga (MBA 2017) -
- 10 Mar 2021
- HBS Alumni Bulletin
Elevator Pitch: Game Time
Re: Hans ten Cate (MBA 2001)