Ruling the Waves

Ruling the Waves was published in 2001, before 9/11, when the commercial Internet was young and Web 2.0 was just getting going. The book was hoping, then, to shed some light on what was to come in the development of cyberspace. The author, Debora Spar, was a professor at the Harvard Business School at the time (now she's a dean).

The book presents a premise that when a ground-breaking new technology is introduced, it goes through four phases of development before becoming a commonplace part of everyday life on which we depend. First there is the invention phase, involving just a few people, and then the entrepreneur phase, where risk-takers develop the new technology commercially. Next is what she calls a period of “creative anarchy,” when the most successful entrepreneurs battle for supremacy in the marketplace, and finally the rulemaking phase, where those who now dominate the technology application push for a fixed legal structure within which to operate.

The author takes us on a tour de force of how these waves progressed for certain technologies, such as the telegraph and radio. You will come to understand the happenstance of how certain institutions emerged and became predominant, institutions such as Western Union and NBC, which are still around and taken for granted today. There are also chapters on the waves of contemporary (2001) Internet technologies, where the full cycle wasn't yet complete. It would be fascinating to read what Spar thinks about how the Internet has evolved in the past twenty+ years, but to my knowledge she hasn't told us.

This book is highly recommended for anyone interested in the history of technology, or in political or social theory, since they are intertwined. Technology is as much in the application as it is in the invention, after all.

When I read this book, I was interested to see how what Spar's different technological wave forms compare to the cycles in Strauss & Howe generational theory. It seemed to me that there should be some synchronization between Spar's technological wave cycles, and Strauss & Howe's generational cycles, or saecula as they are called.

The first wave Spar analyzes is the wave of advancements that led to the Age of Discovery – but this happens over a long period of time (centuries) so bringing saecular theory into it seems difficult. The next technological wave was that of the telegraph, and here it was easier to do the analysis.

The Telegraph

I was half-expecting to find that the Gilded generation were major players in the drama of the development of the telegraph, since they are the Nomad generation of the Civil War Saeculum. After all, the Nomad generation of the current saeculum, my generation, has had a big part to play in the rise of Internet technology. But what I found is that the the main players in the story (looking at the U.S. part of it) were all from two generations – Compromise and Transcendental. The Gilded are nowhere to be found, probably because they were too young.

The narrative of the development of the telegraph did track pretty well with the turnings of the Civil War Saeculum, however. The invention period occurs at the end of the Transcendental Awakening, the 2nd turning. It involves two key players, Samuel Morse (b. 1791, Compromise Generation) of course, and Alfred Vail (b. 1807, Transcendental Generation), who worked closely with Morse. The idea of transmitting electricity over wires had been known about for decades; their genius was in combining the transmission with encoding, to create information. They managed to get some public backing through Congress to build a line, but the enterprise failed.

So then came the entrepreneurs to buy them out, and build a private enterprise instead. A key player was Amos Kendall (b. 1789, Compromise), a former postmaster general who left his position specifically for this purpose. He proved that it was possible to raise funds privately to build a telegraph line, and once the public caught on to what the technology made possible, the money started flowing into more and more companies building regional lines. Other big time entrepreneurs of this period included Henry O’Rielly (b. 1806, Transcendental) and Cyrus Field (b. 1819, Transcendental), who built the first trans-Atlantic line.

Without going into too much detail, the competition became fierce, as well as costly to the companies involved. In the period leading up to the Civil War, that is the 3rd turning in saecular terms, there was fighting over patent rights and access to markets, as well as confusion sowed by competing signal standards and encoding methods. This is the “creative anarchy” period in Spar’s terminology.

The winner of this period of conflict turned out to be Western Union, thanks in large part to the efforts of Hiram Sibley (b. 1807, Transcendental), who led it in its transformation into a telegraph company, eventually establishing the first transcontinental line. With this consolidation came standardization – the rulemaking period. After the Civil War, in the 1st turning of the next saeculum, Western Union became a huge and powerful monopoly, enough to worry people into pressuring the government to regulate it, though not much was done in the Gilded Age.

I find it fascinating that so many of the key players in the development of the telegraph were from the Transcendental generation, the Prophet archetype of the Civil War Saeculum. They were the Bill Gates and Steve Jobs equivalents of their time, and of this technological wave.

It wasn’t until the end of the new saeculum, with the founding of the FCC, that private communication networks became thoroughly regulated, during the radio era.

Radio

The story of radio comes in two halves. The first one is dominated by the best known figure in the history of radio, Guglielmo Marconi (b. 1874 – Missionary peer). He was not just an inventor, but also an entrepreneur, and managed not only to make radio a feasible technology, but also to completely control the market via his patents during the 1910s.

But Marconi’s dominance was undermined by two factors. The first was nation-state governments, which recognized the security implications of wireless communication and used their authority to constrain Marconi’s monopoly power. The second factor was the development of the next generation of radio technology. Marconi’s system used spark gaps to generatate pulses of electricity and transmit signals in Morse code – it was essentially wireless telegraphy. What was really wanted was a way to send signals on continuous waves. Then sound, even music, could be transmitted. It would transform radio into wireless phonography, which is how we experience it today.

This is the second half of the radio story, a sort of mini-wave of its own. The invention phase was primarily the work of an engineer named Reginald Fessenden (b. 1866 – Missionary), and occurred at the same time that Marconi’s creation was prominent. The entrepreneurial/creative anarchy phase took place in the first part of the 1920s. It was kicked off by an important development, the formation of the Radio Corporation of America (RCA) in 1919. This was an innovation of its own in the commercialization of communications – RCA was an organization that controlled radio stations without controlling the technology of radio. This was the beginning of the broadcasting industry. Marconi’s system became obsolete and his patents worthless, and his empire crumbled.

In the first half of the 1920s, radio was in a period that definitely matches Spar’s creative anarchy phase in technology develoment. Small stations operated by amateurs – “radioheads” – sprung up everywhere, broadcasting whatever music they could get their hands on. This became too chaotic to be tenable, since by their very nature broadcast signals interfere with one another. Order came with laws passed in the late 1920s to regulate bandwidth, and with the emergence of broadcasting corporations which controlled networks of radio stations and could operate them in a coordinated fashion. The first of these was the National Broadcasting Corporation (NBC), and before long ABC and CBS came along – the Big Three which moved on to the world of television broadcasting and which are still prominent today.

So Spar’s entire cycle of four phases of technology development can actually fit into the space of one decade. The fact that radio’s story is ensconced within the third turning of the Great Power saeculum fits that era’s heady, fast-paced reputation. The subsequent development of television takes place in the next first turning, but Spar actually skips over that entirely. Her example from the history of television specifically relates to the rise of satellite and digital TV.

Satellite and Digital Television

This is another fast cycle, and takes place within the third turning of the current Millennial saeculum – in the 1990s, the last decade before the publication of Spar’s book. It starts with the rise of SkyTV, powered by the relentless ambition of Rupert Murdoch (b. 1931 – Silent). The new techonology in question was satellite broadcasting, and the key to SkyTV’s takeover of the British market was the fact that Britain’s tight television regulations did not cover this particular type of broadcasting.

By taking advantage of this regulatory gap, Murdoch was able to penetrate the British television market with a unique brand, one that threatened Britain’s conservative and cultured self-image with trashy “American-style” content. SkyTV quickly got into financial trouble, which Murdoch handled by bringing in legendary executive Sam Chisholm (b. 1939 – Silent peer). But no sooner had Chisholm straightened things out, than SkyTV was hit by a new wave of techonological innnovation and forced to adjust to that.

This new wave was digital broadcasting, which basically reimplements signal encoding in such a way that far more channels can fit within the same bandwidth of electromagetic radiation. Consequently, providers can offer more content and choices, to presumably leverage for more profit-making. You may remember this transistion, which for consumers was disruptive since it meant their old analog systems were going to become obsolete. You may remember complaining and a sense of consumer powerlessness in the face of inexorable progress. It’s a done deal now, but at the time that Spar’s book was published was an ongoing process of negotiation and new rulemaking.

What’s interesting about these early twentieth century techonological waves is that “ruling the wave” becomes as much a matter of navigating the regulatory environment as of pioneering a new techonological application. This comes with the growing sophistication of both corporate enterprise and government oversight. But even as the focus of the stories has shifted from individual inventors and entrepreneurs to giant corporations and milestone regulatory acts, there is still room for strong personalities to exert their influence.

Looking at the personal computing/Internet related waves, we see similarly that they occur within a tighter timeframe. But here we must also face the fact that Spar’s book was published in 2001, and the whole issue of how these technologies would be regulated wasn’t necessarily fully resolved yet – in other words, the pattern wasn’t complete. This is where Spar is using her thesis to provide guidance about what might be coming in the future (from a 2001 perspective).

Encryption

One thing I will note about these last technology waves is that the Boomer generation is predominant in their stories, in both the initial invention phase, and the subsequent entrepreneurship phase. Let’s start by looking at encryption. The inventors of public-private key encryption were all Boomers: Whitfield Diffie (b. 1944), Martin Hellman (b. 1945) and Ralph Merkle (b. 1952). So were the inventors of the RSA algorithm: Ron Rivest (b. 1947), Adi Shamir (b. 1952) and Len Adleman (b. 1945). And the guy who put these together to give us the popular PGP software used by the masses on the Internet is also a Boomer: Phil Zimmermann (b. 1957).

The invention phase of encryption started in the recent second turning (in the 1970s), and continued into the third turning (the 1980’s and 1990s). The entrepreneurship phase began in the third turning with the rise of the Internet, as Zimmermann developed PGP in the early 1990s. At the time of Spar’s book’s publication, the legal status of PGP was up in the air, but today it is accepted by government in the US and EU, and is widely used. It’s also open source, meaning that Zimmermann, though he’s the entrepreneur in this story, has not become obscenely wealthy because of it. I see this particular story as a great example of the Boomer generation’s role in computing technology’s transition from being used solely by big corporations to becoming a technology for the masses.

PC Operating Systems

This is the familiar story of the personal computer. The Boomers who are most associated with this tale of the empowerment of the common man are Steve Jobs (b. 1955) and Bill Gates (b. 1955). The latter figures prominently in the next wave of which Spar writes – the PC operating system. But it should be noted that the inventors in the first phase of this wave were other men. The first hobby PC was the Altair, invented by Ed Roberts (b. 1941 – Silent), and the OS which Bill Gates famously licensed to IBM was based on an earlier operating system called Q-DOS, invented by Tim Paterson (b. 1956 – Boomer). These inventions happened in the last second turning, in the 1970s.

Gates was the entrepreneur in this technology wave; you might even call him the chief entrepreneur. He did get to be one of the wealthiest men ever, after all. His famous arrangement with IBM, which made him wealthy, happened at the end of the second turning, in 1980. Throughout the third turning, his dominance of the marketplace only grew, to the point that his company, Microsoft, was being called “the evil empire.” At one point, it was challenged by another technological development, which Spar covers in the same chapter: the web browser, an alternative platform for information access that might have derailed Microsoft’s control over software applications on its system.

The World Wide Web

With the World Wide Web, the invention phase was very fast, occurring in just a couple of years in the early 1990s. The inventor was yet another Boomer, Tim Berners-Lee (b. 1955). The entrepreneur whom Spar singles out for her narrative is a Gen Xer, Marc Andreessen (b. 1971). He developed the first highly popular web browser, Mosaic, later Netscape Navigator. Depending on your age, you may or may not have used it. Microsoft tried to muscle Netscape out of the business by bundling their web browser with their operating system, precipitating a famous anti-trust lawsuit, U.S. v. Microsoft.

So this technology wave actually gets to the rule-making phase in the narrative. The rule-maker in this case is a judge, Thomas Penfield Jackson (b. 1937 – Silent). His ruling was that Microsoft was indeed practicing monopoly, and would have to break into two separate units, one to produce the operating system, and one to produce other software components. But in a settlement after appeal, this was rescinded. Spar’s book was published before this settlement, so her narrative misses this plot twist. And what was the final result of this attempt at regulation? I would say that Microsoft remains a powerful monopolist, but in a field where new monopolists have arisen, with the coming of yet another technology wave which this book could not predict: smartphones, which come with their own OS, and the application platforms on them, which completely circumvent the web.

Digital Music

The last technology wave discussed in Debora Spar’s wonderful book is digital music, specifically the MP3 format. This was invented by committee in the late 1980s and 1990s, a committee of mostly European peers of the Boomer generation. The entrepreneurs of the next phase are Gen-Xers who, in the 1990s, leveraged MP3 technology to build music-sharing empires which made them money, but were of dubious legality and sparked legal wars with established music labels, and many of the music artists as well. These are Sean Parker (b. 1979) and Shawn Fanning (b. 1980) of Napster, and Mike Robertson (b. 1967) of MP3.com. Their companies didn’t survive the legal battles ultimately, though at the time of Spar’s book publication, the rule-making phase was only just underway, with the formation of the Secure Digital Music Initiative, which was attempting to come up with standards for digital music usage that would satisfy all stakeholders.

In the end the SDMI got nowhere, and other standards were developed for digital rights management. These are in use today in the age of streaming music and video, which gives consumers access to huge libraries of content for an affordable price. The old content owners, and the artists, probably, have lost out in this deal. But it’s the way the market ended up regulated: in a way that could meet the huge consumer demand which digital encoding inevitably wrought. I discussed this in a review of another book; the streaming model provides what people want, and allows them to get it in a way that is fair and legal.

It’s too bad that Ruling the Waves left off in 2001, and didn’t get into the smartphone and social media era, and the rise of the now dominant Big Tech companies. To my knowledge, the author has not continued this study approach with any other technology waves. But I think that if she did look at developments of the past twenty years, she would agree with this assessment of the dominant tech corporations today – Alphabet (Google), Amazon, Apple, Facebook, and yes, still Microsoft: they are the winners of the once dynamic competition, during the early days of the Internet, among different information technologies and platforms.

The world standardized on Big Tech’s platforms and technologies because they provided the best experience, or because it was just easier for everyone. As with Western Union and the telegraph, they are the monopolists who emerged from the free wheeling creative anarchy phase to become the rule makers. As with the story of the telegraph, this happened during a saeculum’s fourth turning, which in the case of the current saeculum began in 2008. And as was the case with Western Union, the Big Tech companies are resented for their monopoly power. Another author I have reviewed calls them "information empires."

Conclusion

Debora Spar’s Ruling the Waves is a remarkable book, with a brilliant insight about the history of technology and the patterns of technological change. The idea that technology comes in waves, with different phases of development, from a period of loose rules to a period of tight rules, reminded me of the similar idea with respect to social norms in Strauss & Howe generational theory. Both theories tie into the concept of enantiodromia, the principle of things or states tending to transform into their opposites. That is why I embarked on a review of Spar’s book through the lens of generations theory.

What I found is that, as is generally the case with these high level theories, the patterns are not perfectly there. But where they are there and do line up, it is striking that the periods of greatest technological innovation and development of markets for new technologies which Spar identifies match the social era from Strauss & Howe theory that has the greatest degree of individualism and tends to be focused on commercialization and free markets. This suggests a clear relationship between social eras and the degree of technological innovation, and means that some generations, by dint of their location in history, are more strongly associated than others with technological change.

I should note one caveat: half of Spar’s examples are from recent history; they are digital technologies developed at the end of the twentieth century. So of course they are all stories from the same social era, meaning there is sample bias in the survey. It would be wonderful if Spar’s principle were applied across a great many of the major technological developments of the past few centuries – would we find that technological innovation is clustered in particular social eras? It would also be wonderful to hear Spar’s take on the developments in digital technology over the past twenty years. How different the world of the Internet looks today than it would have to a professor of business writing at end of the “dot com” era!

This review is based on a series of posts on "In The Zeitgeist," my blog, available at: http://stevebarrera.com/category/ruling-the-waves/