Can we have innovation without billionaires?

Lately I’ve been reading a financial blog written by one Mr. Money Mustache, who managed to retire after just 9 years of work as an engineer. His radical philosophy of personal finance can be summed up by his mantra that “luxury is just another weakness”. In practical terms, this means that the best way to manage one’s finances is to avoid excessive luxuries, live well below your means, and invest your money wisely to reach financial autonomy as quickly as possible. A few days ago, Mustache published a post arguing that once you achieve that coveted financial autonomy, you will probably continue to fill your time with work. Unlike the day-job, this work is undertaken to provide a sense of purpose and direction rather than out of necessity. Here’s the argument in his own words:

“My best days are the ones where I accomplish something truly difficult, preferably in both mental and physical realms. And my worst days are those that I just spend sitting around. So I’ve learned that work is an incredibly powerful source of happiness. The key is that it must be creative, social and engaging work that brings you towards a purpose you believe in. So if a friend asks me to spend a day helping him haul steel beams and welding them into his foundation so he can resume progress on a dream house, I’ll be right over. “

Mr. Money Mustache is not the first person to articulate this idea, which is, I think, actually pretty intuitive. Answering the criticism that a Basic Income would cause everyone to sit around all day, shutting down the economy, proponents of the idea often reply, “is that what you would do?”. Consider that question yourself: If you no longer had to work for money, what would you do with your time? I think more of us would answer in a way that is more similar similar to Mr. Money Mustache, than Peter Gibbons of Office Space, whose answer is that he would sit on his ass, watch TV, and do nothing.

This might seem a bit tangential for a blog about the politics of technology, but you should bear in mind that the issues of personal finance, consumption, technology, and sustainability are all very closely interconnected. Technology is, after all, almost inseparable from work. Whether you’re talking about a space-ship or a plastic cup, it takes work to design a prototype and put it into production. Often it takes work to use it, although sometimes its use reduces the amount of work required (which can cause problems). Today, I want to talk about what implications Mr. Money Mustache’s philosophy has for the production of new technology.

The neo-liberal economic paradigm, are fundamentally based on the idea that we need to offer lavish rewards to the people who make society better. When asked to provide examples of such people, neoliberals often point to people who develop new technologies. That’s why Bill Gates and Mark Zuckerberg are such common poster-children. They earned their wealth by developing useful technologies, argues the conservative, and therefore their wealth is justified. If we don’t structure our economy to offer lavish rewards to people like Gates and Zuckerberg, then we won’t enjoy their contributions to society. This is basically the entire plot of Atlas Shrugged. But is this actually true? If we removed the chance for inventors and technological entrepreneurs to become billionaires, would all innovation cease? I think that’s very far from proven. Consider a few things:

First of all, successful entrepreneurs are, almost by definition, not stupid people. At the outset of their project, they are probably well-aware that the odds of successfully commercializing their idea actually pretty slim, and that the odds of becoming wealthy from it are even more so. Kickstarter is littered with great ideas that were never funded, and quite possibly were abandoned as a result. A savvy entrepreneur with a good idea might have a decent chance at making some money, and perhaps even earning a living. But if a smart person really wants to get rich, they’ll probably have a higher expected return on their investment by going to medical or law school, or getting an MBA. That’s not to say that the potential for obscene wealth isn’t present in their minds when they start designing a new technology, but if they’re savvy, then it’s unlikely to be their prime motivation.

Secondly, there was a fascinating experiment done by Sam Glucksberg in 1962 which sheds some interesting light on the motivations behind problem-solving. Participants were sat at a table with a candle and a box full of thumbtacks, and instructed to find a way to suspend the candle from the wall. This is a standard problem-solving task, which most participants eventually solve when they realize that they can stick the the box the thumbtacks came in to the wall, placing the candle upright in it. For Glucksbert’s experiment, researchers promised one group a financial reward for solving the problem quickly, while a control group was given no added incentive. Surprisingly, the group without the incentive completed the task faster on average. One explanation for this is that while rewards might be useful for motivating some kinds of tasks, for problem-solving tasks they are actually just a distraction.

When you consider these two points in light of Mr. Money Mustache’s statement, then a very different account of the motivations behind new technology emerges. The implicaiton is that inventors invent not because they want to become billionaires, but because they enjoy inventing. Solving the problem and making a new thing is its own reward. My hypothesis is that a lot of technological entrepreneurs are mainly interested in finding a way to make their interest in developing new technologies earn them a living. Everyone needs to keep the lights on, after all. But perhaps the potential to get rich isn’t actually that big of a motivator.

If this is true, then it is a huge blow to the neoliberal account of technology. It suggests that we could radically restructure our economy to give more to the underprivileged and less to the wildly successful, and the John Galts of this world would still be motivated to make cool stuff for us. Here’s another possible implication: How many intelligent, driven, and innovative people do you think are out there slaving away at minimum-wage jobs, working meaningless office jobs because they can’t afford to quit, or are struggling to survive in conditions of economic destitution? How many great, world-changing ideas are languishing in the minds of people who don’t have the time or the energy to bring them to fruition? What if we took the pressure to make ends meet off of these people? What might these people create if they were given a basic income, or if they were able to earn a living by working fewer hours? And how does that compare to the innovations that we might lose if we fail to motivate the entrepreneurs who won’t pursue their ideas unless they have the opportunity to become a billioniare? I can only speculate as to the answers to these questions, but I have a feeling that they might make neoliberals very uncomfortable.

The story of the entrepreneur who works hard to improve life for all of us, and is justly and richly rewarded for it, is a foundational myth of our Western capitalist economies. It goes right back to Samuel Smiles, who developed it as a response to a controversy over nineteenth-century patent law. When I say it is a ‘myth’, I don’t mean to say that it is necessarily false. Rather, that its importance is independent of its truth. Myths are stories that we tell each-other to make sense of the world we live in.

But what if this story is false? What if we could enjoy all the benefits of a high-tech society, without having to suffer the side-effect of rampant economic inequality? That would have profound implications for technology, the economy, politics, and culture. So maybe we should be so quick to accept the story of the heroic entrepreneur who needs to be enriched to make his efforts worthwhile.


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