Mad Dog 21/21: From Hegel To Google

The renowned philosopher Georg Hegel, whose life coincided with the Industrial Revolution, analyzed social change and the resultant conflict of old and new. His ideas galvanized Karl Marx, 50 years his junior. Two centuries after his birth, Hegel’s wisdom guided Silicon Valley’s sensational inventors.

At its best, our economy is nourished by a hearty Hegelian stew of technologies seasoned with a dash of Ninotchka. At its worst, we try to feed on an Apple duly but dully managed by former ibmocrat Tim Cook as we listen to a hoarse Yahoo.

Georg Hegel: German philosopher whose work at Jena, Heidelberg, and Berlin remains a pillar of contemporary thought.

It’s very difficult to go from zero to Hegel. If you’ve taken a couple semesters of philosophy, you’ve probably been on the path that leads to Hegel and beyond. Hegel’s work has roots in classical Greece, in the words of Socrates as conveyed by Plato. The ancient Greeks explored learning in the form of conversations or dialogues. Philosophers use the term dialectic for the two-way exchange of views in the quest for truth. It gets complicated if you are just jumping in at the deep end. It took scholars a couple thousand years of discourse to get from the Greeks to the nineteenth century, and philosophy has kept moving since.

If you never studied philosophy, or did but forgot what it’s all about, you still won’t have any trouble understanding one of the ideas Hegel emphasized, that quantitative change, if it’s great enough, becomes qualitative change. This wasn’t an original idea, but nevertheless it is one that Hegel developed. He may have been stimulated by the scientific progress of his time. His contemporaries gained from the mathematics of Isaac Newton a century earlier, from the work of numerous chemists and physicists and from the rise of industries that turned scientific knowledge into productive technology.

The popular example drawn from the scientific culture of his time to illustrate Hegel’s assertion about change, about the quantitative becoming qualitative, uses water. At low temperatures, it is ice, a solid. But when it is warmed to zero degrees centigrade it suddenly becomes a liquid. Keep heating it, and at 100 degrees C the liquid becomes a gas, the water turns to steam.

Karl Marx: His work explored the forced unleased as the Industrial Revolution created a distinct working class and empowered the owners of means of production.

Hegel felt that some social phenomena behaved the same way, that certain changes that occurred in a gradual fashion would, at certain points, dramatically change the state of affairs.

The Industrial Revolution that took place during Hegel’s lifetime had a huge impact on Western Europe and its cultural children in the Western Hemisphere nations born as European colonies. Amidst the Revolution, The United States of America broke free of England, France had a republican revolution and elsewhere across the changing civilizations governments, even if they kept old forms, were renovated in rapid, dramatic ways. Wealth that formerly was tied tightly to land came to the owners of factories. Industries with the right facilities (and talent) could generate profits on a few acres that exceeded the yield of agriculture across property that was two or three orders of magnitude larger. At the same time, as wealth left the country for urban industries (or for industrial developments that became cities), peasants were no longer able to live off the land. The countryside suffered poverty that eventually drove many people off the land their families had lived on for generations. The displaced former farm workers sought work in factories. A lot of this work involved harsh conditions that sowed the seeds of discontent.

While the development of industries was correctly viewed as commendable progress, the fate of the working class was dire. To cope, working people had to find new schemes of social and political organization. One of the philosophers who rose to prominence as Hegel’s life ended was Karl Marx. He argued that the clash of ideas, the dialectic, of his world was not the abstract, idealized set of notions pondered by Hegel and his contemporaries. Marx said that the important differences among ideas and people, including classes of people, were tied to wealth, to who had it and who did not, to how it was created and how it was distributed.

Ninotchka: Greta Garbo and Melvyn Douglas starred in this 1939 comedy contrasting life in Stalinist Russia with that in Paris; Stalin was not amused.

Ultimately, Marx correctly predicted, some societies would be unable to resolve their conflicts by peaceful or at least non-violent means. Marx suggested Russia would have a very hard time making the change from a feudal nation with many peasants, a vast land ruled by its Czar, to a country with a different structure and different ways of distributing wealth. Marx was long dead when Russia had its revolution, but many key developments played out the way Marx and his colleagues, particularly Frederick Engels, forecast.

What the philosophers did not foresee was that even with a drastically different economic structure Russia would end up ruled by tyrants. The Russian revolution of 1917 may have sown the seeds of a democratic republic, but what grew was the invasive weed of tyranny. Today, a full century later, Russia is ruled by a strongman, not a voting public. It has a legislature with suitable mechanisms, but not a democratic parliament. For most Russians, it probably isn’t as awful a place to live as it was under Stalin, or under the Czars before the revolution. Russia has a toe in Europe, but it is not European. Marx was smart, but he sure wasn’t all-seeing.

These days, Silicon Valley and its counterparts in Europe, Japan, India, and elsewhere seem to have more success than Russia, which bet its entire future on oil just in time for fracking to change the rules of the energy business. It’s not that Russians don’t do things well, it’s that their culture finds imagination too threatening. If the world never changed, eventually the Russians would do very well. But that’s not the way it is.

In the late 1930s, as America suffered in its Great Depression and Europe staggered toward World War II, Hollywood dreamed up a comic film that poked fun at the grim life of Stalinist Russia and contrasted it to the far more pleasant culture of Europe and Eurasia, particularly Paris but also Istanbul. The film, Ninotchka, starred Swedish beauty Greta Garbo and American Melvyn Douglas. It’s a charming, witty film, and sharp enough that, as it became a hit and went into international distribution, it was banned in Russia. (It probably still is, and as long as Putin is in charge, it probably ought to be, at least from a Russian point of view.) Ninotchka is the story of a woman sent to recover wealth taken from Russia by a Czarist refugee who despite her training and initial inclinations, falls in love with Paris and a Parisian. It has a happy ending as the characters played by Garbo and Douglas end up in romantic Istanbul, where they will live out their lives.

Apple iPhone: Apple’s outstanding mobile phones work on more networks than phones of any other brand, creating the possibility for Apple to offer communications services.

The forces of anti-capitalism that played out in Russia and elsewhere a century ago were, according to Marx, best measured in monetary terms. But that was then, and this is now. Money is still the great force it was and capitalism still has all the virtues and vices of years past, but the change that is sweeping the world, the quantitative change that will become qualitative change, cannot be measured in dollars or, for that matter, rubles. The key measure of our times is bandwidth.

Yes, buying bandwidth involves money, and that makes the relevant issues a bit more complicated. But the dramatic social impact, the change that brings political forces to a boil and perhaps turns liquid aspects of society into steam with its dramatically different gaseous properties, is due to technology. And the organizations that may best exploit the bandwidth and its power are relatively young, lively, and witty. They are the ones with the cheerful, daring, witty, and romantic Ninotchka factor, not the grim grey Stalinists.

Apple is a wonderful field on which the forces may play out. It had lots of life when Steve Jobs had life. It is, regrettably, a lot less fun under Tim Cook. To be sure, Apple makes the iPhone, still the best mobile phone in the world, except if you need to start a fire, in which case Samsung may be the phone vendor of choice. The company’s small computers are as good as or better than any other outfit’s machines. Its tablets, even if they may go out of fashion, are swift, smooth, easy to view, and fully featured. So it is not a lack of prowess or unwillingness to invent that is hurting Apple. It is, rather, the company’s loss of the wit and iconoclasm that characterized Steve Jobs’ key decisions. Tim Cook, for all his gifts, is just too much of an ibmocrat. He may even be an argument against IBM’s chances for a lively future.

IBM has vast human and material resources, a wonderful history and gargantuan ambition. But it doesn’t have that Ninotchka factor. It’s just no fun.

Google Nexus 5X: Google currently offers one phone that is as versatile as an iPhone, but not as powerful, while more are in the pipeline.

If you want to think about examples of companies that understand that bandwidth is at the moment the greatest force in the world, take a look at Google. It not only has vast bandwidth to sell in the form of content-based services like search and maps, it has put pressure on carriers to boost bandwidth and keep the costs down by building cable Internet utilities and, soon, very likely, wireless Internet utilities, too.

To make sure people can affordably take advantage of the bandwidth, Google has a mobile phone service called Project Fi. Project Fi is a world phone service that blends wireless telephony and Internet. It provides Wi-Fi calling and over-the-air calling, Wi-Fi data and over-the-air data, switching between them in ways kept largely invisible to the end user. Project Fi uses phones designed by Google engineers, this year’s and last year’s Nexus models, and starting any minute the new Pixel instruments. These phones work pretty well the world over, and Project Fi does, too. (The Nexus 5X has a lot of network flexibility; the larger and peppier 6P doesn’t span Europe quite as well.) In more than 130 countries, Fi users, when on Wi-Fi, can place calls and send texts to Fi’s home country, the USA, for free. Calls to China or across Europe might run a penny or a few cents a minute. Data services cost $10 a gigabyte worldwide. The base cost so far has been $20 per phone per month, and that covers unlimited texts and free or cheap phone calls. Google is likely to soon unveil phone group plans for families or business organizations, further reducing cost. One of the best aspects of Project Fi is its support. You can phone Fi and leave your number. Fi Support will call you right back, usually within one or two minutes. And, in one commentator’s experience at least, Fi support provides excellent, effective advice. Problems get solved right away!

Apple could probably offer a similar service, but to do so it would put at risk its relationship with carriers around the world. It apparently does not believe it can afford to do this. And so far at least, it shows no sign of playing it both ways, of offering Fi-like world phones in addition to the general purpose models it puts on the market every year. But it’s early in this contest, and Apple could easily catch up to Project Fi if it put its considerable intellectual resources behind the task.

Amazon, another bandwidth empire, and, notwithstanding IBM’s claims, the recognized leader in cloud computing, failed with its first phone venture. It is now experimenting with phones from established manufacturers sold a low cost when bundled with a suite of Amazon apps. It’s too early to say how this will play out. But Amazon has persisted in the tablet business and seems to be growing year after year. It is adding technology that helps customers manage the Internet of Things, mainly household gadgetry, and testing the market to see whether this capability is best sold as a dedicated appliance or as an app on tablets and phones. What is missing so far is a bandwidth offering, a way for Amazon to offer direct access with the help of or despite a lack of help from major carriers. Amazon has long since offered bandwidth on some of its Kindle book readers and some of its Fire tablets, but it hasn’t yet gone as far as Google with Project Fi. When it comes to wit and daring, the Ninotchka factor, Amazon is as lively as Google.

Google’s Fi service uses Google networks in the relative handful of cities where it has built fiber systems, but for now Fi runs on customers incumbent networks plus over-the-air capacity it buys wholesale from T-Mobile, Sprint, and U.S. Cellular.

Microsoft has lots of cloud computing capacity, but it has been a loser in phones, a weakling in tablets and a real but not particularly effective force in laptop computers. When it comes to interactive services, Microsoft is nearly as gray and gloomy as IBM. No Ninotchka factor here. There are lots of Wall Street types who believe Microsoft will have a bright future, although it’s seems harder and harder for the bean counting types to explain just how it will arrive. It’s a bit like the way Warren Buffett trusts in the gods and his instincts to protect his hefty investment in Big Blue. When it comes to investing, Buffett is rarely wrong. Skeptics agree with the rule but ask whether IBM might be the exception.

Google is so prominent, it’s easy to think Project Fi and Google’s high speed cable ventures are defining the future, but in fact it’s just as likely that the future will simultaneously be created in India. The Ambani brothers, a couple of the smartest and most successful businessmen in India, are deploying fast, cheap mobile data services. They put an estimated $20 billion behind the scheme. It is called Reliance Jio, which roughly translates as l’chayem in Yiddish, or to life in English. The utility says it can deliver 4G LTE service to more than three-quarters of India. It’s free now, but when the billing begins next year, the cost is expected to start at 149 rupees (roughly $2.25) per month per user. Google is scrambling to get into the Indian game; its opening gambit involves free Wi-Fi at train stations. Apple may be lurking in the wings, if it can somehow get Tim Cook to cheer up, raise his Ninotchka quotient.

And where is IBM in this? In India, it is running a race to the bottom in enterprise services against Tata and its ilk. In the USA, it is twiddling its corporate thumbs as a new generation of wireless carriers learns to get first dibs on burgeoning bandwidth.

Across the USA, Republic Wireless offers a service involving a mix of Wi-Fi, wireless data, cellular telephony and voice-over-LTE that costs less than Project Fi service, offers a wider choice of phones and generally keeps Google on the brink of embarrassment. Right now, Republic’s big disadvantage, at least for travelers, is its lack of international service arrangements, something at which Google seems to be adept. Between Fi and Republic, the pressure is on. AT&T, which owns a pre-pay service called Cricket, has had to significantly improve its competitive posture. Verizon hasn’t yet responded, but it has other troubles, such as its entrapment in obsolete CDMA telephony, which does not allow simultaneous voice and data transmission.

As Sun Microsystems tried to explain decades ago when it was alive and smart, the power in these times stems from mastering bandwidth. And as available bandwidth becomes more affordable and more abundant, it is a quantitative change that will bring about qualitative change. Just what that change will be, nobody yet knows. But that ignorance does mean anyone can afford to ignore what is going on. On the contrary, only the vigilant and those with quick reflexes will be able to adapt and evolve. And even among those likely survivors, the winners will be the ones who can err, spot the mistake, laugh at themselves and then do what makes sense, like Ninotchka, Google, Amazon, probably Apple but perhaps not IBM.