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Columns

Jobs and Capitalism

What the late Apple CEO did differently from most billionaires

By Dylan R. Matthews

By definition, the longtime CEO of the second biggest company in the world is a figure of rather significant political import. But even so, I was surprised at the speed with which mourning over Steve Jobs’ passing gave way to fights over whether he was a paradigmatic success story of American capitalism or a greedy megalomaniac who made shiny toys for the rich. National Review’s Kevin Williamson immediately seized upon Jobs as an example of a daring entrepreneur who meddling politicians would like an “even stronger whip hand over.” Lefties like Grist’s Dave Roberts, by contrast, dismissed Jobs’ record, saying he “unquestionably made life better & more wondrous … for wealthy people.”

The shared assumption of both the right-wing and left-wing responses is that Steve Jobs is just another capitalist, whether that be an admirable quality or a sign of moral depravity. Would that it were so. The kind of capitalism practiced by Jobs is of a wholly different—and superior—moral character to the kind of capitalism that has dominated the world for the past decade or more. Treating him as a typical profiteer is to misunderstand badly what he did, and why it was important.

Over the past 40 years or so, computers have gone from a relatively obscure tool of business to an absolutely essential component of daily life. Thirty percent of the world’s population has access to the Internet today; just five years ago, that figure was 16 percent. And given that the vast majority of residents of rich countries are now online, those figures are only going to go up as poorer countries develop. No one person can take credit for a cultural transformation of this scale. But it’s hard to think of a more essential figure in the shift than Steve Jobs.

The Apple II, as one of the first successful personal computers, helped spur the initial home computing craze in the late 1970s. The Macintosh took developments in graphical user interfaces that had been developed by the Xerox PARC lab and commercialized them. Without Jobs’ initial effort to push the Mac to market, it’s hard to know if Microsoft would have decided to follow Apple’s lead and push Windows, their own operating system with a graphical user interface, to market. If you use a computer that has menus and windows and a mouse or trackpad, then you probably have Jobs to thank.

This is not even to mention the plethora of non-computing achievements—from popularizing digital music players and convincing record labels to sell music online to founding Pixar and producing one of the most consistently excellent catalogs of any movie studio ever—for which Jobs can claim credit. The point is that Jobs made stuff that mattered and pushed competitors to do so as well. Apple, under his leadership, worked like a capitalist enterprise is supposed to work, making profits not through rent-seeking or gamesmanship but by making products that people actually wanted. Sure, Apple’s own products mostly serve a mostly high-end niche, but their introduction spurred the creation of new, better products at all price points.

This would be admirable at any time period, but Jobs’ record is especially remarkable coming as it did at a time when more of the American economy than ever before is devoted to socially useless pursuits. Concurrent to the IT boom that Jobs helped usher in, the financial services industry was also exploding in size, amounting to a third of all corporate profits by the middle of the last decade. Any idea that this was the result of genuine financial innovation, as opposed to deregulation and capture of government by banking interests, should have been put to rest when the crisis hit in 2008.

But finance was, and remains, a good industry to be in if you want to get filthy rich. As the economist Tyler Cowen has noted, the number of financial executives and other investors making over $100 million a year in 2004 was nine times the number of CEOs of public companies making that amount. The top 25 hedge fund managers that year made more combined than every CEO of an S&P 500 company put together. The lesson is clear. If you want to become rich in early 21st century America, you shouldn’t make things, or provide real services to people, or otherwise make a “dent in the universe,” as Jobs often said was his goal. You should instead take out huge loans and make crazy bets on financial instruments.

That’s why Jobs was important. He was a model of wealth acquired not due to highly leveraged, socially prestigious gambling, but due to actual inventiveness. For those of us who still think that regulated capitalism is still something worth saving, that’s something to celebrate.

Dylan R. Matthews ’12, a Crimson editorial writer, is a government concentrator in Kirkland House. His column appears on alternate Wednesdays.

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