New HQ... Charles Mudede

There is much talk today about the iPhone, which was introduced a decade ago, and the release of the iPhone X (as in the Roman numeral for 10), which promises to be better and cooler than all the others before it (no home button) and will be the most expensive iPhone ever (one grand). The New York Times has a video that's partly jokey and partly serious about all of the commodities, services, and habits made extinct by the creative destruction of this decade-old product: the death of the watch, the death of the cab, the death of the calendar, the death of small talk. This synthesis of the web browser with the handy, by way of the synthesis of the iPod (an mp3 player) and the handy, is still Apple's cash cow. According to Get Data Sheet, Apple has "shipped more than 1.2 billion iPhones worldwide in the last 10 years and generated $760.4 billion in revenue over that period." After the November launch of the very expensive X (which I will pronounce as the letter rather than the number), the year will end with a product line that the world has spent a $1 trillion on.

But despite the buzz, iPhones have been in decline for two understandable and related reasons: 1) fierce competition and 2) the spell of the brand is waning. Both are normalizing Apple's profits. And we can predict that the new features on X will not generate the extraordinary sales (what Marxists call "relative surplus value") of the first iPhone simply because X is still a smartphone. ("iPhone X is its screen—a 5.8-inch display that uses OLED technology—similar to that on Samsung phones...".) rather than traditional LCD. Apple's response? Find or make the next big displacement product as soon as possible. A few years ago, it decided this product would be a self-driving Apple car. Apple's HQ projected onto the translucent screen of the near future a city of smartphones on wheels. A smartphone that fetches you from where it has parked itself. That picks up your groceries or grand-kids like the maid robot, Rosie, on The Jetsons. With this invention, Cupertino would become the next Detroit.

That vision, however, is now dissolving and the near future appears to be still holding a smartphone. The New York Times recently reported that Apple tried and failed to scale up the iPhone to an autonomous vehicle. And it's not that this transformation is impossible. It can be done. But here is the thing: An autonomous car is not the kind of thing a corporation or the market can afford to make. This is the business of what the UK-based economist Mariana Mazzucato calls the entrepreneurial state. The research and development needed to make the leap from navigation by the human mind (an organ that has evolved over millions of years and in thousands of environments) to that by computer code (a technology still in its infancy) is too great for even a corporation with a market valuation of $800 billion. The difficulty of crossing from mind to code involves innovations that are not yet known and lines of imitation that have yet to intersect.

This area of darkness is too much for the market, which almost never gives to future but takes as much as it can from it (what else is finance). A well-funded state has the resources to play this giving role. Here, the only economic system that's viable is socialism—as it displaces the accumulation of capital (the logic of the merchant) with the accumulation of knowledge (the logic of the enlightenment). With the former, use-value and exchange value (the foundations of capitalist accumulation) are suspended. As a consequence, a distinction forms between research under socialism and research under the market: the latter cannot survive without success and the former can thrive on failure. When working in the dark of a public-supported research project, what you find by error can be as important as what you find by design.

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As Mazzucato points out, all of the main parts of the iPhone were developed by institutions within or supported by the US government. Another UK-based economist, Ha-Joon Chang, explains in his excellent Economics: The User's Guide that this state-funded R&D actually constitutes a subsidy for corporations, whose pockets are not deep enough to work in the dark. Seen from Joon's and Mazzucato's perspective, corporations are not innovators but "knowledge brokers." This is the iPhone: a synthesis of knowledge accumulated from socialist enterprises.

Let's end with a quote by John Maynard Keynes:

The important thing for Government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.