It occurs to me that Steve Jobs personifies much of what is both good and ill in American capitalism.
On the good side, he was an innovator much in the same vein as Thomas Edison, innately grasping how information technology could be applied and extended in profitable ways. The iPod revolutionized the music distribution business like nothing had done since the advent of the phonograph, one of Edison’s inventions.
But his innovations were often barely so technologically, operating more in the realm of delivery and sales. He made people believe that they needed what they hadn’t even wanted before, and made sure when they were convinced of the need, that his organization profited handsomely thereby. When Jobs launched the must-have iPhone, he made sure that AT & T, not Apple, bore the brunt of the expense of servicing the massive bandwidth the new phone required. Apple got rich. AT & T got schnookered. The iPhone meanwhile didn’t do a whole lot more than an old Blackberry, but Jobs convinced the world that it was revolutionary and the world, or at least some segment of it, bought into his claims.
He succored the human instinct for status in society, positioning his products as cool and hip and technologically sophisticated, charging a premium for the very same information and services available cheaper elsewhere for the privilege of having it delivered through a device with the logo of a bitten apple gracing its cover. In that regard, more so than industrialist giants like Ford and Edison and Rockefeller, Jobs understood and masterfully exploited human nature and man’s innate drive to best his fellows. Apple’s products filled no existential needs. They didn’t allow crops to get to market more efficiently, or light the darkness to extend the day. They filled a psychic need for status and connection and, importantly in this age of aimless leisure, of allowing one to believe that what they were wasting their time doing held great importance somehow.
Jobs created in Apple something of a cult for consumers, as the vigils held in his honor after his death attest. He was simultaneously charismatic and authoritarian, two attributes commonly held by cult leaders. Through his charismatic salesmanship, he instilled in consumers a reverent, worshipful loyalty to his cause, i.e., his products. He made Apple into a secular religion; a great many people filled a life devoid of meaning and purpose through owning and using its products.
Apple was a fad that lasted a great while, replacing the forlorn fads of the dot-com and real estate eras that preceded it. It was the Pet Rock of the seventies, animated and given life in the fabulous new age it heralded. The iPod literally was a throwback to the seventies, mimicking the Sony Walkman in almost every fundamental aspect, only smaller and with a bigger potential playlist.
Apple mania was already passing before Jobs passed. The iPhone 4S, the latest in the line of highly profitable cell phones, “fail[ed] to wow” as the Wall Street Journal put it. One wonders how much its failure to wow was related to its lack of technological innovations and how much was related to the fact that Steve Jobs, the coolest, hippest CEO alive, was not around to promote it. Jobs died a day or so after its debut, and did not attend its coming out party.
For awhile, when it appeared that Jobs could practically print money at will, Apple stock rose so high until the company threatened to topple Exxon as the most valuable company in the world. It has since receded a bit from those lofty valuations relative to Exxon, but not by much. As of today, Apple’s market capitalization is about $347.4 billion, whereas Exxon’s is $359 billion. Imagine for a moment what that says about American capitalism. Apple products, which carry a premium over their competitors mainly because of the status that comes with their ownership, is nearly as valuable as the world’s largest and most profitable producer of a mineral that is essential to virtually all human economic activity in the developed and developing world. The world’s economic system would not grind to a halt if Apple customers suddenly couldn’t access the internet on their iPhones or iPads, or download music to their iPods, but it would if Exxon suddenly quit pumping oil. And Apple has a smaller market share in every category in which it operates (except the iPod) than Exxon does in the world oil market. Apple’s market capitalization is a reflection of the fact that when all the subsistence needs have been satiated, higher order needs, like status and meaning and purpose, take precedence and command a premium far out of proportion to their importance for survival.
Which is why Jobs’ death and Apple’s inevitable demise bodes ill for American capitalism. There is nothing to power economic growth except fads like Apple, and if Apple, as personified by Jobs, is gone, from what quarter will growth arise? There will undoubtedly be new fads and new hip companies whose products are uniquely positioned to enhance their user’s status while also salving their existential angst, but it will take time for them to arise. Status enhancement only works if a critical mass of people agree that a thing is cool and desirable. In the meantime, a population rich and growing old is not a population that can expect to see rapid economic expansion. In a way, Jobs and Apple helped alleviate the feeling of despair attendant to a dearth of economic growth opportunities. Even if there was no way to make much out of this economy, at least one could be cool simply by toting an Apple device, which also conveniently served to fill up the empty hours of an aimless existence. Without Jobs, what then will America do?