How one magic word became a way of justifying Silicon Valley’s unconstrained power
There are certain phrases that are central to the sway the tech industry holds over our collective imagination: they do not simply reflect our experience, they frame how we experience it in the first place. They sweep aside certain parts of the status quo, and leave other parts mysteriously untouched. They implicitly cast you as a stick-in-the-mud if you ask how much revolution someone is capable of when that person represents billions in venture capital investment. Among the most influential of these phrases is undoubtedly “disruption”.
The concept of disruption is a way for companies, the press or simply individuals to think about questions of continuity and discontinuity – what lasts and what doesn’t, what is genuinely new and what is just the next version of something older. There is a lot at stake in how we think about these issues. Are the changes the tech industry brings about, or claims to bring about, fundamental transformations of how capitalism functions, or are they an extension of how it has always functioned? The answers to such questions will determine what regulatory oversight we believe is necessary or desirable, what role we think the government or unions should play in a new industry such as tech, and even how the industry and its titans ought to be discussed.
When we speak of disruption, we are usually thinking about the perils of continuity; we express the sense that continuity works fine until it doesn’t. To some extent, this sense that things staying the same for too long is dangerous and makes us risk falling behind, is characteristic of modernity – not in the sense of a specific time period so much as the condition of being modern, living in a modern age. As the poet Charles Baudelaire wrote in the 19th century, when the world around him was modernising at a breakneck pace: “The form of a city / changes faster, alas, than a mortal’s heart.” Keep living the way you’re living, and soon enough you’ll find yourself living in the past.
More specifically, though, disruption resonates with our experience of capitalism. Think of all the companies and products that you remember treating as seemingly permanent, inextricable fixtures of your everyday life, that nevertheless slid right out and disappeared with time. Recall, if you’re of the right age, the act of respooling a cassette tape with your pinkie finger, or the phrase “Be kind, please rewind”. Or, for a slightly younger generation, the whistles of a dial-up modem or the mastication of a floppy disk drive. Disruption tells a story that explains how things that seem as if they will last forever nevertheless come to be short-lived.
Neither those who argue for continuity nor those who are in favour of discontinuity are disinterested parties – everyone has a stake in these things. I have to include myself in this. I confess to being very wary of claims of disruption, but then again, as a professor of literature, I’m in a profession that pretty much depends on the idea that the past matters a lot and that messing with it in any meaningful sense entails spending a lot of time studying it. As Mandy Rice-Davies put it when she was told that the politician Lord Astor denied having an affair with her: “He would say that, wouldn’t he?” And I would argue that stewardship of the past is more important than riding roughshod over it, wouldn’t I?
Nonetheless, I think at least some of the rhetoric of disruption depends on actively misunderstanding and misrepresenting the past. We can call this the infomercial effect. You don’t see quite so many of them today, but they were once ubiquitous, and they would follow the same template: “Don’t you hate it when,” they would ask, and name an extremely minor problem with some mundane task you honestly couldn’t say you had ever encountered. Then they’d offer their revolutionary solution to the problem they had invented about 30 seconds prior. The infomercial deliberately misinterpreted whatever it was seeking to disrupt. One of the greatest works of collective satire of the internet age are the 6,069 and counting Amazon reviews for the Hutzler 571 banana slicer, which mock exactly the mania for buzzy solutions in search of a problem – “No more paying for those expensively sliced fruits- i can just stay at home,” joked one user.
The reason infomercials use this template is that it taps into a pretty pervasive sense of boredom. We get excited when things get shaken up, for the big and powerful to get taken down a peg. There is a joy in seeing “the system” shaken up, old hierarchies up-ended, Goliaths falling to Davids. Such narratives play to our impatience with structures and situations that seem to coast on habit and inertia, and to the press’s excitement about underdogs, rebels, outsiders. If you look back at coverage of Theranos, until the fateful article by John Carreyrou in the Wall Street Journal that brought the company down, few journalists really bothered to ask whether or not Theranos could do what it claimed to be able to do – they asked what would happen if it could. Disruption is high drama. The claim that “things work the way they work because there’s a certain logic to them” is not.
The idea of disruption has a particularly strange backstory. Probably its oldest ancestors are Karl Marx and Friedrich Engels, who wrote in the Communist Manifesto that the modern capitalist world is characterised by “constant revolutionising of production, uninterrupted disturbance of all social conditions”, so that, as they put it, “all that is solid melts into air”. Whereas the premodern world was defined by a few stable certainties, by centuries-old tradition, and governed by ancient habits of thought, in modernity all fixed relations “are swept away, all new-formed ones become antiquated before they can ossify”. You can sense their giddiness, even though the situation they describe is disorienting and ultimately nightmarish. And yet they are giddy, because they feel that this accelerating cycle of constant destruction and replacement ultimately destroys itself.
This idea made its way from the Communist Manifesto into business jargon by way of the economist Joseph Schumpeter, who, in a 1942 book, coined the phrase “creative destruction”. Although hardly a communist himself, Schumpeter derived the term from Marx and intended it to be descriptive rather than affirmative. Born in Austria in 1883, Schumpeter was steeped in both Marxian economics and in the work of classical liberal economists such as Ludwig von Mises. He became one of the great analysts of the business cycle, but also of its social ramifications. In 1932, he became a professor at Harvard. Schumpeter thought that capitalism would almost gradually lead to some kind of state socialism, a fact that he didn’t exactly welcome but thought inevitable.
Audio and video cassettes and floppy discs. Photograph: Prostock-Studio/Getty Images/iStockphoto
It’s noticeable that the inevitability of socialism and the instability of capitalism are two ideas one rarely hears mentioned in connection with disruption today. If anything, disruption seems to lean in the direction of more capitalism – that is, of a more untrammelled expression of market forces. But it’s important that this theory was first developed in dialogue with Marx, a philosopher who was trying to show that the capitalist mode of production made a revolution inevitable. Schumpeter agreed with Marx on two important points: that the ever-increasing efficiency of capitalist exploitation inevitably decreases rates of profit, and that decreased rate of profit leads to monopolies.
Marx thought that the falling rate of profit doomed capitalism to exploit labour ever more harshly (thus setting the stage for revolution). Schumpeter countered with the idea of creative destruction: if markets were uniform over time, Marx might well have been proven correct, but this turns out not to be the case. “The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organisation that capitalist enterprise creates,” wrote Schumpeter. In his view, capitalism’s “creative destruction” – its tendency to shake up and redefine its markets – is the thing that actually accounts for its continuity. Yesterday’s monopolist is suddenly one competitor among many, and, often enough goes under entirely. The cycle begins anew.
It would have been easy enough for Schumpeter to argue that in this way, creative destruction would ensure capitalism’s long-term viability. But interestingly enough, in his magnum opus, Capitalism, Socialism and Democracy, he argues just the opposite. The second part of the book is titled Can Capitalism Survive?, and Schumpeter comes down on the side of no. After all, the constant destruction, however generative it may be from a bird’s eye view, will ultimately call forth attempts to regulate capitalism. While creative destruction is viable economically, its experience is too disorienting politically to allow capitalism to survive long-term. In the end, Schumpeter believed, creative destruction makes capitalism unsustainable: gradually and peacefully (through elections and legislative action), capitalism will yield to some form of socialism.
Most of the discourse around disruption clearly draws on the idea of creative destruction, but it shifts it in important respects. It doesn’t seem to suggest that ever-intensifying creative destruction will eventually lead to a new stability – that hyper-capitalism almost inevitably pushes us toward something beyond capitalism. Instead, disruption seems to suggest that the instability that comes with capitalism is all there is and can be – we might as well strap in for the ride. Ultimately, then, disruption is newness for people who are scared of genuine newness. Revolution for people who don’t stand to gain anything by revolution.
Indeed, there is an odd tension in the concept of disruption: it suggests a thorough disrespect towards whatever existed previously, but in truth it often seeks to simply rearrange whatever exists. Disruption is possessed of a deep fealty to whatever is already given. It seeks to make it more efficient, more exciting, more something, but it never ever wants to dispense altogether with what’s out there. This is why its gestures are always radical, but its effects never really upset the apple cart: Uber claims to have “revolutionised” the experience of hailing a cab, but really that experience has largely stayed the same. What it managed to get rid of were steady jobs, unions and anyone other than Uber making money on the whole enterprise.
The most obvious shift that has occurred in the use of the term “creative destruction” is that it now has an exculpatory, at times even celebratory, side. Schumpeter wasn’t altogether horrified by creative destruction, but he thought it was as much of a problem as it was a functional rule for how capitalism operates. By the 90s, “creative destruction” had become an exonerating byword, usually when someone wanted to push back against government regulation or public opprobrium for certain business practices. Evangelists of downsizing and hostile takeovers, such as business professors Richard Nolan and David Croson, relied on the term.
While “creative destruction” is a deeply ambivalent phrase, the word “disruption” is frequently positioned as something to be explicitly celebrated. It becomes something to be taught and striven for. And where Schumpeter’s view of the business cycle presumes a kind of Olympian view from above, disruption puts us in the trenches, and presumptively on the side of the attacker rather than the stalwart. While creative destruction was neutral on whether whatever was getting creatively destroyed deserved it, anything that is getting “disrupted” had it coming.
But there is a less obvious shift in usage. Schumpeter proposed creative destruction as a concept that applies to the business cycle. Companies dominate the market, are challenged by other companies and get displaced. But today’s rhetoric of disruption frequently applies to things other than companies. This is why people such as Peter Thiel are so intent on claiming that higher education, say, or healthcare as a whole, or government, are oligopolies or even monopolies. Schumpeter would have looked at Blockbuster’s gradual defeat by Netflix – a rival it never saw coming, a rival it didn’t take seriously when threatened and even refused to buy when given the chance – as a textbook case of creative destruction. But is the same true for your local travel agency, record shop and pharmacist? Is it true of the postal service or the regional bus company? Disruption is a concept that draws combatants into an arena they had no sense they were entering.
A Blockbuster store in Sidcup, Kent, 2013. Photograph: UrbanImages/Alamy Stock Photo
The rhetoric of disruption frequently creates solidity, stability and uniformity where it doesn’t exist. The disrupter portrays even the most staid cottage industry as a Death Star against which its plucky rebels have to do battle. Misperceiving, misunderstanding or simply ignoring the industry one is seeking to disrupt seems, if not necessary, then at least no impediment to disrupting it. The world is out there, stupid and driven by habits, ready to be disrupted.
Friedrich Nietzsche once wrote that “forgetfulness is a property of all action”. If I could clearly see what everyone had done before me and what the consequences were, I would never act. To act decisively, Nietzsche proposed, requires a moment of egocentrism, “drawing a limited horizon round one’s self”, the power to be “super-historical”. Disruption is premised on creative amnesia, on a productive or at least profitable disregard for details. Sometimes what comes out at the other end is a Tesla Model 3. Sometimes it’s a Hutzler 571 banana slicer. The way the concept is used today is deeply suspicious of any cumulative, gradual force of progress. This despite the fact that while stories of gradual progress aren’t as exciting as stories of people just flipping the game board, they often end up describing the world we live in fairly well.
Disruption depends on regarding people as participating in the business cycle who insist that they’re doing no such thing. And it depends on extending the sense in which the terms “monopoly” or “oligopoly” can be applied. Did big taxi companies once dominate personal transportation, or did thousands of individual cabbies who were barely making ends meet? The term “disruption” makes a monolith of structures and organisations that are old, have grown up organically and are therefore pretty scattered and decentralised. Think about the peculiar alchemy involved in talking about how Google disrupted the media landscape: suddenly the hundred-billion-dollar company is a scrappy underdog and a magazine with 40 employees is a Big Bad Monopolist.
The final distortion the rhetoric of disruption introduces concerns where society and the state lend their support. For Schumpeter, creative destruction issued from challengers who were able to spontaneously expand or change the playing field. But what happens when disruption becomes itself institutionalised? Today’s plucky rebels are funded by billionaires, can go into massive debt if they need to, are supported by regulatory bodies they or their business school buddies have long ago captured and are cheered on in their attacks by people who have been wanting to get rid of unions and regulation all along. They are hardly what we’d usually think of as outsiders.
And while it’s hard to cheer on a company like Blockbuster, which acted as if the market it found would remain uniform forever, it’s also strange to look at companies such as Uber and cheer them on in thinking that eventually government regulation will need to adjust to support their business models. For the ultimate upshot of the disruptor’s super-historical impulse is the expectation that, rather than your idea conforming to the world in some manner, the world ought to accommodate the sheer genius of your idea.
When Elizabeth Holmes appeared on the talkshow Mad Money after the allegations against Theranos became public, she repeated a Steve Jobs-ism (an infamous free-floating quote, variants of which have been ascribed to everyone from Mahatma Gandhi to Arthur Schopenhauer): “First they call you crazy, then they fight you, then you change the world.” When challenged, Holmes retreated into a kind of received wisdom, but that wisdom seems to have been largely gleaned from dorm room motivational prints. Even so, there’s a lot going on in that sentence.
Holmes was characteristically vague about who “they” were, but from context, it seems likely that the naysayers were regulatory bodies: the US Food and Drug Administration, the Centers for Medicare & Medicaid Services and the Securities and Exchange Commission. So really she wasn’t saying that Theranos’s fictional tech was going to change the world; she was expecting the world to make Theranos’s fictional tech real. She was blaming regulatory oversight for what that regulatory oversight found. She blamed the FDA’s craven insistence that technology should do what you claimed it did and that people should not be told they have diseases they don’t actually have.
Her hope wasn’t as outlandish as it may sound; this was, after all, how it has worked in many other fields. In those fields, tech hasn’t so much changed the rules as it has captured the norms by which the field is governed. And ultimately, “disruption” probably refers to this disruption of our judgments and categories as well. But only the disruptor has this privilege. Anytime the disruptees suggest that they might like to have the world adjusted to ensure their survival, they’re told that this is a sign of their weakness and resistance to change. This double standard applies to another Silicon Valley mantra as well: do you want to “fail better”, do you want to “fail fast”? Well, whether you get to, and how your failure gets interpreted, depends a great deal on who you are.
All Rights Reserved for Adrian Daub