Hall’s Law: The Nineteenth Century Prequel to Moore’s Law

by Venkat on March 8, 2012

For the past several months, I’ve been immersed in nineteenth century history. Specifically, the history of interchangeability in technology between 1765, when the Système Gribeauval, the first modern technology doctrine based on the potential of interchangeable parts, was articulated, and 1919, when Frederick Taylor wrote The Principles of Scientific Management.

Here is the story represented as a Double Freytag diagram, which should be particularly useful for those of you who have read TempoFor those of you who haven’t, think of the 1825 Hall Carbine peak as the “Aha!” moment when interchangeability was first figured out, and the 1919 peak as the conclusion of the technology part of the story, with the focus shifting to management innovation, thanks in part to Taylor.

The unsung and rather tragic hero of the story of interchangeability was John Harris Hall (1781 – 1841), inventor of the Hall carbine.  So I am naming my analog to Moore’s Law for the 19th century Hall’s Law in his honor.

The story of Hall’s Law is in a sense a prequel to the unfinished story of Moore’s Law. The two stories are almost eerily similar, even to believers in the “history repeats itself” maxim.

Why does the story matter? For me, it is enough that it is a fantastically interesting story. But if you must have a mercenary reason for reading this post, here it is: understanding it is your best guide to the Moore’s Law endgame.

So here is my telling of this tale. Settle in, it’s going to be another long one.

Onion Steel

In A Brief History of the Corporation, I argued that there were two distinct phases — an early mercantile-industrial phase that was primarily European in character, extending from about 1600 to 1800, and a later Schumpeterian-industrial phase, extending from about 1800-2000, that was primarily American and Russian in character.

Each phase was enabled by a distinct technological culture. In the early, British phase, a scientific sensibility was the exception rather than the rule. The default was the craftsman sensibility. In the later,  American-Russian phase, the scientific sensibility was the rule and the craftsman sensibility the exception (it is notable that the American-Russian phase was inspired by French thought rather than British; call it Napoleon’s revenge).

What was this (much romanticized today) craftsman sensibility?

Consider this passage about the state of steel-making in Sheffield, the leading early  nineteenth century technology center for the industry, before the rise of American steel. The quote is from Charles Morris’ excellent book The Tycoonsmy primary reference for this post (it is nominally about the lives of Rockefeller, Carnegie, J. P. Morgan and Jay Gould, but is actually a much richer story about the broad sweep of 19th century technology history; I am not done with it yet, but it has been such a stimulating read that I had to stop and write this post):

Making a modest batch of steel could take a week or more, and traditional techniques were carefully passed down from father to son; one Sheffield recipe started by adding “the juice of four white onions.”

Morris attributes the onion story to Thomas Misa’s Nation of Steel, which is now on my reading list.

American steel displaced British steel not because it was based on the Bessemer and open hearth processes (Bessemer was English), but because the industry was built from the ground up along scientific lines, with no craftsman-baggage slowing it down.

The interesting thing about this recipe for onion steel is that it illustrates both the strengths and the weaknesses of the craftsman sensibility. You can only imagine the tedious sort of uninformed experimentation it took to consider adding onions to a steel recipe. There is something beautiful about the absence of preconceived notions in this sensibility. No modern metallurgist would even think to add onions to a metal recipe.

On the other hand, if a modern metallurgist were faced with data showing that onions improved the properties of steel, he or she would not rest until they’d either disproved the effect, or explained it in less bizarre terms. The recipe would certainly not get passed down from “father to son” (“mentor to mentee” today) unexplained.

What America brought to manufacturing was a wholesale shift from craftsman-and-merchant thinking about technology and business to engineer-and-manager thinking. The shift affected every important 19th century business sector: armaments, railroads, oil, steel, textile equipment. And it created a whole new sector: the consumer market.

But this was not the result of an abstract, ideological quest for scientific engineering and manufacturing, or a deliberate effort to replace high-skill/high-wage craftsmen with low-skill/low-wage/interchangeable machine operators.

It was a consequence of a relentless pursuit of interchangeability of parts, which in turn was a consequence of a pursuit of greater scale, profits and competition for market share (which drove greater complexity in offerings) on the vast geographic canvas that was America. Craft was merely a casualty along the way.

So why was interchangeability of parts a holy grail in this pursuit?

Interchangeability, Complexity and Scaling

The problem is that even the highest-quality craft does not scale. When something like a rifle is mass-produced using interchangeable parts, breakdowns can be fixed using parts cannibalized from other broken-down rifles (so two broken rifles can be mashed-up to make at least one that works) or with spare parts shipped from an warehouse. Manufacturing can be centralized or distributed in optimal ways, and constantly improved. Production schedules can be decoupled from demand schedules.

A craftsman-made rifle on the other hand, requires a custom-made/fitted replacement part. The problem is especially severe for an object like a rifle: small, widely-dispersed geographically, and liable to break down in the unfriendliest of conditions. Conditions where minimizing repair time is of the essence, and skilled craftsmen are rather thin on the ground. It is no surprise that the problem was first solved for guns.

Let’s do some pidgin math to get a sense of what a true mathematical model might look like.

Roughly speaking, scaling production for any mechanical widget involves three key dimensions: production volume V, structural complexity S (the number of  interconnections in an assembly is a good proxy measure for S, just like the number of transistors on a chip is a good proxy for its complexity) and operating tempo of the machine in use, T (since the speed of operation of a machine determines the stress and wear patterns, which in turn determines breakdown frequency; clock-rate is a similar measure for Moore’s Law).

For complex widgets, scaling production isn’t just (or even primarily) about making more new widgets; it is about keeping the widgets in existence in the field functioning for their design lifetime through post-sales repair and maintenance.  The greater the complexity and cost, the more the game shifts to post-sales.

You can combine the three variables to get a rough sense of manufacturing complexity and how it relates to scaling limits. Something like C=SxT provides a measure of the complexity of the artifact itself. Breakdown rate B is some function of complexity and production volumes, B=f(C, V). At some point, as you increase V, you get a corresponding increase in B that overwhelms your manufacturing capability. To complete this pidgin math model, you can think in terms of some B_max=f(C, V_max) above which V cannot increase without interchangeability.

Modern engineers use much more sophisticated measures (this crude model does not capture the tradeoff between part complexity and interconnection complexity for example, or the fact that different parts of a machine may experience different stress/wear patterns), but for our purposes, this is enough.

To scale production volume above V_max without introducing interchangeability, you have to either lower complexity and/or tempo or increase the number of skilled craftsmen. The first two are not options when you are trying to out-do the competition in an expanding market. That would be unilateral disarmament in a land-grab race. The last method is simply not feasible, since education in a craft-driven industrial landscape means long, slow and inefficient (in the sense that it teaches things like onion recipes) 1:1 apprenticeship relationships.

There is one additional method that does not involve interchangeability: moving towards disposability for the whole artifact, which finesses the parts-replacement problem entirely. But in practice, things get cheap enough for disposability to be a workable strategy only after mass production is achieved. Disposability is rarely a cost-effective strategy for craft-driven manufacturing, though I can think of a few examples.

These facts of life severely limited the scale of early nineteenth century technology. The more machines there are in existence, the greater the proportion of craftsmen whose time must be devoted to repair and maintenance rather than new production.  Since breakdowns are unpredictable and parts unique, there is no way to stockpile an inventory of spare parts cheaply. There is little room for cannibalization of parts in the field to temporarily mitigate parts shortages.

What was needed in the 19th century was a decoupling of scaling problems from manufacturing limitations.

Interchangeability and the Rise of Supply Chains

Interchangeability of parts breaks the coupling between scaling and manufacturing capacity by substituting supply-chain limits for manufacturing limits. For a rifle, you can build up a stockpile of spare parts in peace time, and deliver an uninterrupted supply of parts to match the breakdown rate. There is no need to predict which part might break down in order to meaningfully anticipate and prepare. You can also distribute production optimally (close to raw material sources or low-cost talent for instance), since there is no need to locate craftsmen near the point-of-use.

So when interchangeability was finally achieved and had diffused through the economy as standard practice (a process that took about 65 years), demand-management complexity moved to the supply chain, and most problems could be solved by distributing inventories appropriately.

These happy conditions lasted for nearly a century after widespread interchangeability was achieved, from about 1880 to 1980, when supply chains met their own nemesis, demand variability (that problem was partially solved using lean supply chains, which relied in turn on the idea of interchangeability applied to transportation logistics: container shipping. But I won’t get into that story here, since it is conceptually part of the unfinished Moore’s Law story).

The price that had to be paid for this solution was that the American economy had to lose the craftsmen and work with engineers, technicians and unskilled workers instead. This creates a very different technology culture, with different strengths and weaknesses. For example the scope of innovation is narrowed by such codification and scientific systematization of crafts (prima facie nutty ideas like onion steel are less likely to be tried), but within the narrower scope, specific patterns of innovation are greatly amplified (serendipitous discoveries like penicillin or x-rays are immediately leveraged to the hilt).

Why must craft be given up? Even the best craftsmen cannot produce interchangeable parts. In fact, the craft is practically defined by skill at dealing with unique parts through carefully fitted assemblies.  (“Interchangeability” is of course a loose notion that can range from functional replaceability to indistinguishability, but craft cannot achieve even the coarsest kind of interchangeability at any meaningful sort of scale).

Put another way, craft is about relative precision between unlike parts. Engineering based on interchangeability is about objective precision between like parts. One requires human judgment. The other requires refined metrology.

From Armory Practice to the American System

It was the sheer scale of America, the abundance of its natural resources (and the scarcity of its human resources), that provided the impetus for automation and the interchangeable parts approach to engineering.

As agriculture moved westward through New York, Pennsylvania and Michigan, the older settled regions began to turn to manufacturing for economic sustenance. The process began with the textile industry, born of stolen British designs around what is now Lowell, Massachusetts. But American engineering in the Connecticut river valley soon took on a distinct character.

Like the OSD/DARPA/NASA driven technology boom after World War II, the revolution was driven by the (at the time,  fledgling) American military, which had begun to acquire a mature and professional character after the war of 1812 (especially during the John Quincy Adams administration).

The epicenter of the action was the Springfield Armory, the PARC of its day, and outposts of the technology scene extended as far south as Harper’s Ferry, West Virginia.

John Hall was among the hundreds of pioneers who swarmed all over the Connecticut valley region, dreaming up mechanical innovations and chasing local venture capitalists, much like software engineers in Silicon Valley today.

There were plenty of other extraordinary people, including other mechanical engineering geniuses like Thomas Blanchard, inventor of the Blanchard gun-stock lathe (which was actually a general solution for turning any kind of irregular shape using what is known today as a pattern lathe). By the time he was done with gun stocks, a bottleneck part in gun-making, with all sorts of “subtle curves along multiple axes” he had created a system of 16 separate machines at the Springfield Armory that pretty much automated the whole process, squeezing out all craft of what had been the single most demanding component in gun-making.

British gun-making was like British steel-making before people like Blanchard and Hall blew up the scene. Here is Morris again:

The workings of the British gun industry were reasonably typical of the mid-nineteenth-century manufacturing. It was craft-based and included at least forty trades, each with its own apprenticeship system and organizations. The gun-lock, the key firing mechanism, was the most complicated, while the most skilled men were the lock-filers…[who]… spent years as apprentices learning to painstakingly hand-file the forty or so separate lock pieces to create a unified assembly… When the Americans breezily described machine-made stocks, and locks that required no hand fitting, they sounded as if there were smoking opium.

Among the opium-smoking geniuses, Blanchard at least enjoyed a good deal of success. Hall did not.

He put together almost the entire “American System” through his single-minded drive, in the technology-hostile Harper’s Ferry location far from the Connecticut Valley hub. When he was done, he had created an integrated manufacturing system of dozens of machines that produced interchangeable parts for every component of his carbine. Even parts from production runs from different years could be interchanged, a standard some manufacturing operations struggle to reach even today.

The achievement was based on relentless automation to eliminate human sources of error, increasingly specialized machines, and rigorous and precise measurements (there were three of every measurement instrument, one for production use, one for calibration, and a master instrument to measure wear on the other two).

It was a massive systems-engineering accomplishment. The Hall carbine was the starter pistol for the American industrial revolution.

Overtake, Pause, Overdrive

Hall did not reap much of the rewards. Thanks to unfortunate exploitative relationships (in particular with a shameless patent troll, William Thornton, a complete jerk by Morris’ account), he was banished to Harper’s Ferry rather than being allowed to work in Springfield. And his work, when completed, was acknowledged grudgingly, and with poor grace. The Hall carbine itself was obsolete by the time his system was mature, and others who applied it to newer products reaped the benefits.

Between 1825 and the 1910s, the methods pioneered by Hall spread through the region and beyond, and were refined and generalized. In the process, first America, and then the world, experienced a Moore’s Law type shock: rapidly increasing standards of living provided by an increasing variety of goods whose costs kept dropping.

Culturally, the period can be divided into three partially overlapping phases: an overtake phase (1851 – 1876)  when America clearly pulled ahead of Britain as the first nation in the technology world, a “pause” represented by the recession of the 1870s, and finally an over-drive phase beginning in the 1880s and continuing to the beginning of World War I, when the American model became the global model (and in particular, the Russian model, as Taylorism morphed into state doctrine).

Overtake: 1851 — 1876

The overtake phase has a pair of useful bookend events marking it. It began with the 1851 Crystal Palace Exhibition, the first of the great 19th century world fairs, when the world began to suspect that America was up to something (McCormick’s harvester and Colt’s revolver were among the items on display), and ended with the 1876 Centennial World Fair in Philadelphia, when all remaining doubt was erased and it became obvious that America had now comprehensively overtaken Britain in technology.

When Britain finally caught on and hastily began copying American practices following the Philadelphia fair, the result was a revitalization of British industry that produced, among other things, the legendary Enfield rifle (the rifle subplot in the story of interchangeability has an interesting coda that is shaping the world to this day, the Russian AK-47, as pure an example of the power of interchangeability-based mass manufacturing as has ever existed).

It wasn’t just guns. In every industry America began to show up Britain. Much of the credit went to showboating hustlers who claimed credit for interchangeability and the American System/Armory Practice, and made a lot of money without actually contributing very much to core technological developments. These included Eli Whitney of cotton gin fame, the McCormicks of the harvester, Samuel Colt (revolvers) and Isaac Singer (sewing machines). While they certainly contributed to the development of individual products, the invention of the American model itself was due to technologists like Blanchard and John Hall.

In the initial decades of the overtake, fueled in part by opportunity (and profiteering) associated with the Civil War and government subsidized building out of the railroad system, much of the impact was invisible. But by the 1890s, as the infrastructure phase was completed, the same methods were unleashed on everyday life, creating modern consumer culture and the middle class within the short space of a single generation.

The Pause: the 1870s

The Civil War looms large as the major political-economic event in this history (1861 – 1865), but the bulk of the impact was felt in the decade that followed, once the dust had settled and interrupted infrastructure projects were completed.

This impact took the form of the rather strange long recession of the 1870s, which was very culturally very similar to the one we are currently experiencing (increased economic uncertainty and fall in nominal incomes, hidden technology-driven increases in standard of living, foundational shifts in the nature of money — back then it was a greenbacks vs. gold thing).

One way to understand this process is that the infrastructure phase had created both tycoons and an extremely over-leveraged economy. It was the uncertain gap between “build it” and “they will come.”  It was a huge, collective pause, a national decade of breath-holding as people wondered whether the chaos unleashed by the new infrastructure would create a better social order or destroy everything without creating something new in its place.

Starting in the 1880s, the bet began paying off in spades. The recession ended and the over-drive boom began, as people figured out what to do with the newfound capabilities in their environment.

Overdrive: 1880s — 1913

A good early marker here is probably the first Montgomery Ward catalog in 1872, the first major sign that the new infrastructure allowed old businesses to be rethought, leading to the creation of the modern consumer economy.

The mail-order catalog was by itself a simple idea (the first catalog was just a single page), but the reason it disrupted old-school merchants was that it relied on all the infrastructure complexity that now existed.

Trains that ran on reliable schedules, to deliver mail, telegraph lines that brought instant price updates on western grain to the East Coast, steel to build everything, oil and electricity to light up (and later, fuel) everything, new financial systems to move money around, and of course, the application of interchangeability technology to everything in sight.

It took Sears, starting in 1888, to scale the idea and truly take down the merchant elites who had defined the old business culture, but by World War I, middle-class consumer culture had emerged and had come to define America. In another 50 years, it would come to define the world.

It was such a powerful boom that globally, it lasted a century, with two world wars and a Great Depression failing to arrest its momentum (as an aside, I wonder why people pay so much attention to the 1930s depression to make sense of the current recession; the 1870s recession makes for a far more appropriate comparison).

What ultimately killed it was its own success. Semiconductor manufacturing probably represents the crowning achievement of the Armory Practice/American System that began with a lonely John Hall pushing ahead against all odds at Harper’s Ferry.

Moore’s Law was born as the last and greatest achievement of the parent it ultimately devoured: Hall’s Law.

Hall’s Law

When you step back and ponder the developments between 1825 and 1919, it can be hard to make sense of all the action.

There is the pioneering work in manufacturing technology. There is the explosion of different product types as the American System diffused through the industrial landscape. There is the story of the rise of the first tycoons. There is the rise of consumerism and the gradual emergence of the middle class. There is the connectivity by steam and telegraph.

Then there is the increasingly confident and strident American presence on the global scene (especially through the World Fairs, two of which I already talked about). And of course, you have the Civil War, the California Gold Rush, the cowboy culture that existed briefly (and permanently reshaped the American identity) before Jay Gould killed it by finishing the railroad system.

There was the rise of factory farming and the meatpacking and refrigerator-car industries together killing the urban butcher trade and suddenly turning Americans into the greatest meat eaters in history. Paycheck economics took over as the tycoon economy killed the free agent.

In fact, there was a lot going on, to put it mildly. And that was just America. The rest of the world wasn’t exactly enjoying peace and stability either. Perry had kicked down the doors of Japan, Opium wars had ravaged China, the East India Company (the star of my History of Corporations post) had been quietly put out to pasture and the Mughal empire had collapsed. The Ottomans were    starting on a terminal decline. Continental Europe had begun its century-long post-Napoleon march towards World War I (the US Civil War served as a beta test for the post-Bismarck model of total war, just as the Spanish Civil war served as a beta test for World War II).

But just as Moore’s Law provides something of a satisfying explanatory framework for almost everything that has happened in the last 50 years, the drive towards the holy grail of interchangeability provides a satisfying explanatory framework for much of this action. Here’s my attempt at capturing what happened (someone enlighten me if something like this has already been proposed under a different name) :

Hall’s Law: the maximum complexity of artifacts that can be manufactured at scales limited only by resource availability doubles every 10 years. 

I believe this law held between 1825 and 1960, at which point the law hit its natural limits.

Here, I mean complexity in the loose sense I defined before: some function of mechanical complexity and operating tempo of the machine, analogous to the transistor count and clock-rate of chips.

I don’t have empirical data to accurately estimate the doubling period, but 10 years is my initial guess, based on the anecdotal descriptions from Morris’ book and the descriptions of the increasing presence of technology in the world fairs.

Along the complexity dimension, mass-produced goods increased rapidly got more complex, from guns with a few dozen parts to late-model steam engines with thousands.  The progress on the consumer front was no less impressive, with the Montogmery Ward catalog  offering mass-produced pianos within a few years of its introduction for instance. By the turn of the century, you could buy entire houses in mail-order kit form. The cost of everything was collapsing.

Along the tempo dimension, everything got relentlessly faster as well. Somewhere along the way, things got so fast thanks to trains and the telegraph, that time zones had to be invented and people had to start paying attention the second hand on clocks.

There is a ton of historical research on all aspects of this boom, but I suspect nobody has yet compiled the data in a form that can be used to fit a complexity-limit growth model and figure out the parameters of my proposed Hall’s Law, since it is the sort of engineering-plus-history analysis that probably has no hope of getting any sort of research funding (it would take some serious archaeology to discover the part-count, operating speed and production volumes for a sufficient number of sample products through the period to fit even my simple model, let alone a model that includes things like breakdown rates and actual, as opposed to theoretical, interchangeability).

But even without the necessary empirical grounding, I am fairly sure the model would turn out to be an exponential, just like Moore’s Law. Nothing else could have achieved that kind of transformation in that short a period, or created the kind of staggering inequality that emerged by the Gilded Age.

Break Boundaries and Tycoon Games

Both Moore’s Law and Hall’s Law in the speculative form that I have proposed, are exponential trajectories. These trajectories generally emerge when some sort of runaway positive-feedback process is unleashed, through the breaking of some boundary constraint (the term break boundary is due to Marshall McLuhan).

The positive-feedback part is critical (if you know some math, you can guess why: a “doubling” law in a difference/differential equation form has to be at least a first-order process; something like compound interest, if you don’t know what the math terms mean).

Loosely speaking, this implies a technological process that can be applied to itself, improving it. Better machines with interchangeable parts also means better machine tools that are themselves made with interchangeable parts and therefore can run continuously at higher speeds, with low downtime. Computers can be used to design more complex computers.  This is not true of all technological processes. Better plastics do not improve your ability to make new plastics, for instance, since they do not play much of a role in their own manufacturing processes.

This is the inner, technological positive-feedback loop (think of an entire technology sector engaging in a sort of 10,000 hours of deliberate practice; a major sign is that the most talented people turn to tool-building: Blanchard and Hall for Hall’s Law, people like the late Dennis Ritchie and Linus Torvalds for Moore’s Law).

But the technological positive-feedback loop requires an outer financial positive-feedback loop around it to fuel it. You need conditions where the second million is easier to make than the first million.

This means tycoons who spot some vast new opportunity and play land-grabbing games on a massive scale.

Both Hall’s Law and Moore’s Law led to wholesale management and financial innovation by precisely such new tycoons.

For Hall’s Law, the process started with Cornelius Vanderbilt, the hero of A. J. Stiles’ excellent The First Tycoon, who figured out how to tame the strange new beast, the post-East-India-Company corporation and in the process sidelined old money.

It is revealing that Vanderbilt was blooded in business through a major legal battle for steamboat water rights: Gibbons vs. Ogden (1824) that helped define the relationship of corporations to the rest of society. From there, he went from strength to strength, inventing new business and financial thinking along the way. Only in his old age did he finally meet his match: Jay Gould, who would go on to become the archetypal Robber Baron, taking over most of Vanderbilt’s empire from his not-so-talented children.

Vanderbilt was something of a transition figure. He straddled both management and finance, and old and new economies: he was a cross between an old-economy merchant-pirate in the Robert Clive mold (he ran a small war in Nicaragua for instance) and a new-economy corporate tycoon.  He transcended the categories that he helped solidify, which helped define the next generation of tycoons.

Among the four tycoons in Morris’ book, Rockefeller (Chernow’s Titan on Rockefeller is another must-read) and Carnegie appear on one side, as the archetypes of modern managers and CEOs. Both were masters of Wall Street as well, but were primarily businessmen.

On the financial side, we find the Joker-Batman pair of Gould and Morgan. Jay Gould was the loophole-finder-and-destabilizer; J. P. Morgan was the loophole-closer and stabilizer.  While Gould was a competent, if unscrupulous manager during the brief periods that he actually managed the companies he wrangled, he was primarily a financial pirate par excellence.

It makes for a very good story that he made his name by giving the elderly Vanderbilt, who pretty much invented the playbook along with his friends and rivals, the only financial bloody nose of his life (though Vanderbilt exacted quite a revenge before he died).   Through the rest of his career, he exposed and exploited every single flaw in the fledgling American corporate model, turning crude Vanderbilt-era financial tactics into a high art form. When he was done, he had generated all the data necessary for J. P. Morgan to redesign the financial system in a much stronger form.

Morgan’s model would survive for a century until the Moore’s Law era descendants of Gould (the financial pirates of the 1980s)  started another round of creative destruction in the evolution of the corporate form.

From Hall’s Law to Moore’s Law

Hall’s Law was the prequel to Moore’s Law in almost every way.  The comparison is not a narrow one based on just one dimension like finance or technology. It spans every important variable. Here is the corresponding Double Freytag:

I’ll save my analysis of the Moore’s Law era for another day, but here is a short point-by-point mapping/comparison of fundamental dynamics (i.e. things that were a consequence of the fundamental dynamics rather than historical accidents).

  1. Obviously Hall’s Law maps to Moore’s Law
  2. Increasing interchangeability in mechanical engineering maps to increasing transistor counts in semiconductor manufacturing. Increasing machine speeds map to increasing chip clock-rates.
  3. Both technologies radically drove down costs of goods and created de facto higher standards of living
  4. Both technologies saw the emergence of a new breed of tycoons within a few leadership generations. Jack Welch maps to Cornelius Vanderbilt. Bill Gates and Michael Dell map to Rockefeller and Carnegie. Jeff Bezos maps to Montgomery Ward and Sears.
  5. The newer, younger “digital native” tycoons, starting with Zuckerberg, map to the post 1890 3rd generation innovators who were native to the new world of interchangeability rather than pioneers, similar to the early 20th century automobile and airplane industry tycoons (it is revealing that the Wrights were bicycle mechanics; bicycles were the first major consumer product to be designed around interchangeability from the ground up; the airplane was a result of the careful application of exactly the precise sorts of careful scientific measurement, experimentation and optimization that had been developed in the previous 75 years).
  6. Each era was punctuated in the middle by a recessionary decade marked by financial excesses, as the economy retooled around the new infrastructure. The 1870s maps to the 2000s.
  7. Each era enabled, and was in turn fueled by, new kinds of warfare, exemplified by major wars that disturbed a balance of power that had been maintained by old technology. The American Civil War maps to the Cold War, while the wars of the 1990s and 2000s are analogous to World War I.
  8. Guns (including high-tempo machine guns) with interchangeable parts map to nuclear weapons. John Hall’s stint at Harper’s Ferry was the Manhattan Project of its day (here the mapping is not exact, since semiconductors were spawned by the military-industrial research infrastructure around electronics that emerged after World War II, rather than through the Manhattan project itself).
  9. Lincoln’s assassination is eerily similar to Kennedy’s. Just checking to see if you are still paying attention. The first person to call bullshit on this point gets a free copy of The Tycoons.
  10. The Internet and container shipping taken together are to Moore’s Law as the railroad, steamship and telegraph networks taken together were to Hall’s Law. The electric power grid provides the continuity between Hall’s Law and Moore’s Law.
  11. Each era changed employment patterns and class structures wholesale. Hall’s Law destroyed nobility-based social structures, created a new middle class defined by educational attainments and consumer goods, and created paycheck employment. Moore’s Law is currently destroying each of these things and creating a Trading Up class, a new model of free agency, and killing education-based reputation models.
  12. A new mass entertainment model started in each case. With Hall’s Law it was Broadway (which led on to radio, movies and television). With Moore’s Law, I’d say the analogy is to reality TV, which like Broadway represents new-era content in an old-era medium.
  13. At the risk of getting flamed, I’d say that Seth Godin is arguably the Horatio Alger of today, but in a good way. Somebody has to do the pumping-up and motivating to inspire the masses to abandon the old culture and embrace the new by offering a strong and simple message that is just sound enough to get people moving, even if it cannot withstand serious scrutiny.
  14. Hall’s Law led on to the application of its core methods to people, leading to new models of high-school and college education and eventually the perfect interchangeable human, The Organization Man. Moore’s Law is destroying these things, and replacing them with Y-Combinator style education and co-working spaces (this will end with the Organization Entrepreneur, a predictably-unique individual, just like everybody else).
  15. Hall’s Law led to the industrial labor movement. Moore’s Law is leading to a new labor movement defined, in its early days, by things like standardized term-sheets for entrepreneurs ( the 5 day/40 hour week issue of our times; YC-entrepreneurs are decidedly not the new capitalists. They are the new labor. That’s a whole other post).
  16. And perhaps most importantly, each era suffered an early crisis of financial exploitation which led first to loophole closing, and then to a new financial system and corporate governance model. Jay Gould maps to the architects of the subprime crisis. No J. P. Morgan figure has emerged to really clean up the mess, but new corporate models are already emerging that look so unlike traditional ones that they really shouldn’t be called corporations at all (hence the pointless semantic debate around my history of corporations post; it is really irrelevant whether you think corporations are dying or being radically reinvented. You are talking about the same underlying creative-destruction reality).

The New Gilded Age

When Mark Twain coined the term Gilded Age, he wasn’t exactly being complimentary. For some reason, the term seems to be commonly used as a positive one today, by those who want to romanticize the period.

I started to read the book and realized that Twain had completely missed the point of what was happening around him (the focus of the novel is political corruption; an element that loomed large back then, but was ultimately a sideshow), so I abandoned it.

But he got one thing right: the name.

Hall’s Law created a culture that was initially a layer of fake gloss on top of much grimmer realities. Things were improving dramatically, but it probably did not seem like it at the time, thanks to the anxiety and uncertainty. Just as you and I aren’t exactly celebrating the crashing cost of computers in the last two decades, those who lived through the 1870s were more worried about farming moving ever westward (outsourcing) and strange new status dynamics that made them uncertain of their place in the world.

It took time for Gilded to turn into Golden (about 50 years by my estimate, things became truly golden only after World War II). There were decades of turmoil which made the lives of transitional generations quite miserable. The 1870s were a you’ll-thank-me-later decade, but for those who lived through the decade in misery, that is no consolation.

I abandoned The Gilded Age within a few pages. It is decidedly tedious compared to Tom Sawyer and Huckleberry Finn. Sadly, Twain’s affection for a vanishing culture, which made him such an able observer of one part of American life, made him a poor observer of the new realities taking shape around him.

He makes a personal appearance in the stories of both Vanderbilt and Rockefeller, and appears to have strongly disliked the former and admired the latter, though both were clearly cut from the same cloth.

To my mind, Twain’s best stab at describing the transformation (probably A Connecticut Yankee in King Arthur’s Court — note the significance of Connecticut) is probably much worse than the attempts of younger writers like Edith Wharton and later, of course, everybody from Horatio Alger to F. Scott Fitzgerald.

We are clearly living through a New Gilded Age today, and Bruce Sterling’s term “Favela Chic”  (rather unfortunately cryptic ; perhaps we should call it “Painted Slum”) is effectively analogous to “Gilded Age.”

We put on brave faces as we live through our rerun of the 1870s. We celebrate the economic precariousness of free agency as though it were a no-strings-attached good thing.  We read our own Horatio Alger stories, fawn over new Silicon Valley millionaires and conveniently forget the ones who don’t make it.

New Media tycoons like Arrington and Huffington fight wars that would have made the Hearsts and Pulitzers of the Gilded Age proud, while us lesser bloggers go divining for smaller pockets of attention with dowsing rods, driven by the same romantic hope that drove  the tragicomic heroes of P. G. Wodehouse novels to pitch their plays to Broadway producers a century ago.

History is repeating itself. And the rerun episode we are living right now is not a pleasant one.

The problem with history repeating itself of course, is that sometimes it does not. The fact that 1819-1880 map pretty well to 1959-2012 does not mean that 2012-2112 will map to 1880-1980. Many things are different this time around.

But assuming history does repeat itself, what are we in for?

If the Moore’s Law endgame is the same century-long economic-overdrive that was the Hall’s Law endgame, today’s kids will enter the adult world with prosperity and a fully-diffused Moore’s Law all around them.

The children will do well. In the long term, things will look up.

But in the long term, you and I will be dead.

 Some thanks are due for this post. It was inspired in part by Chris McCoy of YourSports.com, who badgered me about the Internet = Railroad analogy enough that I was motivated to go hunt for the best place to anchor a broader analogy. His original hypothesis is now the generalized point 10 of my list. Thanks also to Nick Pinkston for interesting discussions on the future of post-Moore’s Law manufacturing; the child may resurrect its devoured parent after all. Also thanks to everybody who commented on the History of Corporations piece. 

Dane March 8, 2012 at 2:36 am

I’ve been meaning to ask you, have you read ‘The Control Revolution’ by James Beniger? It is an interesting book that has some overlap with the posts you’ve been doing on this & related topics. A decent overview can be found in a review by Cosma Shalizi: http://cscs.umich.edu/~crshalizi/reviews/beniger/

If you haven’t read it, I think it would be worth reading.
http://www.amazon.com/Control-Revolution-Technological-Economic-Information/dp/0674169867

Kumarpal Sheth March 8, 2012 at 3:03 am

Imagine if the replacability problem was solved for human organs through cloning and / or organ farms. That would lead to doubling of lifespans in a generation. A whole new class of problems, markets, consumers and of course people would exist everywhere.

Anthony Moralez March 8, 2012 at 3:11 am

I call bullsh*t on the Lincoln – Kennedy assassination “eerie” similarities.

Venkat March 8, 2012 at 3:13 am

Sorry, you’re too late. @otoburb already called it first on Twitter :)

otoburb March 8, 2012 at 3:46 am

Next time I’ll leave the easter eggs for others. But the last physical book I received in the mail was Tempo, and I’ll be damned if I pass up an opportunity to have another physical book sent to me.

The utility function of having interesting physical books arriving at the house is much higher for me because my wife has banned physical books in the household unless “there’s a really good reason.”

Eleanor Saitta March 8, 2012 at 4:57 am

It’s notable that while physical resource constraints where considered a serious constraint during the first run-through of this pattern, they were largely only worried about food and those worries were proven largely groundless before the second spike. Our current run-through is not nearly so lucky.

Max Battcher March 8, 2012 at 10:22 am

Another fascinating, insight-packed post worthy of days of pondering. I did want to note that I very much want to read The Organization Entrepreneur now.

Kevin March 8, 2012 at 1:20 pm

Wow, this might be your best post since History of Corporation. Unfortunately, I am at work, and I anticipate an afternoon-long brainstorming session centered around this post which will keep me completely distracted.

Are you familiar with Kondratiev waves or long-wave economic theory? Some economists have built long-wave supercycle models, which are economic cycles lasting between 60-80 years. Interestingly enough, this is the lifespan of the average human.

http://www.dinl.net/latest_letters_05/20051023_ll_2bg.jpg

http://en.wikipedia.org/wiki/Kondratiev_wave

Long-wave theory is rejected by mainstream economists, most likely because it cannot be backed with “reliable data”. I find it interesting that long-wave theorists look, as you do, towards technological advancements and changes in cultural or social norms within a society to support their ideas.

Thus, the 2008 recession is similar to the 1930’s depression and the 1870’s recession for similar culture and technological reasons. All of these are considered “Kondratiev winters”, and the 1870’s and 2008 recessions map well to your argument.

Anyway, my overall point is that mainstream economics tries to “assume away” the variables that actually drive economic decisions, such as technology and cultural attitudes. Despite having no empirical backing, I think this approach, while radically different than modern, academic economic thinking, serves well to build a conceptual model of our economic reality.

Gregory Rader | OnTheSpiral.com March 8, 2012 at 2:20 pm

It seems like we could characterize each downturn as the point when a given set of cyclic shifts has led to disruption of a significant portion of the economy, but has also left a significant portion of the economy untouched, such that the untouched portion is still inefficient and expensive. It is that unbalanced situation that drags the economy into recession and forces an accelerated restructuring.

To use Moore’s law as the example it might look something like this:

Early on we get rapidly improving computers and IT infrastructure. This stuff is nice to have but has a relatively small impact on the overall economy. We would probably call this the cheap trick (I am shifting your double Freitag to reflect economic impact which would lag pure technological development). The cheap trick provides some nice bonus stuff for everyone to play with and boosts gdp by a couple points but is only disruptive to a small portion of the economy.

We then enter the middle portion of the cycle…digital technology eats increasing portions of the industrial economy, accelerating as it goes. Eventually we reach a point (basically today +/- a few years) wherein the cycle has gained too much momentum to be slowed. It has already eaten major chunks of the economy, leaving unemployment, bankruptcy and the like in its wake, but the disrupted portion of the population still faces significant expenses from the yet-to-be-disrupted portions of the economy. In our case that would include healthcare, education, defense and major portions of the energy industry…industries that have paradoxically gotten more expensive even in absolute terms.

The big lift (in economic terms) consists of the push to bring these holdout industries in line with the leading industries. In the mean time we get bizarre inconsistencies like people who can access vast repositories of medical information for free but who can’t afford branded antibiotics, or people who pay $0 for the majority of their (mostly digital) entertainment and leisure but who could easily spend $50+ just for a cab ride to go out on the town for a night.

I am trying to figure out what the comparable hold-out industries and paradoxical cost relationships might have been in your 1870’s narrative. I suspect the reality may have been more granular than a simple grouping of industries, for example, long haul shipping becoming dramatically less expensive (railroads) while local transportation remained expensive and labor intensive.

Thoughts?

Dane March 19, 2012 at 8:55 pm

I know this is isn’t exactly what you asked for but the cotton/textile industry may get you closer to the example you are looking for. I’m recalling some of this from the book I mentioned, and my memory/explanation will be flawed.

Around the time period mentioned in the post, America produced cotton and Britain produced clothing from cotton. The cotton would work its way to a port, get sent to Britain where someone would buy it. End products, such as clothes would be produced, some of which would get shipped back to America.

At one time, the cotton would often be sold in auction houses, where asymmetric information allowed some people to make more money. With the advent of the railroad and telegraph, auction houses were often replaced by specialized middlemen with more stable prices. Railroads allowed for more efficient transportation, and telegraphs enabled scheduling and stability. The railroads didn’t exist on their own, they co-evolved with (and in some ways required) the telegraph. There would be no way to coordinate and control trains if the telegraph didn’t exist. W/o the telegraph, it would be very easy for two trains to expect availability of the same track, resulting in a crash. The telegraph also allowed for more direct and rapid communication between all parties, including those on both sides of the Atlantic. One recent book went as far to call the telegraph the Victorian internet.

Another thing to remember is that vast areas of the US were quite a distance away from these resources for a while. So maybe there weren’t hold-out industries but instead just areas without access.

This is elaborated on much more in The Control Revolution.

Dane March 19, 2012 at 9:02 pm

I forgot to mention, the primary explanation of why the telegraph helped: It was faster than the train. To control the trains, something that could transmit information more rapidly than the trains was needed. Railroads in turn provided a convenient place to put the wires for the telegraph.

Isaac Lewis March 9, 2012 at 8:14 am

I once sat down and thought about why things like cars haven’t advanced as fast as CPUs (the whole “if automobiles had a Moore’s law, they’d travel 50,000 miles in 37 seconds on a thimbleful of petrol” thing). I think it’s because CPU’s have very few physical constraints. Cars have to move a few hundred kilos of meat around the Earth’s surface in relative safety and comfort. There’s only so much optimisation you can do there.

There’s few physical constraints on computation, however. That’s because computation doesn’t have any physical meaning – it’s just shuffling bits around. (True, we are now starting to hit fundamental limits where we’re almost manipulating individual atoms and heat dissipation is killing everything). CPUs work just as well whether they’re made at micrometres or nanometres. If you could shrink cars down 1000x they’d clearly do more miles for the gallon, but they wouldn’t be very useful.

I think “assemblies of interchangable parts” is the same kind of thing. What do other people think?

Bill Seitz March 9, 2012 at 9:11 am

The K-waves model is the Carlotta-Perez’s Technological Revolutions and Financial Capital. Excerpted a bit here: http://webseitz.fluxent.com/wiki/TechnologicalRevolutionsAndFinancialCapital

Bill Seitz March 9, 2012 at 9:18 am

(oops, that should “is the basis for Carlotta…”)

I Godin’s Linchpin book “The Organization Entrepreneur” book you imagine? Actually, *all* his books smell like that to me. Which perhaps leads back to TomPeters’ BrandYou thing. http://webseitz.fluxent.com/wiki/BrandYou

BraveNewCurrency March 10, 2012 at 2:18 pm

Maybe I’m seeing things, but I think your “Double Freytag Triangle” maps to the “Growth -> Peace -> War” picture in Simon Wardley’s post about the cycle of ‘innovation to commoditisation’.

http://blog.gardeviance.org/2012/01/moving-onto-new-research.html

In the first phase, the creative types (“craftsmen”) invent something new (using existing building blocks). This “new thing” brings obvious benefits, so businesses start using it. Once this thing diffuses out far enough, it becomes a big enough market that it’s worth optimizing. The engineers/scientists come in and boil this thing down to it’s essential ingredients. It becomes a well-understood “off the shelf” commodity, which are the building blocks for the craftsmen in the next cycle.

Venkat March 10, 2012 at 2:24 pm

To everybody jumping to things like K-waves, I have to admit, while I do read about those ideas (which include Elliot waves), I am *very* wary of generalizing the pattern. It is useful to make specific historical comparisons easier, but structuralist models are just too brittle for my taste, and too many things don’t fit easily.

So I have a “history over structuralism” model where I always try and work with raw historical narratives and use cyclic models at most as a visualization/organization technique rather than as the basis for prediction.

Bill: I meant “organizational entrepreneur” in an ironic sense of being NOT unique, NOT linchpins. Interchangeable hustlers basically. Call my model the ironic version of Godin’s if you like.

Bill Seitz March 10, 2012 at 8:53 pm

Actually, I prefer to call Godin the unironic Rao. :) I think LinchPins are probably more likely to be Clueless than Sociopaths.

Mike March 10, 2012 at 4:00 pm

Great article, thanks.

I would’ve cut the “new gilded age” and saved for separate post.

To me raising Twain’s lament about corruption as just an aside to an analysis of the period needs more than just assertion.

We certainly have a great deal of corruption right now. The Chicago school of political governance is ascendant to the Federal level and more obvious than ever.

Even if a Keynesian economist wouldn’t push so much capital into so many unproductive enterprises—they wouldn’t want to undermine their reputation. The engine of innovation can be mired if there is enough drag placed on it by misallocation or resources. The debt will capture us if we don’t stop this pattern.

Hope to see your distinction about YC and the true “new capitalists” soon. Oh wait… not before closure on the Gervais Principle.

Stay busy, we all need our slightly evil genius perspectives. But only slightly.

Chris McCoy (@chrisamccoy) March 10, 2012 at 6:15 pm

Venkat,

Glad you wrote this post. Helps a fellow systems thinker see patterns of the past shape the realities we’re starting to live in now.

A couple follow-up, semi-related thoughts to yours:
a) Driving down the cost of production is the greatest invention of process meets innovation. Once at median level, the middle class can begin to profit from its resources, and economies can grow upwards.
b) Right now, software development is too expensive (and complex) of a process to capitalize on the effects of Hall’s Law, but there are plenty of people working on this problem.
c) I created a user-experience first product development framework for building complex systems that starts with the design, business logic, and data. Internally, we’re calling it Henri Ford, and just today we shipped over 56 features and 155 points of velocity in 4 days of development work. Can read about it a bit more here: http://engineering.yoursports.com.
d) As a result of Henri Ford, we’ve been able to drive the production costs of YS ~500%.
e) Engineering can be democratized for the masses if user-experience/design lead the way. Of course both need to be built on top of very solid, incredibly flexible architecture.

Kay March 16, 2012 at 4:22 pm

Right now, software development is too expensive (and complex) of a process to capitalize on the effects of Hall’s Law, but there are plenty of people working on this problem.

Yes, the problem is called “putting software engineering to life”, an attempt which goes back to the “organization man” era. The last update of the program was in the 1990s when the idea of reusable software components became popular, with component technologies like COM and CORBA and frameworks such as MFC, J2EE and Swing. It didn’t took long and the star of component technology sunk again and Open Source sky rocketed with its delirious mixture of expert teams, community engagement, open standards and pop culture, which seemingly scales to arbitrary size. Interestingly OSS didn’t impact the demand for developers negatively nor lowered it their market prize. Is someone daring a serious prediction about the future of the complicated relationship between market economy and network society? Of course everyone is free to guess that one is supplanting the other but I mean something which is of a different quality.

A brief remark about the article. It is awesome and hard to praise enough. The conjectured law cannot be quoted though as if it was well researched and peer reviewed but there is also a strange lack of concern about it. The article showcases Venkat’s “scientific sensibility” which means here that whatever scientific theory of the subject will be suggested, it will basically look like this and not like story telling, botany ( historism ) or the Hegelian unfolding of the absolute. It might share elements with all of them but is essentially different: a principle which gives rise to a dynamic system which is not somehow transhistoric but can nevertheless be robust against minor perturbations and substitution of concrete actors.

Dan L. March 13, 2012 at 1:46 pm

(as an aside, I wonder why people pay so much attention to the 1930s depression to make sense of the current recession; the 1870s recession makes for a far more appropriate comparison)

Well, the correct answer is that our culture hasn’t heavily mythologized the 1870s recession the way it has the 1930s one so there’s no 1870s recession narrative to apply to the current recession.

But the claim that the 1870s recession makes for a more appropriate comparison is very arguable even without the mythology. Obviously the reality is as always: there are some aspects of the current recession that are more comparable to the 1870s recession, some aspects that are more comparable to the 1930s recession, and other aspects that are essentially unique to this recession. Which aspects are most salient depends entirely on one’s narrative frame. You’ve chosen a narrative frame in which the 1870s recession is the appropriate point of comparison. I’m certainly not convinced that this is the “appropriate” point of comparison outside of this particular narrative frame.

(Just as an example, if your narrative frame is about the failure of modern economics to moderate the business cycle then the unique aspects of the current recession are more salient than its similarities to other recessions.)

Greg March 19, 2012 at 10:49 am

Maybe I missed this in your post or in one of the comments, but I think one of the main mapping connections between Hall’s Law and Moore’s Law is how the railroad system (then interstate highway system) maps to the high speed fiber infrastructure (then wireless). The networks created by these delivery/communication methods is a major factor in the transformational effect that each Law had, but those networks would not exist without the existence of the underlying Law itself.

Kimmo March 30, 2012 at 12:28 am

Onion steel may well sound ridiculous, but how about a Beaujolais iron telluride superconductor?

Gareth Rees April 16, 2012 at 11:55 am

Perhaps the onions were originally used as a crude thermometer, but this purpose this had been forgotten? Primo Levi tells a very similar story in the “Chromium” chapter of “The Periodic Table”:

“So, returning to boiled linseed oil, I told my companions at table that in a prescription book published about 1942 I had found the advice to introduce into the oil, toward the end of the boiling, two slices of onion, without any comment on the purpose of this curious additive. I had spoken about it in 1949 with Signor Giacomasso Olindo, my predecessor and teacher, who was then more than seventy and had been making varnishes for fifty years, and he, smiling benevolently behind his thick white moustache, had explained to me that in actual fact, when he was young and boiled the oil personally, thermometers had not yet come into use: one judged the temperature of the batch by observing the smoke, or spitting into it, or, more efficiently, immersing a slice of onion in the oil on the point of a skewer; when the onion began to fry, the boiling was finished. Evidently, with the passing of years, what had been a crude measuring operation had lost its significance and was transformed into a mysterious and magical practice.”

Barak June 8, 2012 at 8:02 am

I read your post carefully but not the comments: Am I the first to call BS on point number 9? If so, I will be excited to receive the book.

Barak June 8, 2012 at 8:03 am

Oops. See that now. Please ignore. :-\

Barak June 8, 2012 at 8:22 am

“YC-entrepreneurs are decidedly not the new capitalists. They are the new labor. That’s a whole other post.”

Have you written that one yet?

Venkat June 8, 2012 at 12:12 pm

No, that whole line of thinking is turning into a draft for a potential book.

Barak June 8, 2012 at 12:16 pm

I’d be very excited to read it. I absolutely love your blog, by the way and am planning to read Tempo.

At some point, I will send you a page or two sketch of my Marx-Information Age-labor thoughts. My education pales next to yours but I may (or may not) have tapped into some broad sweeps worth exploring.

David Blake October 17, 2012 at 5:29 am

Very interesting but you omit the first successful industrial production using interchangeabilty. This was the Royal Navy factory for making the blocks used in sailing ships. This factory, based on an idea by Brunel, was producing 130,000 units a year by 180.

Venkat October 17, 2012 at 10:27 am

Interesting. No I was not familiar with this example. Do you have a good reference for the details?

David Blake October 18, 2012 at 2:18 am

There’s this. http://en.wikipedia.org/wiki/Portsmouth_Block_Mills
And wikpedia has a note http://en.wikipedia.org/wiki/Portsmouth_Block_Mills
Of course, this was technology being applied to increase the efficiency of the production process rather than bring about higher performance.
The British experience in the early 19th and 20th century is partly a reflection of not applying scientific methods to replace craftsmanship. This in turn reflects the very limited spread of higher education compared to many other countries. In 1830 there were only two universities in England. It also show the danger of being first mover, because existing producers fear innovation will destroy their advantage

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