How We Got Here: A Slightly Irreverent History of Technology and Markets

How We Got Here: A Slightly Irreverent History of Technology and Markets , Andy Kessler , Collins / HarperCollins, New York, 2005. $14.95 (262 pp.). ISBN 0-06-084097-8

The subtitle of Andy Kessler’s How We Got Here: A Slightly Irreverent History of Technology and Markets is a fair summary of the contents. The author does focus on the interactions of technological advances and market operations—and that emphasis is the book’s strong point. He gives the reader a pretty good appreciation of the importance of each, something often poorly understood by the technologists and the business and marketing types.

It would be more accurate to call the book a story of technology and markets rather than a history of such. Providing a readable and well-written overview in a 262-page book requires a highly selective, often frustratingly incomplete commentary on those technological advances that have contributed to today’s society. Kessler accomplishes the task through his humorous and, yes, irreverent style. Much of the book, particularly the first half, which considers the period from the Industrial Revolution to modern times, is a bit like having the old philosopher and humorist Will Rogers take us through 150 years of technological accomplishments as he comments on the human condition with his folksy, western twang. For example, Kessler points out the importance of clothing materials as a driver for technology: “One can only imagine how itchy clothing was in 1775. … Royalty still insisted on silk, it beat scratching and itching all day. Comfortable clothing was yet another thing that separated the rich from the poor. Silk was expensive … since there was no way to push productivity out of worms.” Hence the emphasis on cotton and the development of the Crompton spinning mule. “This guy should get as much credit as James Watt,” points out Kessler, who explains that the spinning mule could use the steam engine to get enough power to stretch and wind and make cotton “as smooth as silk.”

Kessler’s selection of personalities and technological advances gives his informal commentary a sense of direction. The author has his eyes fixed on the modern marketplace and the critical role played by high-speed computing. The technology permits one to know changes in any given field or company operation, changes that are instantly distributed and acted upon, specifically by traders and investors. Thus all the technological improvements Kessler has selected for comment have contributed, on one hand, to the development of modern computing devices and, on the other, to the evolution of stock exchanges as a parallel, perhaps necessary, phenomenon. He emphasizes devices and components that provide logic and memory, concepts that go back to Blaise Pascal in 1642 and eventually lead to electricity, vacuum tubes, and present-day computers.

But How We Got Here is more than just a review of key technologies. The author is careful to point out who provided funds, and why. He brings in the accompanying trends in transportation and trade, not only for the incentives they provided for technological advances but also for the role they played in the development of major capital markets and, importantly, insurance companies. He humorously but effectively weaves two other factors, patents and the role of military demands, into the story.

The second half of the book moves quickly through communications, electric power, transistors, and computers and brings us to the author’s principal interest—the operation of capital markets. Because Kessler is an electrical engineer who entered Wall Street after working in electronics and chip development at Bell Labs, market operations is clearly a topic close to his heart. In fact, the tone in the book’s second part seems somewhat less casual and more serious, with much more detail than perhaps the average scientist or engineer will easily absorb. However, here he describes the culmination of the technological developments that have permitted the operations of capital markets as we know them today.

The book’s importance is not so much in its stories of technical advances, fascinating as they are, as in its discussions of policy implications. Kessler shows how capital formation influences entrepreneurship, how patents can affect technical advance, and how the availability of insurance can make otherwise risky investments acceptable. He clearly brings home how military needs have set goals and provided funds for new technologies that have led to many critical advances. And of course, he also demonstrates how industrial R&D provides breakthroughs that have military applications. Much of the story is somewhat within the awareness of technology-literate people, but the narrative helps emphasize the interactions more clearly.

Kessler introduces many anecdotes that humanize technology’s impact on society. But in his discussion of the ENIAC (Electronic Numerical Integrator and Calculator), Kessler may not have been aware of one item that took place at the University of Pennsylvania’s Moore School of Electrical Engineering, where the ENIAC was housed. The school was located just across a grassy strip from what was the Randall Morgan Laboratory of Physics where I was a graduate student. While the ENIAC became the first large-scale digital computer, people in the physics lab were advancing our understanding of semiconductors, preparing the way for the solid-state devices that would make the modern computer possible, keeping the power required for operation down, and shrinking the size of computers. It is doubtful that my physics colleagues could predict the truly vast advances in solid-state computers or foresee Moore’s Law, but their innovations were in parallel with the engineering developments until both merged in the 1960s.

One final story, which I cannot completely verify, really belongs in Kessler’s book. The demonstration of the ENIAC for the press in 1946 was a success; however, the actual computing that took place in the vacuum tubes would not have seemed very dramatic because nothing moved or even blinked. There really was nothing to see. So our graduate colleagues from the Moore School, who worked on the ENIAC, rigged up at random on the front of the computer a number of tubes that went on and off at intervals, giving the press a sense of action! Not the first time a technological advance was hyped up to arouse public interest.