Mises Daily – January 7, 2011

January 7, 2011

Mises Daily

Like Finally, a Real Creator Is Person of the Year on Facebook

Other Dailies
The Unthinking Right
by Llewellyn H. Rockwell Jr.

The Conservative Movement and the Libertarian Remnant
by Jörg Guido Hülsmann

Finally, a Real Creator Is Person of the Year
by Doug French on January 7, 2011

Time‘s Person of the Year seems to often be reserved for despots and politicians. Joseph Stalin, Churchill, Truman, Ike, LBJ, Reagan, and George W. Bush each made a couple of appearances, while FDR was Man of the Year three times in the days prior to gender neutrality. Entrepreneurs are few and far between. Time even puts last year’s Person of the Year, Fed Chairman Ben Bernanke, in with “Business and Technology”: one of only six in this category in the previous 83 years. All but 20 of Time‘s Persons of the Year have been political, military, or international leaders.

But the world is changing, and Time‘s 2010 Person of the Year, Facebook’s Mark Zuckerberg, is creating that change. While politicians stand in the way of progress, entrepreneurs like Zuckerberg make it. While governments operate in secret, Facebook embraces transparency. And while governments’ use of force and monopoly leads to unwanted associations and tensions between various groups, the nearly 600 million people on Facebook choose whom they want to be friends with.

Facebook allows millions the opportunity to communicate, commiserate, and collaborate effortlessly with friends, family, and peers without the limitations of geography. So while Hans-Hermann Hoppe explained in Democracy: The God that Failed that it is in the big cities that “citizens will develop the most highly refined forms of personal and professional conduct, etiquette, and style,” breeding “civilization and civilized life,” Zuckerberg has created a big virtual city for humans to develop style and conduct.

As Time‘s Lev Grossman points out,

Facebook has merged with the social fabric of American life, and not just American but human life: nearly half of all Americans have a Facebook account, but 70% of Facebook users live outside the U.S. It’s a permanent fact of our global social reality. We have entered the Facebook age, and Mark Zuckerberg is the man who brought us here.

The Harvard dropout didn’t make Facebook to get girls or get in a club; he created a web social life to match his. It’s nothing a group of bureaucrats could have come up with, and unlike static laws and legislation, Time‘s POY and his army of 1,700 employees are ever changing his creation to stay ahead of, and satisfy, his growing number of users. And while Grossman makes the wistful analogy to 1960s counterculture (“No single computer runs the network. No one is in charge. It’s a paradise of equality and anonymity, an electronic commune”), the 26-year-old Zuckerberg sees the world as voluntary relationships.

“Within the frame of social cooperation there can emerge between members of society feelings of sympathy and friendship and a sense of belonging together,” Ludwig von Mises wrote in Human Action. “These feelings are the source of man’s most delightful and most sublime experiences. They are the most precious adornment of life; they lift the animal species man to the heights of a really human existence.”

Zuckerberg echoes Mises, telling Time,

In the world, there’s trust. I think as humans we fundamentally parse the world through the people and relationships we have around us. So at its core, what we’re trying to do is map out all of those trust relationships, which you can call, colloquially, most of the time, friendships.

As Mises and Hoppe point out, it is social cooperation and the division of labor that make these relationships possible. Instead of people being deadly foes, constantly fighting over scarce resources, they cooperate. Because of the higher productivity created by the division of labor, “Human society is an intellectual and spiritual phenomenon,” Mises writes.

Time‘s Grossman credits the one-time psychology/computer-science major with creating a cybercommunity for people to be the same person online as they are in real life, with the same responsibilities. “Facebook makes cyberspace more like the real world: dull but civilized.”

Zuckerberg’s entrepreneurial gift is the human element. People want to connect with others whom they know, like, and trust. “Whereas earlier entrepreneurs looked at the Internet and saw a network of computers, Zuckerberg saw a network of people,” writes Grossman.

Facebook is permeating all parts of the web, like it or not. It has allowed users to live among their friends all day long online. And while the Internet is a “howling mob of strangers,” Facebookers can look to their friends for help and advice in navigating the scary bottomless pit of information and stimulus. Now people don’t have to click somewhere, they can set up their likes and friends and let the cyberworld come to them.

So while most of the world believes society is shaped by the latest crew of politicians to descend upon Washington, as well as the various state houses and city halls around the country, it’s the rare and amazing Zuckerbergs that really change the world. Sheryl Sandberg, who has turned on the advertising taps sending money gushing into Facebook’s coffers, used to work in Washington as Larry Summers’s chief of staff at the Treasury Department. “I never thought I’d work in a private company,” she told Time. “But from the outside in D.C., you watched what was going on out here, and it really felt like it was changing the world. And I always wanted to work in places that felt like they were going to have an impact on the world.”

Facebook is free to its users and, of course, voluntary. However, every time a user expresses a like or dislike, the algorithms created by Zuckerberg’s team will pick up their preferences and the appropriate advertisers will be directed that way.

Facebook has become so big, it’s database has governments salivating. Politicians and fans of democracy can only wish the public would sign up to vote in the same numbers they sign up for Facebook accounts. Facebook has a larger population than any country save India and China. The power of digits leads to strength in numbers.

But while politicians make multiple appearances as Time‘s person of the year, just making the magazine’s cover has often signaled doom for businesses and trends. Amazon’s Jeff Bezos was Person of the Year in 1999, when his company’s stock was trading near it’s all-time high at $113 per share. Within a year, the stock collapsed by 95 percent. Nevertheless, Amazon has changed the way people buy books.

Alan Greenspan’s “The Committee To Save The World” Time cover with Robert Rubin and Larry Summers in 1998 may have marked the peak of the Maestro’s popularity. And Time‘s “Home $weet Home” cover in 2006 marked the peak of the housing market.

Facebook is not publicly traded and Zuckerberg has said going public is not his goal. However he has tiptoed close enough by selling a portion of the company to Goldman Sachs, a rich Russian, and various hedge funds — about which the sirens are going off over at the SEC building.

Holman W. Jenkins Jr. points out in the Wall Street Journal,

pressuring Facebook into a premature IPO would be doing America a disservice, one peculiar to the age of social networking. Companies like Facebook spring from young minds for a reason, and it would be a near-miracle if their young CEOs were ready for the complicated public performances required of them in our politicized, lawyer-happy world in which privacy is bound to be a huge future battleground.

Zuckerberg is quickly learning the cold reality that making the world a better place for human relations with your grand idea runs headlong into stifling government rules and regulations that short-circuit voluntary exchanges and gum up the division of labor. While government wants to treat everyone like uniform and interchangeable ants, humans are unique, as Murray Rothbard wrote in Egalitarianism as a Revolt Against Nature and Other Essays. “It is the fact that these unique personalities need freedom for their full development that constitutes one of the major arguments for freedom.”

Forcing Facebook to be publicly traded and sending Zuckerberg to Washington with hat in hand, like Bill Gates before him, is more tragic than Jenkins knows. Rothbard pointed out that “only the free man can be fully individuated and, can be fully human.” Investment, mobility, the division of labor, creativity, entrepreneurship, and ultimately wealth creation depend upon individual freedom. Dotting i’s and crossing t’s for the SEC won’t spur the creative process. Next, valuable resources and brainpower will be stationed in the nation’s capitol to play defense.

Mises noted that the ideal communist man is a dilettante, who knows a little of everything but does nothing well. Everyone’s time and energy are limited, Rothbard explained, “hence in order to develop any of his faculties to the full, he must specialize and concentrate on some rather than others.”

How many life-changing ideas does Time‘s person of the year have? Nobody knows. “Far above the millions that come and pass away tower the pioneers, the men whose deeds and ideas cut out new paths for mankind,” Mises wrote in Human Action. “For the pioneering genius to create is the essence of life. To live means for him to create.”

What we do know is that binding Zuckerberg with regulations won’t get his creative juices flowing. “But, of course, one can organize society in such a way that no room is left for pioneers and their path-breaking,” explained Mises.

That’s the world we live in. Instead of hacking against the clock with his development team, the person of the year will have every incentive to play it safe and just take the money and run.

Douglas French is president of the Mises Institute and author of Early Speculative Bubbles & Increases in the Money Supply and Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his masters degree in economics from the University of Nevada, Las Vegas, under Murray Rothbard with Professor Hans-Hermann Hoppe serving on his thesis committee. French teaches in the Mises Academy. See his tribute to Murray Rothbard. Send him mail. See Doug French’s article archives.

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