I just finished Marc Levinson’s book The Box (CE*), which traces the introduction and development of the shipping container and its impact on global trade. You might think from that description that it was quite a dull read, but actually it was fascinating. (Steve Davies has a very useful 3-minute overview here. Check it out, I’ll wait.) The story includes an interesting take on the nature of innovation – while Malcom McLean is clearly an important innovator whose role cannot be discounted, lots of other people and events are indispensable parts of the story, which, as Hayek would be happy to remind us, is vastly complex and is the result of more inputs that one might guess. Levinson notes that single-actor “a-ha!” stories stir the imagination, but tend to obscure the actual process by which change occurs. Individual insight and entrepreneurship are real, of course, but if we want to fully understand innovation, we need to know about the other inputs as well.
Levinson’s story is a great illustration of unpredictability and the difficulties in planning. The book shows how both governments and private actors made some bad mistakes along the way, and the way things are in 2021 were largely unforeseen in 1956. Not only would the people in 1956 not have been able to predict the way the shipping business would evolve, they also couldn’t have predicted the way those changes would impact manufacturing, global supply chains, urban planning, the economic impact on then-undeveloped countries.
Another thing I found useful in this book is that it’s a great illustration of the tensions between classical liberal proponents of free markets, and actual business leaders. Levinson’s story is rife with lobbying, subsidies, and regulation. The regulatory activity is an important part of the story; sometimes helping move progress along, often hampering progress or promoting malinvestment. In some cases the regulatory structure reveals the political influence of industry leaders, other times that of unions. Indeed, labor unions come off as not particularly more noble than the captains of industry, as we see them press for rules that allow for make-work and featherbedding, and to shield themselves from the disruption innovation frequently entails. But the business leaders are, in a different way, seeking protection from competition and subsidies for their experiments – the exact opposite of “laissez-faire.”
Levinson tells the story in a fair-minded way – he’s sympathetic to the dock workers who stand to lose jobs, even as he describes rules and practices that are plainly self-serving and can’t withstand rational scrutiny. Meanwhile, he’s very up-front about the way the business leaders transparently seek favorable regulatory systems, as if skillful lobbying is as much a part of business as entrepreneurship and competition. It’s a prime example of “Horwitz’s First Law of Political Economy”: no one hates capitalism more than capitalists. More precisely, in this case, they simply take it as a given that there is a regulatory apparatus, and therefore do see “competing” via lobbying for a favorable place in the regulatory regime like competing in the market. And when Levinson shows us the point of view of the legislators who are on the other end of the lobbying efforts, it’s sometimes almost comedic, as they have to juggle “protecting” the interests of shipping companies, railroads, trucking companies, manufacturers, longshoremen’s unions, the Teamsters, stevedores’ unions, and so on – all of whose interests are often at odds with each other, and with that of the general public.
Interestingly, despite all the intervention by regulators and lobbyists from both labor and business, the innovation happens, the industry evolves, and millions of people experience an increased standard of living as global poverty declines massively. So is “capitalism” the story of businesses and unions “competing” via lobbyists for special legal protections? Or is “capitalism” the word for exchanges and competition that happen without government intervention? Obviously the word gets used to mean both, although that’s oxymoronic (which is a good reason to avoid the word – a topic for another day’s blogpost). But the story of the shipping container shows that despite, if not because of, political pull and self-dealing, dynamic innovations have the power to help millions of people lead better lives, often in ways no one could have predicted.
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