Would the free-market have had the incentives to produce the Internet?
The establishment narrative says No, and it says that DARPA created the Internet.
First, let’s explain what we mean. The free-market is everything voluntary. In a free-market system, everyone would be free to own, invent, build, sell, buy, trade, advertise … anything. One would be free to enter any mutually voluntary contract, and perform any mutually voluntary transaction.
It should thus be obvious that we do not have anything close to a free-market, so for the free-market to produce the Internet, government would have to have gotten out of the way. Government spends trillions per year, and saddles us with taxes, laws, regulations, lawsuits, debt, war, division, and propaganda. Government crowds out competition because government is a monopoly on the right to initiate force and fraud within a geographical boundary. Government is neither wise, competent, nor ethical. Government has given us a system of perverse incentives that can best be described as authoritarian collectivist cronyism.
The internet protocol, tcp/ip, is just another protocol, and private companies have produced the hardware that implements tcp/ip, and private companies have also produced alternative networking protocols and hardware. Private companies also produced the telegraph, the telephone, electrical power plants, the transistor, personal computers, and smart phones.
To quote from Transistors, Fire, and Love:
For computers, and the Internet, we could thank government for inventing the tcp/ip protocol, which is unremarkable and which crowded out dozens of potential and better protocols, or we could thank the guy at AT&T who had already invented the transistor, which was truly brilliant, absolutely necessary, and for which there is no alternative.
The Internet today is primarily built and paid for by businesses—except for when they can get taxpayers to pay for it, which reveals a critical vector of corruption—For the last few decades, everyone has been addicted to government. Why would a company spend money to be an early adopter if it can wait just a couple of years for government to pay for it? Suppose your company did so anyway. Then when government builds an inferior system that makes your system obsolete (because of incompatibility), your competitors are not saddled with the debt you incurred, and thus can charge less for their products and thus usually put you out of business. So everyone lobbies government to pay for everything they can, and innovation slows down.
It is natural that every technological innovation is initially more expensive, more primitive, less reliable, and harder to use than it would be in future years. Therefore, it is natural that it would first be used by businesses and rich people, then by early adopters, and then by consumers.
Of course, government can force early adoption like it did in France with the Minitel system in 1980, in which a French company invented a (non-Internet) computer terminal and network for simple online tasks such as banking. The French government put a Minitel terminal in millions of homes. As Minitel became increasingly obsolete, and users became increasingly dissatisfied, the solution offered by the French government to reinvigorate their one-size-fits-all program was to offer Minitel terminals in multiple colors.
Now let’s look at how and why the free-market would have developed something like the Internet even if government didn’t exist.
Did you know that before the internet was viable, Motorola built a system of hundreds of satellites to transmit data around the world? Only businesses and rich people could afford it at first, but Motorola built it anyway.
Consumers were using BBS systems across phone lines in the early 1980’s, so consumer demand for something like the Internet was already there.
Long before the Internet was commercial, private networks that at first could only support email and document sharing were growing exponentially in capability.
The biggest incentives to create the Internet manifested because the capabilities of digital technology have grown exponentially per dollar, which is primarily because the number of transistors that can fit in a given space has doubled about every two years. Also the amount of data that can be stored in a given space has grown exponentially, and the speed of storage and processing has increased exponentially. Therefore, the amount of data and the need to transmit that data has grown exponentially.
Before the Internet, companies created large powerful internal networks in their buildings to meet this need. Of course, companies needed a way to share this data between buildings, across cities, across countries, and across oceans—especially as new markets emerged around the world.
Many competing protocols and technologies were produced, but the monopoly that is government ensured that the existing Internet won out.
If any other technologies had won out, then the same pattern would have happened as with the existing Internet. Large companies and rich people would have used it first, and then as it became cheaper, early adopters would have used it, and then it would have become viable for the consumer market.
Like 3g, 4g, and 5g; it would have only been cost effective to deploy in wealthier and more densely populated areas first, and later it would have become cost effective to deploy to rural areas, but it would have deployed to both before it was cost effective in order to prevent competition from getting a foothold first.
Another incentive for private companies to produce the Internet is that the number of software applications and the size of those applications also grew exponentially, so distributing them to customers was expensive and cumbersome, and that was only for the first version. As additional fixes and enhancements were made, getting those into the hands of customers would rarely have been cost effective without a way for customers to download them.
Then there is the corresponding exponential growth in the need for customer support, which would be prohibitive without online support.
Also, best practices in software design already prescribed that one should separate the user interface code from the rest of the code, and web browsers make that almost guaranteed. In fact, such concepts further reduce the need to distribute software updates because the user simply navigates to a URL, and the web browser loads the most up to date version of that web page, and the code on the servers could thus transparently be upgraded every hour if desired.
Given that it should now be obvious that the free-market was sufficient to provide the Internet—possibly a better Internet—why would we want to empower an illegitimate leviathan with a monopoly on the right to initiate force and fraud?
To quote again from Transistors, Fire, and Love:
Obviously, those innovations that we like and that resulted from government spending the confiscated fruits of our labor would have occurred without government, and in many cases would have become available to us sooner without government bans and government inefficiency.
If it isn’t obvious, the only thing that government does well is coercing large numbers of people to work towards a common goal that they would never have voluntarily worked towards, and thus government is really good at building monuments, waging war, and redistributing the fruits of our labor.
I would sum up the choice between private vs. government as … transistors, fire, and love vs. monuments, war, and genocide.