Economic Lessons of Silly Putty

Gary Gibson, Introduction…

Building in the streets…

Abandoned homes, foreclosures, broke cities. Architects at the Museum of Modern Art think they may have the solution to what’s ailing crumbling municipalities across America.

“This is an experiment to look at what happens when you get rid of streets and build a pedestrian city,” says architect Michael Meredith. He and his partner designed a city in which new buildings occupy the roads themselves and create a car-free pedestrian paradise. Using the roads for living and office space also eliminates the tax burden of upkeep on the roads.

Their proposal is part of an exhibit called “Foreclosed: Rehousing the American Dream” at the Museum of Modern Art.

Chief curator Barry Bergdoll says, “It’s not sufficient to fix sub-prime…globalize who holds the debt…and go back to building McMansions that take us three hours to drive to [from work and shopping]…The way we build is part and parcel of this massive foreclosure crisis.”

The modern city is one built around a sprawling network of roads for cars. The cities are also serviced and linked by federal highways. This system encourages anti-pedestrian development: things in the cities themselves are spaced too far apart to manage without a car and completely car-dependent “separation of uses” development results with cul-de-sac housing pods and strip malls along the highway.

This is just as much a government-spawned mess as the mortgage crisis itself. When you bring up the idea of stateless societies, one of the very first things people ask is “What about infrastructure and roads?” The answer is that a stateless society would have a very different physical setup. Roads may be needed a lot less…or not at all.

Most people we talk to consider suburban sprawl and SUVs as the physical manifestation of post-war American wealth and power…as well as the ugly, despoiling results of free markets…

We would argue that neither case is true. We would argue that suburban sprawl is a horribly inefficient (i.e. unsustainably expensive) physical arrangement that free markets would never have allowed to develop the way it did.

Urban and suburban sprawl is an outgrowth of expansive road building. And roads are the poster children of public works, the sine qua non of the infrastructure that even “smaller government” advocates insist we need some government to build and maintain.

We are reminded of the words of Harry Browne:

“Government is good at one thing: It knows how to break your legs, hand you a crutch, and say, ‘See, if it weren’t for the government, you wouldn’t be able to walk.’”

The government creates a vastly inefficient infrastructure and then tells us that infrastructure represents the absolute best arrangement for living. And further we all need need government to provide and maintain it.

(This is proving as faulty as the government’s attempts to pitch home buying — with increasingly long payment times — as investment instead of what it really is: debt-based consumption of a durable good.)

So in answer to the perennial question “without government, who would provide the roads?” we respond, “maybe nobody…and maybe that’s for the best.”

The curators at MOMA are definitely thinking about the box. They are thinking beyond the old arrangements. We are pretty sure they are not thinking of a stateless city per se…but they are thinking beyond the crutch that governments insist governments must provide: roads.

So what would the stateless city look like? We don’t know exactly, good patrons. That’s what markets are for: to bring us solutions that we all can’t imagine today. The solutions that people like and are willing to pay for are the ones that survive. The ones that are too expensive and convoluted…and which require government subsidy to survive…are the sort that the state brings us.

Who knows what the modern state-free city could look like? And who’s to say there would only be one model? The architecture for urban living sans government would naturally vary among different topographies, climates and cultures.

The technology would have grown to fill the different spaces created when the state is not there to fill the void with its expensive, often unsustainable solutions. Perhaps the stateless city would indeed be a roadless one, full of tightly packed buildings in the center…orderly homes within walking distance from the main street…as used to be the norm in the pre-war era.

Maybe people would opt for more sprawl, but in the absence of collectivized, old world solutions to transportation (government roads), some new technology would emerge to impart pleasant and efficient travel.

Perhaps the modern city’s skies would be filled with denizens in suits that grant efficient short-range personal flight. In the absence of collectivized roads, why assume that only private roads would be the answer? And Lord only knows how much more pleasant long-distance air travel could be in a true free market world. The entire layout of life would be amazingly different and there would be a different set of wonders provided by the market that would make life easier in that heretofore unseen world.

We can imagine that personal flight sounds too fantastic, too sci-fi to ever be true. (And that cheaper, safer, more luxurious air travel may seem like a pipe dream.) But didn’t talking to someone on the other side of the planet in realtime face-to-face on a handheld device seem like mere science fiction conjecture just a generation ago?

When the CNN reporter working on this report took the ideas to the people on the street in Orange, NJ, one person remarked, “Sounds like something from the Jetsons.” How right they are!

That’s the idea, good patrons. Free markets don’t just mean liberty. They also mean progress. They mean development that turns unseen worlds out of science fiction into reality.

You just can never tell what’s going to be useful. Or what will flop. Where the markets take us are a constant source of surprise and delight. In today’s feature article, Jeffrey Tucker explains how the most unlikely of products — silly putty — teaches us these timeless lessons. Read on below…

Economic Lessons of Silly Putty

We loved it as kids — that amazing substance called Silly Putty. I recently found a version in a hotel room the other day, re-branded as Thinking Putty. It turns out that the names differ based on the targeted market segment. In any case, the whole phenomenon is curious. How it is that this seemingly ridiculous stuff could become a product that links the generations?

A closer look reveals that you can learn so much about the way the world works just by looking at this history of this pliable plaything.

Who invented it? There are several competitors for the title, and at least two patents. Earl L. Warrick, who died in 1992, always claimed that he and a colleague at Dow Corning, Rob Roy McGregor, invented it in 1943. But the claim is so uncertain that Warrick’s New York Times obituary even hedged. It appears that James Wright, who was a researcher at General Electric, also has a claim and a patent dated from 1944 to prove it.

More likely, it is a case of simultaneous invention. It turns out that this is not unusual in human history. It is actually the norm. In fact, if you look at the history of just about anything from the cotton gin to the telephone to flight itself, you find a raging dispute over who was first. Patents settle nothing: The bureaucrats approving those things mix things up constantly, and much depends on how the lawyers write them.

Lesson No. 1: The legend of the lone inventor in his lab is a myth. We all breathe the same air of ideas. Those ideas get mixed and remixed. Researchers in the history of invention have found that innovations occur on the margin and simultaneously over large parts of the world, a bit of improvement here and there, all stemming from trial and error and the targeted purpose of the product. This applies not only to products, but also to ideas.

To freeze one stage and isolate one inventor with a government monopoly grant of privilege (the patent) is wholly artificial and injurious to the process of discovery. This is why the lawsuits by Apple against Samsung (among a million other wasteful patent lawsuits) are so pointless. Everyone “steals” from everyone else, except that it is not stealing to learn from others, adapt, improve, remix. That’s how society advances.

In any case, the scientists who discovered the initial putty imagine revolutionary uses for the new rubber substitute. Guess what? No one ever found such a use, unless you include the desire to make a quick and rubbery copy of your favorite Sunday comic. The main use of this stuff turns out to be pretty much what it was in the lab: a fun thing to play with.

Lesson No. 2: No man is smart enough to foresee the most highly valued economic contribution of any good or service. We think we know, but we do not. The only way to discover economic value is to put something out there in the marketplace and see what happens. Most of the time, we are surprised.

In any case, Silly Putty languished in the world of labs and science until the owner of a toy store in New Haven, Conn., Ruth Fallgatter, saw some potential and put it in the catalog. It was a smash hit, selling millions, for adults at first and later to kids. Even then, Ruth didn’t quite see the possibilities here. It took the marketing executive that she hired, Peter C. L. Hodgson, to push it to the limit and become the first Silly Putty millionaire.

It wasn’t easy, however. Everyone told Hodgson that he was crazy, that this stupid stuff had no use. He forged ahead in any case, making more millions in the early fifties. Then the Korean War nearly shut him down with its rationing of essential ingredients. Still, after the war, he persisted and adapted to the changing market.

Lesson No. 3: Invention is never enough. You need marketing to make something wonderful and change the world. Nothing sells itself. You can invent the greatest food, drink, drug or shoe in the history of the world, but it will languish unless there is someone around to take the risk to get it to market. In the course of this marketing, the product often changes. Invention is overrated; marketing is underrated. And even when there is a successful push, it still takes a special entrepreneurial mind to see a possible future of continued success.

By the 1960s, Silly Putty was huge, a massive seller all over the world. It was the classic case of a fad gone wild, except for one thing. It wasn’t a fad. This stuff continues to be an integral part of the cultural experience, generation after generation. In fact, consider this: How many consumer products that you know have been largely unchanged for 50 years and yet still sell millions per day?

Lesson No. 4: Nothing can be dismissed a priori as a fad, and nothing can be declared a priori as a valuable item destined to be a classic. There is no way to know for sure. This is because what we call value is ultimately bound up with the individual human mind. Value is subjective, as the Austrian economists say. We make value by our thinking, and our thinking is notoriously unpredictable. What is useless and what is useful is bound up with human experience. No one can know in advance, which is one reason that central planning is impossible.

Peter Hodgson, the world’s great champion of this stuff, a man whose whole life was dedicated to selling a stretchy, bouncy substance, died in 1976. The next year, the product and the marketing apparatus was taken up by the same company that sells Crayola crayons. It remains an amazing success, unchanged from its long tradition.

Lesson No. 5: Corporate takeovers do not spell disaster. They are sometimes the best means for preserving a tradition and taking it to a new level. It all depends. In the case of this one product, Silly Putty has been an amazing seller for decade after decade. Even for huge corporations, the rule still applies: If it isn’t broken, don’t fix it.

Looking from the outside in, taking on the role of a dictator who knows what we need and what we don’t, one would never say that Silly Putty was an essential contributor to life just because, for some odd reason, we are intrigued by its capacity for both bouncing and stretching. And yet there it is — a staple of civilization as we know it. And why? It makes us happy. That’s a good enough reason.

Regards,

Jeffrey Tucker

Economic Lessons of Silly Putty was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

This story was originally featured on Whiskey and Gunpowder.

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