Technology Planning and Analysis

Rant: Computer price falls show capitalism at its best

‘Capitalism’ is a word that all too often gets used in a derogatory context. That’s OK: capitalism has always had rough edges and for those at the sharp end those rough edges can be especially abrasive. But sometimes we should celebrate the amazing value the free market system brings us.

Take the personal computer. In 1995, a standard PC in the US would cost between about $1,900 and $2,300 for a mail-order bought machine with a Pentium processor, 8MB of RAM and 800MB hard drive. A fast computer with a top spec would cost about $4,500 (sometimes a lot more if you paid the premium for, say, IBM) or if you wanted a laptop/notebook you could easily pay much more than that. Today you get a processor several times faster, about 500 times the amount of RAM and about 700 times more hard drive capacity. Other features would be faster, sleeker, more elegant. In fact, the PC today is so much better in every way that it’s impossible to make direct comparisons but you get a way better product for about a fifth of the price you would have paid 20 years ago.

The gap between desktop PCs and laptops has fallen to almost nothing and mobile devices long ago surpassed desktop sales. In 1995 internet service providers would charge you about $10 per month and software fees were ransom-like. Today, smart buyers get online access, software and hardware bells and whistles for, comparatively, next to nothing.

Now compare that to a Big Mac using The Economist’s famous index. In 1995 buying from Ronnie in the US would cost about $2.13. The price today is $4.79, well over double. If McDonald’s pricing had followed the PC’s amazing decline, a Big Mac would cost about 30 cents, be made from Kobe beef and require a tray the size of an executive’s power desk.

Now, we could quibble and say that US prices are lower than most other places but we’d still see precipitously plunging prices anywhere in the world for technology. You might also argue that declining prices have to be seen against a backdrop of poor labour conditions and long hours in parts of the world or view this as the sign of unchecked consumerism with a ruinous effect on Mother Earth. But you could equally argue that we have much greater insight and transparency over how electronics goods are made, and that we use far fewer toxic materials.

The PC today is a modern miracle that provides all of us with the chance to learn skills, be entertained with thrilling content, and grow our knowledge of the world around us. That should be celebrated - and capitalism is the catalyst behind it.


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Torquemada, not his real name, has been casting a jaundiced eye on the technology world since the Sinclair C5 was causing as much excitement as the driverless car today, a 64K RAM pack could turbocharge performance, and Alan Sugar was the equivalent of Elon Musk.

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