Use it or lose it – semiconductor version

I highly recommend Chris Miller’s Chip War: The Fight for the World’s Most Critical Technology. It starts with the history of the development of semiconductors, which might be familiar from other Silicon Valley histories (such as Margaret O’Mara’s also excellent The Code). But the book then goes on to less familiar and more recent territory, encompassing the technological changes needed to manufacture ever-more precise chips and the huge scale, complexity and sophistication of their fabrication. This introduces companies that have recently become familiar (AMSL in the Netherlands, making the machines that are needed to do the fabrication, and TSMC in Taiwan, which produces more than 90% of the most advanced chips) – and also others key to the process that are still not very well known in general.

The narrative arc is a steady shift from US leadership in both technology and manufacturing, to Asian leadership in manufacturing and rapid catch-up – especially in China thanks to large-scale subsidies and IP theft – in some slices of the technology. The result is an extraordinarily complex global supply chain with a number of very narrow 1 or 2 firm bottlenecks. The best to hope for seems to be a version of the Mutually Assured Destruction doctrine: no country can afford disruption. The worst? Massive disruption of all aspects of modern economic life.

That there would be some shift seems inevitable: as East Asian economies developed in the late 20th century they would always try to move up the value chain into more sophisticated sectors. However, the book is quietly but strongly critical of the pro-globalisation philosophy of the US (and rest of the west) that gave up on retaining core manufacturing and engineering competencies at home – their loss didn’t matter until it really did, with the re-emergence of geopolitical strife. As the book puts it, there was a “liberal internationalist ethos that guided officials of both political parties amid America’s unipolar moment.” Yet Andy Grove’s paranoia was valid, when he said in the early 2010s: “Abandoning today’s ‘commodity’ manufacturing can lock you out of tomorrow’s emerging industry.” (One of the best summary articles making eactly this point is Gregory Tassey in JEP in 2014.)

There is a lot of interesting detail. For example, I hadn’t realised how much Darpa focused on educational infrastructure – funding students and workshops, and university computer equipment, as well as futuristic tech research. There are lots of great examples of the difficulty of copying advanced chip technology because of the necessary tacit knowledge: for instance, every AMSL photolithography machine comes with a lifetime supply of AMSL technicians to tend to it. This is either hopeful – China will find it hard to catch up fully –  or not – the US or EU will not be able to catch up with TSMC because of the latter’s vast embedded know-how. Another example is the fact that defence dollars bought 72% of all integrated circuits produced in 1965, but Robert McNamara’s deffence budget cuts led Robert Noyce of Fairchild to bet on the consumer market and slash chip prices from $20 to $2. Annual US computer sales went from 1000 in 1957 to 18,700 a decade later.

All this and much more. The book has no easy policy solutions but is an essential contribution to current debates about industrial policy.






From citizen to subject in cyberspace

Vili Lehdonvirta’s Cloud Empires is a terrific book. As the title suggests (and the fashionably chatty subtitle spells out just in case), the subject is the political power of large/gatekeeper digital platforms and specifically how in their essential rule-making capacity they are steadily taking on more activities of the state – but doing so without a public service motive (profit instead) and without accountability: “The internet was supposed to free us from powerful institutions. … Then they delivered something different – something that looks a lot like government again, except that this time we didn’t get to vote.”

The book starts with the origins of the internet and digital platforms, including the early libertarian hopes. The first section concerns platforms as economic institutions. One focus is the operation of online labour markets, including mTurk, but also using oWork/Upworker as a case study; the platform become increasingly internally regulated as it grew, among other things setting a minimum wage – of $3 an hour, reflecting the globalisation of online labour. Another chapter concerns privacy, and its complete erosion as platforms increasingly grappled with the need to enforce social order online at massive scale.

The theme through this first section is the transition from libertarian optimism about the absence of control to a non-territorial but nevertheless tightly regulated series of platform domains, with platforms setting their own rules within their own jurisdictions – with the only accountability being people’s ability to leave. You might put it that Albert Hirschman’s ‘exit’ is the only option as neither voice not loyalty have any traction, and even that is limited by the power of network effects. Exit would have to be collective to be effective.

The second section concerns the political power of the platforms. It starts with a wonderfully astute chapter on crypto-currencies, making the point (it has always seemed clear to me but seemingly not to others) that these are not ‘trustless’ but simply relocate trust. And yet many or most are inherently untrustworthy (to use Onora O’Neill’s framing). “The crypto elite who run these organisations are, if anything, less accountable to people than conventional financial and regulatory elites.” The founders may be entirely sincere and nice, and they may even seem to give their communities voice, but in writing the take-it-or-leave-it code, they impose dictatorship. (And have clearly read none of the vast literature on incomplete contracts….) Other authors such as Lawrence Lessig have drawn the comparison between code and law, but I found the social science perspective here very helpful.

Another chapter considers the way the platforms have undermined the traditional public institutions providing health care and education. Neither platforms nor gig workers have an incentive to invest in training or a long-term relationship, and in the US at least that casualised workforce has to rely on GoFundMe campaigns to cover medical bills. “Internet empires are undermining industrial society’s mechanisms of building and maintaining human capital.” What will the essential social safety net look like in the platform economy?

The concluding chapter pulls the threads together in the argument that platforms are usurping the traditional nation state. “Silicon Valley technologists reinvented the economy only in the sense that through trial and error they rediscovered much of what states already knew. Instead of revolutionizing our social order, they reimplemented it with computer code.” Algorithms are bureaucracy. (And indeed, a lot of traditional statecraft depended on technology – including classifying and collecting data, monitoring behaviour). The book argues that states simply gave up some of their former territory of control through outsourcing, or ceasing to collect data in house. In addition, the digital platforms have advantages – they are fast and efficient, and in (narrow) ways provide a great service.

So what to do about it? The book makes the case for an online bourgeois revolution to develop collective action power that will make digital platforms accountable. I must say that the prior chapters don’t give me any optimism that might provide effective. My prescription would be for democratic states to regain the lost territory through a combination of rule-making over online activity and improved efficiency of traditional bureaucratic states. Though I’m not too optimistic about that either.

All of which makes the book an essential read. I have some quibbles (for example, I’d disagree that platforms are effective central planners), but perhaps I’m wrong. The book is firmly rooted in Vili’s own work and the wider literature on digital platforms, spanning economics, sociology and political science, while being very readable with lots of examples and case studies. A strong recommend.




Ways of seeing?

James Poskett’s Horizons: A Global History of Science is concerned with the role played in scientific discovery by non-white, non-European people (mainly men….). The book starts with Aztec and Inca knowledge particularly about natural history, medicine and astronomy. The European voyages of the early modern period made it so clear that Aristotle and Plato in fact hadn’t known everything that they helped overturn scholasticism. The book proceeds through the subsequent centuries but also, centrally, across space. People outside NW Europe (and later N America) knew stuff.

I was particularly interested in the section on non-Linnaean classifications in Africa and Asia (being a classification nerd); and also those about the impact of Einstein’s theories on confidence in measurement (being a measurement nerd too). And one other thought – not particularly made by the author, whose concern is acknowedging previously overlooked contributions by people around the world – that it left me with is the role of people who knit together bodies of disparate knowledge in a new world view. After all, Newton acknowledged the shoulders he stood on; but a different metaphor might be that he shook the kaleidoscope and created a new pattern of seeing.

I enjoyed this book, learning a lot. I must say it was slightly marred for me by the continual repetition of the point about needing to acknowledge non-European contributions – the material makes the case so effectively itself that additional polemic isn’t needed. But it is of course an important point, and the book is a nice introduction to some of the sources of knowledge from other parts of the world.




Predecessors and outsiders

I’m a sucker for books about innovation, and enjoyed reading Gavin Weightman’s Eureka: How Invention Happens. It’s a jolly account of five 20th century inventions: flight, TV, bar codes, personal computers and mobile phones.

Despite the title, the main argument is that there is no single Eureka moment. While we often credit some well-known individuals (such as the Wright brothers or John Logie Baird) with an invention, all inventions rely on bringing together a prior series of other inventions. For example, Babbage never could build his mechanical computers; computing had to wait for electronic valves, transistors and then chips, as well as the insights of Turing and Von Neumann. Predecessor inventions are essential. Yet at the same time, it is often an outsider – such as the Wrights or Baird – who question received wisdom and join the dots to bring the new thing into being. It takes an outsider to not know that something isn’t possible…

The most interesting chapter in a funny way was the one on barcodes (which also feature in Tim Harford’s Fifty Things…). Apart from the fact that they’re less obvious as ‘an invention’, the corporate aspect to this was very interesting. Tech companies were pitching a product to supermarkets that would cost a good deal in upfront investment and needed co-ordination across competing chains to set technical standards. Retail has undergone some huge, productivity-enhancing technical changes over time. It has gone from entirely labour-intensive (shelf stacking, checking out, packing) to using increasing amounts of capital (conveyor belts, scanners) and free labour (customers doing the packing), then still more hard and soft capital (automated checkouts with scanners and sophisticated software) and free labour (we do our own scanning now too) to eventually Amazon-style stores where the paid human labour has gone and the free human labour reduced, but the software greatly augmented. All of this requires barcodes.

It was interesting to learn about some of the prior contributions to the iconic innovations, and the book is an easy read thanks to a lot of biographical background on the various people, often eccentric. The computer and mobile phone histories are ones I’ve read a lot about before.  I think Francis Spufford’s Backroom Boys (albeit only UK focused) is a far better read, if you’re only going to read one general interest book about a range of inventions. But Eureka is very enjoyable, and looks at different technologies from a US perspective, & I’d recommend it.

Screenshot 2022-06-03 at 14.00.47


How to invent ideas

I found Zorina Khan’s Inventing Ideas: Patents, Prizes and the Knowledge Economy very interesting. It uses an impressive assembly of empirical evidence about inventors, patents, the administrators and recipients of innovation prizes and awards, and industrial exhibitions – largely in the US, UK and France – to support a specific analysis of what enabled the US to become the most innovative and richest industrial nation from the late 19th century on. As she points out, much of the literature asks why Britain was the first country to experience an industrial revolution, so the question itself is distinctive.

Her argument is that compared with Europe, there were “dramatic differences in the new approach to growth that were manifested in early US policies.” The key difference – supported by the mass of evidence – is a far greater emphasis in the US on patents (as a market-oriented innovation system) rather than prizes and awards (an administered system). A second and consequential difference is the preponderance of incremental and commercially successful innovations in the US. “Elites have always mistrusted markets: wealth and influence often lead to the convistion that the insights of the favored fiew can outperform spontaneous co-ordination,” Khan observes. The US was strongly anti-elitist (at least in that era), whereas “the most significant variable affecting whether or not a British inventor received a prize was elite education at Oxford or Cambridge,” neither university at the time focused on technical or scientific excellence.

Along the way to supporting its argument that the marketplace of ideas beats elite technocracy, the book demolishes quite persuasively the recent trend toward innovation prizes as an effective incentive mechanism. Less persuasive is the argument that patent trolling is no greater a problem than it ever was (although there clearly was a lot of litigation over patents in the 19th century).

It also makes the point that European and American patent systems operated differently. The specific institutional details mattered. So the conclusion one could draw is that the underlying elitism of European societies and egalitarianism of the US does more to account for latter’s emergence as technological leader. In which case, the longer term outlook for the US staying at the frontier may be less rosy. In any case, much food for thought in the book, and fascinating empirical and historical detail.