Tag Archives: review

Great power transitions and the role of technology

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I have mixed feelings about Jeffrey Ding’s Technology and the Rise of Great Powers. On the one hand, it’s an interesting and persuasive hypothesis. He argues that great power transitions such as from the UK to the US around the turn of the 20th century are driven not by the new great power commanding the technological frontier but rather by the extent to which new general purpose technologies have diffused across the whole economy. He contrasts this with the idea – apparently dominant in political science – that it is the country with control of the leading sectors that predominates.

Thus for example it was the US, not Germany, which overtook Britain because Germany commanded the chemistry frontier but the US educated chemical engineers en masse and the new chemical-enabled manufacturing techniques permeated widely. The book looks at the first Industrial Revolution – the UK’s emergence as dominant after the earlier reign of the Netherlands – as well as this 2nd industrial revolution; and also at the failure of Japan to take over from the US in the late 20th century. The book focuses on the importance of developing skills institutions that enable widespread uptake, citing for example the Mechanics’ Institutes in 19th century Britain and the spread of engineering through universities in 20th century America.

This analysis is backed up by detailed case studies – very interesting – as well as empirical work. While economists will characterise transitions involving new general purpose technologies as involving both a period of leading sector change and then diffusion across the economy, it seems very plausible to me that geopolitical transitions depend on the latter. Military and strategic strength depend on robust engineering and production capabilities; leading edge R&D is necessary but not sufficient.

The ‘other hand’ is the writing style. The text is rather repetitive and written in academic-speak. I guess the book is based on the author’s PhD dissertation, but it would have benefited from a rewrite in order not to read like a series of academic journal articles. This is a bit of a shame, as of course the argument is relevant to the relative roles of the US and China now. The book was written before the US started shooting itself in all the feet it could find in terms of sustained technical and economic progress; but in any case the author recommends the US switch its focus to developing the broad skill base needed to enable AI use across the economy if it’s serious about winning the geopolitical contest.

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The end of progress?

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Carl Frey’s How Progress Ends: Technology, Innovation and the Fate of Nations is the kind of book that is exactly my cup of tea. I did have the opportunity to read it before publication and part of my blurb comment was: “How Progress Ends is a fascinating account of the way culture and institutions interact with new technologies.” The major part of the book consists of the history of some major technological advances along with some significant innovations in societal models (the American Revolution, Soviet central plannng) exploring exactly this interaction.

The thing that makes institutions and culture matter is that general purpose technologies – printing, steam, electricity, telecommunications – is their disruptive character. The affordances of the technologies enable challenges to the established economic or political order. Sometimes the incumbents can resist successfully – as in China’s ‘reversal of fortune’ following the formation of the Qing dynasty, or in the Soviet elite’s resistance to reform until it was too late. Sometimes the character of technology means political competition enables it to advance faster than if there were political centralisation – and sometimes the other way round.

States can therefore play a decisive role in whether their societies experience and (eventually) benefit from technological progress. The book ends with some reflections about the present. Frey is pessimistic about both the US and China (a bit of an echo of Dan Wang here). In the US he sees the incumbent AI companies and their relationship with the government as freezing out innovation: “Reaping the benefits of technological change requires institutional support to make space for exploration.” In China he sees future innovation as falling victim to cronyism and the assertion of control by the central government. “The decline of either China or the United States is by no means inevitable,” he writes, although one senses he thinks it is.

Who knows. What does seem clear is that the path taken by technology cannot be divorced from the politics, which is highly uncertain everywhere. The historical lessons are well worth pondering. How Progress Ends is well worth reading alongside for example Carlotta Perez (Technological Revolutions and Financial Capital) and Bill Janeway (Doing Capitalism in the Innovation Economy) to reflect on the current moment.

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Building vs stopping

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I read Dan Wang’s Breakneck: China’s Quest to Engineer the Future, which some people I follow (like Henry Farrell and Richard Jones among others) have already reviewed. It is,  as they have said, a very interesting read – much more about China than about America, although the contrast he paints between the two is clear. The core of that contrast is that China’s leadership consists of engineers, and they focus on getting things built, while America’s consist of lawyers, who focus on stopping things.

However, the point Wang makes is subtler than ‘engineering good, lawyering bad’, although China’s success in building infrastructure and developing manufacturing industry has delivered astonishing increases in living standards. For, as a couple of chapters emphasise, the engineering mindset can go badly awry when applied to social issues – the one child policy and the covid lockdowns are the examples.

Nevertheless, there are lessons for the US (and the rest) in China’s approach. He writes: “[China] embraced a vision of technology radically different from Silicon Valley’s: the pursuit of physical and industrial technologies rather than virtual ones like social media or e-commerce platforms. In China. technology is not represented by shiny objects; rather, it is embodied by communities of engineering practice like Shenzen, where technoogy lives inside the heads and hands of the workforce.” This seems spot on in identifying a relative weakness of the US and UK models, both of which overlooked the importance of keeping those communities rooted at home. One of my favourite papers is Gregory Tassey’s in the 2014 Journal of Economic Perspectives, making this point. It also reminded me of Dan Breznitz’s point about the different pathways for industrial policy, and Silicon Valley not being the obvious model to emulate.

Another lesson for both countries lies in their contrasting but equally unappealing urban forms – China with its soul-less new mega-block developments and America with its bland suburbs. Neither seems to manage dense, walkable, attractive neighbourhoods on the whole – in China, Wang lived in the attractive French Concession area of Shanghai, an exception to the rule. Here is one dimension where many European countries do better than either superpower, as Chris Arnade often points out.

My other reflection on Breakout – which is a must-read – is that it already seems dated by recent developments in US politics. There are now many things the lawyers are not stopping, although still much that the engineers are not doing either. In the long run the lessons of both countries’ recent past will be relevant for economic growth and technological advance, but the short run seems much murkier than it did even a few months ago.

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From toffs to asset strippers via buccaneers and fat cats

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I’d read The CEO: The Rise and Fall of Britain’s Captains of Industry by Michael Aldous and John Turner in proof form, to provide a quote and I just re-read it in physical form. It’s a very entertaining read, rooted in an impressive database the authors have compiled about the background and characteristics of chief executives – almost all men, though time and still now.

The book is then structured broadly chronologically, using the data to characterise waves of approaches to management and corporate governance. In the earliest days of the corporation as it emerged in modern form, aristocrats were generally in charge, with varying degrees of success. This gave way to founder- and family-led firms. Postwar came the managerial revolution, when at a time of increasing social mobility talented men were able to rise from the shop floor to the boardroom. The chapter on the 1980s is titled ‘The Buccaneers’ and then the book moves on to the Fat Cats, featuring the privatisations of the 90s (many people my age will remember Cedric the pig), and the subsequent attempt to introduce higher standards of corporate governance through the Cadbury code. Each chapter is shaped round characteristic examples, be it British Leyland or Slater Walker.

The authors are sceptical that such codes have done anything to moderate boardroom excess, and scathing about the spread of financialisation and the private equity asset-stripping model. So this is far from a tale of progress – more a story of how British companies managed to fail in every era. For example, UK plc remained highly sceptical about having graduate managers and lagged far behind the educational qualifications of German, Japanese or US executives. The same for specialist management education – Wharton was founded in 1881, Harvard Business School in 1908, but London Business School not until 1964 and Manchester Business School in 1965.

Along with this historical panorama there are many wonderful facts. Who has heard of John Ellerman, shipping magnate, who died in 1933 worth £13.8bn in today’s money? Who knew that James Hanson had been engaged to Audrey Hepburn, before she broke it off after filming Roman Holiday? So this is a very enjoyable book as well as raising serious questions about management quality in the UK, which seems to be a consistent problem.

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The magic of the technology business?

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For anybody interested in the history of telecommunications, Stephen Unger’s From Beacon Fires to Fibre Broadband will be a must-read. Steve is a former senior Ofcom Executive, with a career in telecoms before joining the regulator. (He has also been one of our Bennett Institute affiliates from the start.) The book is a combination of technological history – mentioning the beacon fires but really from the days of optical and then electric telegraphy through to fibre broadband – and policy history. The focus in the latter thread is the role of public versus private sector, and the balance between permitting or encouraging monopoly and encouraging competition.

The book covers four countries, the US, UK, France and Germany. Each produced some technical innovations but the real differences emerge in their respective policy choices. Not surprisingly, the French and German governments tend to be more statist, either for reasons of political control or focusing on national champions. But in all four countries the balance has shifted over time. One of the main conclusions indeed is that there is unlikely to be a single ideal model of shaping and regulating telecoms given how much both technology and context change.

There is an awful lot of interesting detail in the book but inevitably covering several countries and centuries it has a kind of meso-level focal length. This meant that the chapter I know most about, covering data networks, felt very abbreviated. My favourite chapter covers market liberalisation across all four economies from the late 20th century on, starting with the liberalisation of terminal equipment – that is, allowing people to buy telephones from suppliers other than the network operator, setting common standards so competing products can plug in. (Mickey Mouse phones were a thing at one point – there are plenty of ‘vintage’ 1980s models on Ebay.)

Of course, today it’s hard to imagine how the market power of the big tech companies determining the online world will be eroded, but Steve ends on a rather optimistic note: “Over the period of mode than 200 years described in this book, several compaines once thought to be unassailable have been wiped out by disruptive new technologies. The current generation of digital platforms may seem to be unassailable now but, taking the long view, that is unlikely to be the case. Their enormous success is due to them creating products that people want to buy, and if they cease to do so, I am confident that some currently unknown entrepreneur will work out how to take their place. That is the enduring magic of the technology business.”

Maybe – I think it depends on how lne that long view will turn out to be.

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