Does an ability to head to the polls every five years push the UK behind in the race for engineering and innovation?
Democracy is bad for engineering. Or at least, when we look at the difference between China’s rampant spending on infrastructure and the often Nimby-driven brakes applied to projects where the public gets to vote, it would be easy to make such a claim. But is it really the case? Well, it depends on what we mean by ‘engineering’. Is it the accumulated sum of engineering and technology innovation we’re referring to? Or is it big engineering projects such as the space programme? If the former, then democracy holds up pretty well. If the latter, then perhaps it only takes a glance at the effects of China’s more ‘direct’ approach for you to wonder whether constantly shifting party politics makes for a good match.
The arrival of the East as a major force of modern global influence allows us to unpick the relationship between democracy and the industrial economy in a way that has not been realistic before. One-party rule in other authoritarian regimes, such as the former Soviet Union, has always been tied up with inflexible economic planning that could alternately propel and disrupt entire industries at the whim of a leader or committee.
But China and Singapore have changed all that. Last year, the World Economic Forum (WEF) ranked Singapore seventh in the world for innovation, one place behind the US. The group’s researchers placed Hong Kong tenth, although China - with a much more divergent economy than the two islands - ranked 29th. However, the world’s most populous nation still ranked two places higher than Italy. India, which is often compared unfavourably with China in terms of economic growth, ranks 76th, well behind it fellow ‘BRIC’ economies, with Russia ranked 49th and Brazil 61st.
Economies of vision
An alternative way to analyse technological expertise is via well-accepted economic theory, as - since the work of Joseph Schumpeter in the first half of the 20th century - many researchers regard innovation and economic growth as going hand in hand. More recent approaches - such as the endogenous-growth theory often promoted by Gordon Brown prior to becoming UK Prime Minister - claim a central role for technology. Endogenous growth theory holds that investment in human capital (such as a well-educated workforce), innovation and knowledge are significant contributors to economic growth.
In the economic theories, the matter of styles of governance only comes up in passing. Up to a couple of years ago researchers felt that democracy’s tendency to redistribute wealth acts as a brake on economic growth; and, given that growth is dependent on innovation, this too could suffer.
However, recent evidence suggests otherwise. Daron Acemoglu and colleagues from MIT published a paper in 2014 which indicated that instead of withstanding slower development, democracies on average fare better, possibly because they have other factors in their favour, such as better secondary education.
“Innovation in general is the activity of individuals who have got a vision. This vision is not substantiated by a democratic process or by participation in it,” says Daniele Archibugi, research director at the Italian National Research Council and professor of innovation, governance and public policy at the University of London’s Birkbeck College. “History is full of innovations that were not desired. People said they would not need photocopy machines: ‘we have carbon paper’. And not all innovations are successful.
“The other part of the story to take into account is how society intervenes. There is some evidence that free societies are able to innovate more than those that are not free - and for obvious reasons. If your imagination is blocked by religious, political or economic constraints then imagination is not going to be very productive. A certain amount of freedom is a precondition.”
But does a society with sufficient freedom to innovate actually equal democracy? Our ability to see the effects of democracy is further clouded by changes in a number of countries that have become significant in economic and innovation terms and in industries that have assumed incredible importance.
Since Portugal switched to democracy in 1974, there has been a wave of democratisation around the world, although the most recent transitions have been marred by insurgencies and near civil war that have wrecked those economies. In Asia, the so-called third wave of democratisation started in India in 1977, followed by Sri Lanka in 1983, the Philippines in 1987, South Korea and Pakistan in 1988, Thailand and Mongolia in 1990, Bangladesh and Nepal in 1991, and finally Taiwan in 1992.
Although the experience of these countries is far from homogeneous, it would be hard to argue that the transition to democracy has been bad for either the economy or technological capacity of South Korea or Taiwan. The two countries dominate the flat-panel display industry and, together with China, those of personal computers and mobile phones. And Samsung from South Korea and Taiwan’s TSMC are in the top three chipmakers worldwide.
MIT economist Yasheng Huang asked in a keynote speech at a TEDGlobal Conference in 2011: “So, why do economists fall in love with authoritarian governments? One reason is the East Asian model.”
China and Singapore, in particular, have seen rampant growth. And the short gap between democratisation and the ‘Asian Tiger’ boom of the 1990s indicated that South Korea was growing well and building a technological base through the massive chaebol companies that emerged under its former dictatorship model. But Huang points out that alongside successful authoritarian governments in East Asia, there are matching failures: not only North Korea but Burma and The Philippines too.
One key question is this: why did China suddenly grow fast since the death of Mao? According to Huang, it started well before. Even during the Cultural Revolution “when China went mad” it outperformed India in terms of growth in per-capita gross domestic product (GDP) by an average of about 2.2 per cent every year. The thing that China had going for it at that point was ‘human capital’.
Although data is scanty until 1990, China then had an adult literacy rate of 77 per cent compared to India’s 48 per cent, and much higher for Chinese women than women in India. Some point to China’s infrastructural build-out as being a component of its growth and argue that by restricting this kind of growth democracies lie in danger of falling behind, Huang disagrees.
Although India started off with much more infrastructure - railways and a broader communications network - it was allowed to stagnate. China used its economic growth to drive infrastructure, which leads to the other reason why some believe authoritarian states can deliver on major engineering projects far better than their democratic peers.
Polarisation and boring projects
Where an unfettered state can declare a major project ‘A Good Thing That Demands The Commitment Of The People’, a democracy has to keep telling the public that the results will be worth it in the end, assuming the parties are bothered.
Alex Roland, professor of history at Duke University in Durham, North Carolina, says: “Things that are really good for the country, like our transportation infrastructure, are boring so it’s hard to get politicians interested. It’s one of the disabilities of representational government ... you want the authoritarian government to push these projects through.”
Roland says the nature of democracy can turn the debate toxic even on things that can result in a common good: “America is in such a mess with its polarisation of politics. One party will favour an enterprise and the other will turn against it. In that atmosphere it’s hard to get them to do anything constructive.”
Although the popular image is of parties slashing their budgets in favour of the more mundane, technologically driven major projects have typically fared better, partly because parties and leaders back the rhetoric if not the implementation. Roland points out that Republican presidential candidates have often campaigned for an expanded space programme, with George Bush Jr going the furthest in 2004.
Roland says: “He thought John Glenn would be the nominee against him. So he proposed a major initiative for a new space programme, so now we have the new John Kennedy and it was a cynical PR ploy. He put $1bn into a project that will cost hundreds of billions and told Nasa to do the rest by shifting their budget around. He would be out of office then but he would get the credit.”
The recession put paid to any near-?term dreams of people walking on the surface of Mars. In a 1979 symposium on technology and pessimism, historian Melvin Kranzberg argued that technology’s success makes it vulnerable: a public made comfortable by the fruits of technology has the luxury to criticise its excesses. This makes it difficult to sustain development for projects that have extremely long payoff times, assuming that there will be a direct, measurable payoff.
Budget overruns and arguments over whether resources can be redeployed for shorter-term projects can remove the popular support for longer-term projects. In turn, the party in power loses faith, or uses the waning support as an excuse to kill off a project it never liked. But, as Roland points out, it was a democratic society that put people on the Moon, something that other countries have yet to do, and despite budget cuts imposed since the days of Richard Nixon, Nasa still receives more money to continue its programmes than any other space agency around the world.
The relentless focus on infrastructure in China may indeed prove to be its undoing. Much has gone into palatial offices for bureaucrats around the country, and not into useful areas such as intelligent street lighting or high-speed rail. Although it has used the technology industry to bootstrap its industrial economy, the country has failed to upgrade its ability to develop innovative products at home. The government sucks in a much higher ratio of graduates than startups - the reverse of the situation in the US. Although the number of science papers published in China has risen massively since 2000, the average Journal Impact Factor, which is regarded as a proxy for research quality, has remained roughly flat.
And there is a massive gap between rich and poor. This is in stark contrast to countries such as Japan, Korea and Taiwan, which managed to break out of the so-called ‘middle income trap’ relatively early. Huang argues China will have to undertake massive reforms to deal with these problems, which may be hard to deal with when its elite has captured so much of the wealth. As a group, top party members are more than ten times richer than the combined wealth of all US congressmen and senators.
In contrast to the idea of the braking effect of redistributive policies, income equality could apply an even stronger retrograde effect. Daron Acemoglu, professor of economics at MIT and co-author James Robinson, professor of government at Havard University, argue in their recent book ‘Why Nations Fail’ that economies that bestow the fruits of growth on a concentrated group of elites fail in the long run. But Archibugi warns that we should not focus too much on money when it comes to innovation and engineering.
“We shouldn’t think that the main driving engine is just money. Often innovators are driven by passion... A substantial number of innovators come from the public sector and academia. They are not driven by money but by recognition. That is an important part of innovation,” Archibugi says.
However, engineering depends on the work of teams, something that Schumpeter did not take fully into account Archibugi says. As a fan of philosophers such as Nietzsche, Schumpeter applied the idea of ‘superhero’ to the innovating engineer. Over-emphasising the rewards to a few individuals has consequences for all states: dictatorship or not.
“Often innovation generates inequality,” says Archibugi, “There is the possibility of a few successful entrepreneurs generating great fortunes... But if only one individual benefits and all the others are just working, it’s likely that the innovation machinery is not going to work very well.” *