It is understandable that David Sainsbury would want
to trumpet innovation in industry as a way to achieve growth in the economy,
given that he was Minister of Science and Innovation in the British Government.
He is advocating the embrace of innovation as a means
to keep up with and surpass China's growth rate, as well as the economies of
other Asian nations. The trouble is that innovation alone will not do the job.
In fact, achieving growth by innovation is a complicated endeavor that can also
be a double-edged sword.
To expand on his ideas, David Sainsbury wrote an
article under the title: “China and the West Race to the Top,” and had it
published on December 18, 2019 on the website of Project Syndicate. He says
that innovation can be achieved in two ways. One, is to improve on the method
that you use to make your products, as did Henry Ford when he started the
assembly line. The other way is to make your product more attractive to the consumer
as did Steve Jobs when he introduced the Apple's iPhone.
The thing is that for every innovation as massively
consequential as that of Henry Ford, thousands of smaller innovations are
introduced every day in large and small companies. They help improve the method
of production, and in the aggregate, may rival Ford's assembly line for some
companies. These innovations come about because the employees who work on the
production machines, are encouraged to come up with ideas to improve the
products they make or the method by which to produce them, and drop the ideas
in the suggestion box or discuss them with the production manager.
In addition, efficiency in production has undergone
two more massively consequential changes since the days of Henry Ford. These
were the transformations that took place first, from the mechanical and
electrical systems of control and automation to the solid-state logic systems
of control and second, the introduction of the now omnipresent robots on the
assembly line.
Because the systems that make these changes possible,
begin as scientific discoveries, which are published in specialized journals
and seen all over the world, it is as likely that the technological
applications they yield will happen in America as in China or anywhere else in
the world. In fact, only what is innovated by the military is kept secret, but
even these discoveries end up in the hands of rival nations sooner or later.
For these reasons, I wish to suggest a better way of
doing things. To understand it, I must first explain how science and technology
end up serving industry.
To make a product that you can sell to the consumers,
you need machines. So you begin by making the machines. But in so doing, you
realize you're missing something. To obtain it, you do research and development
(R&D.) Now that you have the knowledge, you build the machines that you use
to make the product. When you think about it, going through all that trouble to
finally make a product is like paving the road that leads you to some destination.
In fact, the pioneering nations at the leading edge of industrialization must
add to the road on which they travel. Even if they are super-efficient, they
can only go so fast and no more. It means they can only grow their economy at a
modest rate.
But when it comes to the emerging nations that have
lagged behind for some reason, they now travel on the part of the road that's
already paved by someone else while avoiding the pitfalls that have plagued the
early pioneers. The emerging nations put all their energy into catching up with
those that are at the leading edge endeavoring to add to the road on which they
will travel to a destination that may or may not prove to be worthwhile. This
is what allows the emerging nations to grow their economies at a faster rate.
There was a time when the advanced nations used to
keep their knowledge hidden from the developing ones. It did not work too well.
Eventually, that attitude gave way to the current trend of helping the emerging
nations move up the ladder of sophistication to the level of their potential.
In fact, the corporations that used to identify with
one advanced nation or another, have now turned themselves into multinationals,
and feeling at home everywhere they setup an operation. To be successful
wherever they go, they transfer their knowledge, including the technologies
they developed in the advanced nations, to their new home. Not only that, they
also start doing research and development in the new homesteads, and take the
discoveries made by the local researchers to the advanced nations. This is
quite a reversal; wouldn’t you say so?
Innovation becomes a double-edged sword for the
advanced economies when most of their scientists and engineers devote their
energies to doing R&D while devoting little or no time to doing
applications, such as inventing the consumer products that can be sold to add
wealth to the nation.
In fact, what has been happening to many of America’s
discoveries, is that the Asian countries, from Japan to South Korea, have been
using them to make the products they now sell on the American market, facing no
American competition. This way, they make the money which they use to bankroll
their own research and get a head start on the Americans.