There are those who think of the economy as an edifice made of a static architecture such as a house that can, however, be renovated or modified. And there are those who think of the economy as a living organism that is constantly evolving such as when it grows and ages perhaps to die and be reborn, and go through another cycle of life.
When something goes wrong with the economy and the ideas are expressed as to the best way to fix it, you see a difference in the approaches taken by either camp. The static edifice camp speaks in terms of adding a component to the economy as if adding a room to a house, or in terms of eliminating a component as if taking down a garage. By contrast, the camp of the living organism advocates a remedial approach akin to the reliance on the body to heal itself in addition to which you may administer a little bit of therapy.
A prescription often recommended by the camp of the static edifice is to add an extension they call innovation to the existing architecture. But when you ask them to elaborate, they only repeat the refrain that innovation is the best way to become competitive, to increase your market share at home and to open new markets abroad. And it is this lack of direct response that shows how much their view of the economy is at variance with reality. This attitude also lends credence to the opposing view which is that the economy looks more like a living organism.
In this latter view, an economy that is constantly evolving is one that is innovating all by itself, therefore you do not need to innovate it artificially. When something goes wrong, it is not that the organism has lost the ability to innovative, though such thing can happen at times, but that something toxic has entered the body making it sick. So you help it heal itself by removing the toxicity and boosting its vigor where you see weakness.
When we look at the economies that were the first to industrialize since the beginning of the industrial age, we are struck by the fact that all but one were destroyed in whole or in part by war at least once before they were built anew. Consequently, these economies never had the chance to grow old and leave a detailed historical record as to how the process of aging progresses. The one economy that escaped destruction is the American, and it is the one that is now showing signs of aging though it is far from being a wreck.
Moreover, when we study America we must be mindful of the fact that this is a vast country which takes in immigrants. Thus, while parts of its industrial landscape are as old as the Industrial Revolution and have the look of old, the other parts look as new as the rising industrial tigers of Asia. And so, America remains today an industrial power to be reckoned with thanks to the science and the technologies that were developed on its soil by the newcomers.
Without these activities, all of America would now be looking like the rust belt of the old industrial states and be a complete record of an industrial power that aged and became a wreck. But America was spared this fate and the consequence is that we do not have, anywhere on this planet, a model by which to judge an ailing economy and know how to treat it. We must therefore rely on our intuition and our imagination.
The reason why artificial innovation such as the one called for by the camp of the static edifice does not work is that innovation is an organic phenomenon therefore a natural thing that cannot be made artificially. You can simulate innovation but you cannot create a genuine form of it, much less force it onto an economic system. To see how this relates to the fate of an industrial power it is necessary to see the difference between natural innovation and a simulated one. The following example highlights the differences.
Walk into a primitive village where people are going about their lives in their natural naked state. You will think for a moment that you have discovered a place never seen by someone from the civilized world before. But then the village elder fetches a magnifying glass and uses it to concentrated the sun rays onto a pile of dry leaves and lights up a fire to welcome you. You instantly deduce that someone has been here before. But why were you able to make this deduction? Because nothing in the village suggests that these people have the capability to manufacture a magnifying glass.
Even though you did not study the history of science or technology, you know instinctively that to make a magnifying glass you must have evolved through several stages from the making of a chisel to making the magnifying glass. First, you used the chisel to skin animals but then used it to make an instrument that aided in the development of a more advanced tool that helped in the discovery of a scientific principle that gave the impetus to invent a new product that was used to make a more advanced tool and so on till the magnifying glass. And all these stages of development would have left signs of an industrial base at a level of sophistication that is higher than what you saw in the village. In the absence of such signs you correctly deduced that someone must have brought the magnifying glass from outside the village.
Now, take a number of children from this village to your civilized world. Send them to school and to university where they study science and engineering. They go back to the village and see that it has not changed since they left. They decide they want to change the situation but they are divided as to how they should proceed. Some wish to accelerate things and leapfrog to bring the village to full modernity within a generation. Others wish to implement a more organic approach whereby they will bring opportunity to the village in the form of education and let things develop according to their natural rhythm. The first approach represents a simulated evolution, the second a more organic one.
We let these people decide what they want to do and look at an example that may seem different on the surface but is really similar in many ways. Researchers are fascinated by a lab curiosity they nickname the cats whisker but nobody does anything with it for several decades beyond whipping up a primitive crystal radio. Then, a handful of scientists and engineers in America make a better use of the thing by inventing a contraption they call the Junction transistor for which they find a number of useful applications. The people in Europe and Japan get their hands on the transistor, reverse engineering it and develop a few more applications. After a short while, the cumulative weight of all these applications changes the world like no one could ever imagine at the start of this journey.
The Junction transistor was in fact the quintessential organic innovation of the mid Twentieth Century because it grew out of a natural situation that sat untouched as a cats whisker for many decades. No one did anything with it all this time because the science that would be associated with it did not yet exist and neither was the technology that would be necessary to develop the applications. But when all the parts came together and the first transistor was invented, a number of other types of transistor followed like an avalanche, all artificially innovated and each developed to serve a special need. And while the original invention changed the world, the artificially developed ones caused little or no change beyond what they were developed to do.
A simple and legitimate question must now be asked: What if the principles of the Junction transistor were stumbled upon by a lone genius sitting in a lab somewhere in the Third World! Would this have started the revolution that took place in America? The answer is no, it would not have started a revolution because there was not an industrial base in the Third World that could have sustained an effort capable of perfecting an invention of this complexity or make possible the applications that followed. Even America had to wait several decades before seeing the cats whisker take flight and become a transistor.
This point is of utmost importance because those who do not understand its implications make mistakes that cost them a great deal in terms of lost time, wasted money and the drain on their talent. In fact, the politicians in some underdeveloped countries seek to accomplish the impossible by trying to leapfrog ahead of the advanced nations while ignoring the fact that their country lacks an industrial base advanced enough to sustain the work that will be needed to realize their dream.
And not only do the politicians pounce on discoveries made by their subjects at home, they pounce on discoveries made elsewhere as well. In this, they are powered by the desire to produce in their country goods that will sell all over the world carrying a label that says where the goods were made. But after much wasted expenses, the leaders fall on their faces as they realize they cannot make the second step because they neglected to make the first step.
Surprisingly however, this is a bad judgment that is not confined to the underdeveloped countries because the somewhat more advanced developing countries have also fallen into the same sort of trap. And even more surprising than this is the fact that some advanced and fully developed countries do sometimes suffer the same fate as can be seen from the following three examples:
First example: The old Soviet Union was pushed to near bankruptcy because it lacked the industrial base that could sustain the arms race which was imposed on it by the re-arming of America.
Second example: Although it occupied a place at the leading edge of science and technology, Japan failed to complete the invention and development of the "Fifth Generation Computer" because it could not artificially simulate the series of organic innovations that would have led to the desired result. And Japan abandoned the effort never to return to it.
Third example: America started several new technologies it could not fully develop because it neglected to renew the industrial base it once had. The Asian countries grabbed those technologies, turned them into useful products and sold these to the Americans. This caused an imbalance in trade patterns that may have altered the course of history.
The lesson to be drawn here is that the government must not push scientists and engineers to invent the equivalent of the Junction transistor because this can only happen spontaneously where organic innovations have flourished. What the government can and should do instead is give incentives to encourage the scientific and technological establishment to develop the equivalent of the special transistors once the principles underlying an invention have been understood.
What this means in terms of the energy situation is that governments should promote conservation by encouraging the development of energy efficient transportation, machinery, appliances, procedures, buildings et cetera in order to save on energy. As for the breakthroughs that may someday lead to new sources of energy – like fusion power for example -- this will happen when the "bulb" will go on spontaneously in the organic brain of a human being such as it cannot happen in the silicon circuits of artificial intelligence.
Finally, to be "green" is to let nature take its course especially when the effort involves the search for ways to sustain our human civilization. What is stressful to the natural order of things is the impulse that some human beings have to control every situation by artificial means. And this includes the impulse to "green" the planet through the use of false pretenses known as smoke an mirrors. We must therefore keep under check the clowns that adopt these methods, and in so doing help relieve the stress on the one and only planet we have. Earth has brought us this far over the millennia and the control freaks who cannot control their impulses must now be controlled by the rest of us or they will mess up the Planet for good.