Silicon Valley, innovation stagnation and US-China competition

Suppose geo-economic competition is the name of the game between a country like the US and a country like China. Suppose such a rivalry, using economics to advance geopolitical goals, is more important than the ability to produce war-making hardware because – in superpower terms – it underpins the nations’ ability to shape the future. From there, defense, economy, and even history, to a degree, fall into place by changing the way a superpower is treated by the world.

Peter Thiel
Peter Thiel

So suppose such eventual competition between a country like the US and one like China is built on technological possibilities. Basic scientific breakthroughs, the kinds that invent new industries, will be the foundation of that success. PayPal co-founder Peter Thiel is among those in the US who see a crisis in the Western ability to generate the new kind of breakthrough technologies needed to for future robust US growth and the power it brings.

Thiel sees Silicon Valley as the place to find and hatch these new technologies, pointing to the talent the region today attracts increasingly at the expense of post-credit bust Wall Street and dysfunctional Washington. And yet I can’t help but think that looking for productivity increasing-breakthroughs in Silicon Valley is, frankly, looking for them in the wrong place. Wouldn’t the rise of Silicon Valley as the standard for technological progress coincide with the much-lamented post-1970s innovation-stagnation? So isn’t it possible Silicon Valley is, if not a dead-end of sorts, an unlikely source for groundbreaking future technological breakthroughs? I mean the sort that had increased quality of life and extending the reach of industry.

After all, historically the biggest scientific breakthroughs occur in an environment that is often divorced from a waiting, expectant market. Gregor Mendel, the father of modern genetics, was a monk, for example. The father of microbiology, Antony van Leeuwenhoek, was a Dutch draper. Discussing inventive periods in the past, anthropologist

concorde
What ever happened to the Concorde?

David Graeber notes: “Britain [during the Industrial Revolution was] notorious for being just as generous to its oddballs and eccentrics as contemporary America is intolerant. A common expedient was to allow them to become rural vicars, who, predictably, became one of the main sources for amateur scientific discoveries.”  In other words, guys tinkering away at their own projects far from the dealing rooms of London, were a credible source of invention.

1961 illustration by Charles Schridde showing Motorola's
1961 illustration by Charles Schridde showing Motorola’s “House of the Future”

Big breakthroughs, in fact, are often happy accidents of scientists in a world of pure science and discovery.

US Wartime Director of the Office of Scientific Research and Development Vannevar Bush acknowledged this way back in 1945, noting that “basic research is the pacemaker of technological progress. “ In the essay ‘Science The Endless Frontier‘ penned on the eve of the kind of multi-decade dramatic growth of the US economy and rise in living standards longed for by Thiel and Neal Stephenson and others, Bush wrote.

Industry is generally inhibited by preconceived goals, by its own clearly defined standards, and by the constant pressure of commercial necessity. Satisfactory progress in basic science seldom occurs under conditions prevailing in the normal industrial laboratory.

Scientific progress on a broad front results from the free play of free intellects, working on subjects of their own choice, in the manner dictated by their curiosity for exploration of the unknown.

Bush even noted that “discoveries pertinent to medical progress have often come from remote and unexpected sources, and it is

Vannevar Bush
Vannevar Bush

certain that this will be true in the future.”

In other words, for real breakthroughs to occur, you can’t have investors and marketers breathing down the necks of the researchers and scientists in a place. Real breakthroughs tend to occur in free-range, not caged, conditions.

Yet today, the triumph of monetized, market-ready applied science most visible in a place like Silicon Valley reflects a commercial mindset rather than a more universal abiding push for scientific discovery. The broader experience of significant scientific breakthroughs is different, as well. True scientific progress leading to technological wonders goes hand-in-hand with the myth of our human destiny, of being the one species that can shape its own environment and ultimately, our own destiny. Rolling out tweaks and updates foretold in investor updates and SEC documents that try to quantify the ka-ching is not the same.

Thiel’s VC group, Founders Fund, has a manifesto ‘What Happened to the Future?’ that points to the slide in the scope of technology visible in just the last 20 years:

In the late 1990s, venture portfolios…still supported transformational technologies (e.g., search, mobility), but venture investing shifted away from funding transformational companies and toward companies that solved incremental problems or even fake problems (e.g., having Kozmo.com messenger Kit-Kats to the office).

The statement continues

Not all technology is created equal: there is a difference between Pong and the Concorde or, less glibly, between Intel and Pets.com. Microprocessing represents real technological development, peddling pet food on-line, less so.

The presumption that technology has an immediate market value is another lesson learned after decades, yes, decades, of free-market ideology, embraced in the post-Cold War US. So there is an irony that libertarians, like Thiel, hold the primacy of private enterprise over government as an article of faith, particularly when government can have a crucial role in promoting scientific achievement which leads to productivity-gaining advances.

Apple: Not Different Enough
Apple: Not Different Enough

The final word on the matter is really for historians to debate. But we can say today that the current system is failing. We now have a situation where government has been robbed of basic tools it needs to assure a vibrant, competitive technology sector: Don’t believe me? Consider the case Office of Technology Assessment. Without it, now there is concern government agencies and committees in charge of regulation can be overwhelmed by new technology. It means more clunky and inefficient direction for industry. It’s already happening in areas like civilian drones. Uber is another case study.

Ironically, China, an authoritarian capitalist state, doesn’t have to cope with such ideological blinders on technology, science and results. There was a time when science in a communist country would be shoehorned to fit an economic outcome foretold by the political system. The People’s Republic of China in past times pushed its own population to starvation in the drive to develop its steel industry – as a sign of communist progress. Now, a nation like China can simply gather its best scientists into a room and fund them – market be damned – and look for results.

A recent photo from a Chinese moon mission, (Xinhua)
A recent photo from a Chinese moon mission, (Xinhua)

China’s space program is a clear example of this. While not breaking new ground (yet), it is winning the very real admiration of the world’s space scientists in the process. Moreover, China’s focused space program speaks volumes about China’s civilization, about its place in world affairs and about its destiny – all of which is closely watched by the international community. At its current pace, China will eventually begin to chalk up breakthroughs, and the story China can then tell will be, to a use a word from Silicon Valley, “transformative.” Another more universal description for China’s expected success might be “transcendent” – which is what big technology can do: transcend boundaries, borders, expectations.

Illustration by Charles Schridde
A future postponed (Illustration by Charles Schridde)

Meanwhile the US may still be debating what happened to the unbroken period of productivity-gaining inventions associated with American ingenuity. The sense of crisis in the US is palpable. But that, as Thiel noted in a 2011 New Yorker article, is not necessarily a bad thing. Says Thiel:

“It seems like we’ve not been thinking about the right issues for a long time…I actually think it is a big step just to ask the question ‘What does one need to do to make the US a better place?’ That’s where I’m weirdly hopeful, in spite of the fact that a lot of things aren’t going perfectly these days. There is a very cathartic crisis that’s gone on, and it’s not clear where it’s going to go. But at least everyone knows things are rotten. We’re in a much better place than when things were rotten and everyone thought things were great.”

And that kind of crisis thinking may be what’s needed to get back on the track to technological progress, the sort that reflects the possibilities of people, and that extends a sort of arc of meaning forward into the future.

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A new cold war ideology: conditions becoming favorable

Asked about the difference between life behind the Iron Curtain and life in the West, American novelist Philip Roth quipped: “I work in a society where as a writer everything goes and nothing matters, while for the Czech writers I met in Prague, nothing goes and everything matters.” The observation, made in the 1980s, was a pithy summing up of the difference between the free world and world under Communist rule at the time. You could argue that if the West “won” the Cold War, the period of unbridled economic globalization that followed was one in which “anything” went. There was tremendous activity in opening markets and expanding trade. But much of it occurred, in the West at least, during a period of political indifference. The ideological battles of the historical Cold War just didn’t matter, as long as the market was happy.

Communication was more limited by geography during The Cold War. (WikiCommons)
Communication was more limited by geography during the Cold War. (WikiCommons)

As professional scoffer Thomas Frank pointed out, the market itself was sold as a form of democracy. Market capitalism in the US and abroad was touted as the indisputable answer to all the vexing anxieties of the age, the philosophical end-point all countries should work towards. One of the great fantasies promoted in the US before September 11, 2001 was that elections didn’t matter like they once did, largely because, unlike during the Cold War, there was no longer cause for debate about economic justice, about the social state, etc. All debate, we were told, has been settled. There was consensus across the board: liberal markets ruled and the faster were embraced this truth, the happier we would be. Certainly during Bill Clinton’s years as president both major American parties embraced market-solutions as a cure for so many problems. That lasted until the financial crisis of 2008-9, when it became clear that the market had failed to deliver on the many promises of its champions.

These days, I can’t help but think we are sliding back into a world that has a broad East-West divide, not identical to the one Philip Roth described – but not altogether alien from it either. Clearly the ideology of the historical Cold War is over. The question is if the ideology of a new Cold War will replace it? This thought came to mind on the news that US network CNN was pulling out of Russia at the end of the year to comply with recently implemented Russian media ownership rules. In recent years, total awareness of global news has encouraged people to look at a foreign event and shrug with indifference. (Everything happening, nothing mattering, as Roth said). I expect that to happen even more in the near-term, since Russia’s propaganda is not to persuade as much as to “muddle and confuse.” But over time, possibly a long time, as the news in Russia is flavored to reflect poorly on the West, and in the West, to demonize Russia, the views of overall shape of the world from East and West will begin to diverge in more meaningful ways.

A detail of the Zizkov TV tower.
A detail of the Zizkov TV tower.

Even as CNN is packing its bags in Russia, Russia has relaunched Ria Novosti as an explicitly pro-Russia foreign language network called Sputnik. US-backed Voice of America also launched a fresh Russian language service. China, under Xi Jinping, is “using ideological language reminiscent of the Cold War” to highlight conspiracy theories about always vague but ever-present “hostile foreign forces” bedeviling the country. China’s censors are as busy as ever helping shape the Chinese public’s view of the world, and protecting the public from the embarrassing gaffes in gallantry of China’s ally Vladimir Putin.

What has been remarkable for now, though, is that ideology in the international arena has mattered so little in Great Power
relations. (Obviously, religious ideology is everything for jihadists). For years, the unifying effect of globalized companies was supposedly to smooth over all the pesky differences in politics, culture, perspective that made the world such an acrimonious place.

That may be changing. The Kremlin talks about Russian values and denounces “Gay Europe.” China’s message to its BRICs friends is that they have all been wronged by the West. But Western leaders today facing the rise of an authoritarian states today have begun to notice this change and are responding.

Just last week, British PM David Cameron, speaking in Australia’s parliament, defended the concept of democracy and dismissed the systems without the rule of law. Says Cameron:

In the great sweep of history, sometimes freedom is on the offensive, sometimes on the defensive.

Cameron explicitly countered the so-called “alternative model” for national success.

There’s a more incipient creeping threat to our values that I want to mention.

And it comes from those who say that we will be outcompeted and outgunned by countries that believe there is a shortcut to success, a new model of authoritarian capitalism that is unencumbered by the values and restrictions that we place upon ourselves.

In particular, an approach that is free from the accountability of real democracy and the rule of law.

I say: we should have the confidence to reject this view and stay true to our values. These are the things that make us strong.

We are democracies. We don’t shy away from self-criticism. We debate our mistakes in public. That can be painful, but it is so powerful.

World leaders were in Australia for the G20 meeting in Brisbane. US President Barack Obama hit on the same themes in his speech at the University of Queensland.

We believe in democracy — that the only real source of legitimacy is the consent of the people; that every individual is born equal with fundamental rights, inalienable rights, and that it is the responsibility of governments to uphold these rights. This is what we stand for.

He even put the idea in the context of China.

We do not benefit from a relationship with China or any other country in which we put our values and our ideals aside. And for the young people, practicality is a good thing. There are times where compromise is necessary. That’s part of wisdom. But it’s also important to hang on to what you believe — to know what you believe and then be willing to stand up for it. And what’s true for individuals is also true for countries.

Obama, later in the speech, got to the heart of the matter:

There are times where when we speak out on these issues we are told that democracy is just a Western value.  I fundamentally disagree with that.

This focus is a change from a few years ago, when Western leaders assumed freer markets would bring about political reforms. China recently reaffirmed that its constitution serves the Communist Party – not vice versa. Turns out the opening of markets didn’t kick off an “inevitable” embrace of political reforms, as many in the West believed back in the 1990s. Instead, the

British PM David Cameron
British PM David Cameron

economic power has awakened a sense of “inevitable” rise in China to an era of prominence, if not dominance. Today, all things being equal, with China articulating a stronger role in Asia and Putinist Russia openly (and covertly) challenging the legitimacy of the West, the wars of words and ideas will likely grow. The ideas espoused by the West will be used to offset the importance of the economic size in China. They will also call into question the idea that China’s rise is inevitable, preordained. China, and Russia especially, will use language to plant doubts in the minds of Westerners about the primacy of Western political power, Western values, or even the facts on the ground. Language itself will become more important in media, as each side tries to frame the other.

The lopsided period when the “everything-goes” triumph of the West dominated the “everything-matters” ethos of the authoritarian states of the East will end. Things that haven’t mattered in the West for some time will enjoy a resurgence. To get an idea of what I mean, consider that the US civil rights period played out against a Cold War backdrop. US Presidents Eisenhower, Kennedy, Johnson and Nixon were painfully aware of how segregation damaged the US brand in the world’s eyes. Fast-forward to today. What will again matter in the West in this newly competitive climate? Try this example: how can the US espouse freedom if income inequality in the US is enough to make even its plutocrats blush? You get the idea.

All of this suggests the language and ideas of the geopolitical competition could begin to shape the political discussion within

Russia's rebranded propaganda network
Russia’s rebranded propaganda network

democracies. During the historical Cold War, print, radio and broadcast media was divided geographically, and nation-states managed them. Now, messages fly across borders, they are viral by nature, which makes for some novel possibilities. Today the US State Department seeks to counter jihadists recruiting online by contesting their tweets. The Russians freely blend quality journalism with crackpot conspiracy theory. China broadcasts its views to far-flung Chinese populations living abroad. China uses its populations abroad as extras in stage-managed appearances by its leaders, even going so far as to give would-be flag-wavers background checks. It very much is about shaping perceptions. In the calculus of a new Cold War-type thing, you have to imagine a similar, broader, but less explicit message competition taking hold between authoritarian states and the West, even as trade continues a pace.

In fact, the world got a little taste of it in the speeches from Obama and Cameron in Australia. The theme that permeates from the West will likely be: yes, almost everything goes in Western democracies – that’s the nature of free citizens. Anything goes but in contrast to the last twenty years, some things besides business matter, too. And they matter quite a lot.

Space, risk and Mars

The same day Orbital Science’s rocket blew up on take off, producing a fireball that would make Colonel Kilgore salivate, NASA issued a broad call for deep space exploration proposals from outside groups. In the days since, Richard Branson’s Virgin Galactic space plane broke up in a test flight, hoisting space tourism on to the homepages of the world’s media.

Explosion of Orbital Science's rocket on launch pad
Explosion of Orbital Science’s rocket on launch pad

If the impact of NASA’s Broad Area Announcement on Deep Space is overshadowed by the glare of these two accidents, the public can be forgiven. After all, it’s been quite a while since NASA took credible steps toward a manned-mission to Mars. This time NASA’s call is to the public, businesses and international organizations for proposals on advanced propulsion, habitation and small satellites. A big ask, indeed, even if NASA is offering to share the reward with partners.

NASA says it “intends to engage partners to help develop and build a set of sustainable, evolvable, multi-use space capabilities that will enable human pioneers to go to deep space destinations.”

 Public-private partnerships of this type help NASA stimulate the US space industry while working to expand the frontiers of knowledge, capabilities and opportunities in space.

What’s sure is that for a long-term Mars mission to work, on the ground something must change. What’s needed is the unspoken sense of purpose and direction that was in place around the US space program. Space, during the historical Cold War, was a matter of national security and national pride. It was also a venue for the expression of human yearning to reach new heights and accomplish previously unimaginable feats.

As the events of the last week have reminded the public, space is risky and space is hard. But risk is necessary  in order to achieve breakthroughs. I’ve quoted author Neal Stephenson on risk and I will quote him again:

Innovation can’t happen without accepting the risk that it might fail. The vast and radical innovations of the mid-20th century took place in a world that, in retrospect, looks insanely dangerous and unstable…Competition between the Western democracies and the communist powers obliged the former to push their scientists and engineers to the limits of what they could imagine and supplied a sort of safety net in the event that their initial efforts did not pay off.

Can we really say the scientists and engineers are being pushed to the limits of what they can imagine today? More likely, bureaucracy and hierarchy are the new challenge for scientists and researchers. Stephenson, in his essay, makes the point about how risk is drummed out of projects by hierarchy. One unintended

Virgin space plane breaking up
Virgin space plane breaking up

effect of the internet is how too much awareness of an area of research and potential pitfalls stymies projects at premature stages.

Anthropologist author David Graeber makes a similar point. He believes the rise of what he calls “bureaucratic technologies” have somehow supplanted the kind of “poetic technology” that flourished during the historical Cold War and would be involved in getting humanity to Mars today.

In 2012, he said:

In a way big science is even bigger than it was in 1950s and 1960s but they’ve redirected it in completely different directions. If the reason why we don’t have robots that can take down my laundry, is that 95 per cent of all robotics research is funnelled through the Pentagon, why don’t we have gigantic killer robots shooting death rays from of their eyes?

Graeber says the culprit is “bureaucratic technologies” and he points to the internet, as well, as a prime example. It now allows us to more digital paperwork than ever before. Graeber describes a “fusion of education, corporate and government bureaucracy” that formed a “marketising bureaucracy” with the result that for a lot of organizations and leaders concluded the most important activity was for everyone to “spend most of their time selling things to each other.”

To me, personally, that’s the triumph of freemarket ideology over the better imagination of societies, people and thinkers. It has been true not just in the corporate world, but in the world of academia, publishing, and many others – all of which have been seduced or coerced by the market. One of those values is for

Image from China's moon flyby probe.
Image from China’s moon flyby probe.

organizations to shun risk with the promise of a quantifiable reward locked in. If you’re having trouble imagining an example, look to the chief executive officer meeting market expectations on a quarterly basis. What incentive does he have to go back to the drawing board on an existing business when it’s so difficult to forecast what future revenues and profits would look like? What if the change in the business is greeted with a plummeting stock price? Hence, the institutional bias is for a lot of continuity between past business and future business. Apple’s successive iPhone models are just variations on previous models – for a reason.

So, in a risk-averse environment, how is NASA and its private sector partners going to get past this inertia? Well, the public will have to embrace risk in this area. Not recklessness. But risk. Why will they embrace risk? Because, it will become clearer that the world is once again a risky and  destabilized place. The post-Cold War calm has passed. The ability for the West to ensure security is related to space (think of GPS and satellites, to name a few). China, since the Gulf War of 1991 and the War in Yugoslavia, has desired to counter the US advantage in space. Today, there is no one human who Westerners can thank more for reminding them of growing risks in the world than Vladimir Putin.

Putin’s rhetoric toward the West has already gone nuclear. He just needs to keep talking.

There is another factor. National pride and national destiny. The same week of the space-related accidents, China sent a probe to the moon and back, in anticipation of a mission that will land on the moon, and eventually in anticipation of a human trip to the moon. Done with maximum secrecy, the results of the missions will probably get more people in the West asking about Mars.

The equation around risk and Mars can then change.

It will no longer simply be expensive and distant. There will be the implicit risk of not going, of seeing NASA atrophy while Russia builds new generation ICBMs and China uses space to tell a story of its own “inevitable” rise. In the West, there will be the presumption that a Mars mission will be hard – but that, to paraphrase John F Kennedy, is exactly why the West should go.