Category — Technology

The port of Shanghai from WikiCommons

Dani Rodrik recently had a commentary where he argued that industrial policy is returning to the main stage.  Within the Tallinn School (i.e. the economic research associated with the Technology Governance program in Tallinn) active government policies are seen as essential in order to create the ‘virtuous circles’ of high value-added economic activities. Rodrik (not associated with Tallinn), argues that industrial policy is  (i) “a state of mind rather than a list of specific policies” (ii) “relies on both carrots and sticks” and (iii) “industrial policy’s practitioners need to bear in mind that it aims to serve society at large” As Erik Reinert has shown, history abounds with  examples of how almost every successful economy has at some point employed some kind of industrial policy. Skeptics usually reply, yes, but what about all the failures?   By no means is industrial policy always effective and how well it works in a specific case depends on an inordinate amount of variables. Importantly, it is “a state of mind” and one must experiment to see what works. I would rather ask: what is the alternative, if industrial policy is the only way we know to have worked? Recently, the World Bank has come off as a bit more positive towards industrial policy, but their understanding is quite narrow:

“If industrial policy is nothing more than government agencies organizing conferences with private sector players, I’m all for it. If we include in the definition of industrial policy the supply of classic public goods like infrastructure and education in coordination with the needs of the private sector, I am still fully in support. However, I tend to part ways when the state gets involved to the point of picking winners, which must inevitably be the case when more heavy-handed interventions are put on the table. ” from the World Bank Private Sector Development Blog.

Industrial policy is more than supplying basic infrastructure, but still it is not about picking winners. One aims to develop specific sectors of the economy, calculating that the spillover effects will benefit the economy as a whole. The Asian economies, of India and China,  but also Brazil are recent examples of how industrial policy has been implemented successfully. But Chris Blattman points to an interesting example of how it has been carried out for shoe manufacturing in Ethiopia.

From my experience, how one looks at industrial policy depends a lot on one’s view of economics: In the first post here at Evolution-Revolution, we argued that “understanding the dynamics that propel the economy into the unknown should be at the core of economics, rather than optimizing a static economy that only exists in the abstract.” As such if one believes the most efficient allocation of today’s resources is essential one quite naturally comes to the conclusion that any form of intervention is inefficient. By incorporating the dimension of time however, one can more easily conclude that its worth sacrificing a little efficiency today for what might be a much more prosperous tomorrow.

Clay Shirky posted a very interesting article on creative destruction wrought by the emerging ICT-paradigm, in particular on the television industry. Lots of Schumpeterian economic evolution-revolution. Check it out here.

Thanks to my uncle Ashley, a loyal Evolution-Revolution reader, for sending me the link.   Picture from http://affordablehousinginstitute.org/blogs/us/2007/07/the-value-of-foreclosure.html

Above: Microsoft’s Entertainment and Devices Division after one of Steve Ballmer’s “angry” days.

The Wall Street Journal reports that Microsoft management is cracking down on the use of iPhones amongst company employees. In a recent meeting executives Andy Lees (who is in charge of mobile-phone software development) and Robbie Bach (President of Entertainment and Devices Division, responsible for a.o. the Xbox) were chastised by CEO Steve Ballmer when arguing that [Read more →]

Question 2010 by Katinka Matson

That is the annual question of the Edge Network. They have several interesting essays on the topic here.  In particular, I like Frank Schirrmacher’s asking if  we are we turning into a new species — informavores. Recommended.

The Future State of Humanity? Photo by Aaron Haussman

Friedrich Georg Jünger, translator of the Iliad to the German and expert on Pre-Socratic philosophy has written one of the most powerful critiques of technology named “Failure of Technology: Perfection without Purpose.” I will present some of his most important criticisms of technological progress in general and their relevance for the technological development we are seeing today.

For better or worse, it is certain that technological development is truly changing our society and the way we live. [Read more →]

Above: Nanotech is coming to get you

One of the first definitions of Economics I came across in my life was “the study of scarce resources and unlimited wants.” That is, how choices are made with regards to which of the unlimited wants are to be met and not, or in other words, how resources are allocated. Here, markets come in as one of many possible mechanisms for making such choices socially.

In the context of Technology Governance, another way of understanding economics appears. That is, in recognizing that in the presence of innovation and changing technology, economic systems are not static, the extent to which resources are scarce depends on our ability to produce. As such, economics in this context can be better described as the study of how humans mitigate scarcity of resources by means of technology. Here, the core questions do not so much relate to allocation of scarce resources but to our changing capacity to make available those resources.

However, technology does not only change which resources or goods are available in which quantities, they also strongly influence the market (or other) mechanisms by which they get distributed. [Read more →]

We do what we can to keep the battle of ideas raging.

Here at Tallinn University of Technology, our professor Wolfgang Drecshler pointed out today that as ICT enables more choice in where to get political commentary and analysis, the tendency is that people choose to only get it from sources with whom they already agree. The predictable effect is more political polarization and less real public debate.

To the extent that the authors of Evolution-Revolution are amongst those who humbly provide political commentary and analysis, we pledge to do what we can to help prevent such polarization. By eclectically embracing the ideas of the political left, right, and radical center, we sincerely hope that none of you will agree with us all the time.