Governance, Growth and Global Leadership: The Role of the State in Technological Progress, 1750–2000 (review)

There is a lot of literature on the relationship between technological change, economic growth, and changing global leadership. Abramovitz (1989), on the side of economics, and Kindleberger (1996) and Landes (1969) as economic historians, showed how technological change shapes economic, social, and global leadership, describing the rise and fall of Venice, the Netherlands, the United Kingdom, and finally the United States as technological and political leaders in the world since the sixteenth century. In their view, the mechanism of this change was essentially a historical process of technological change selecting leaders by their congruence with the specific characters of any technology involved. This congruence was sometimes related to specific resource congruence (coal) to exploit specific innovation (the steam engine), as in the case of the United Kingdom during the first industrial revolution; to a generic resource abundance, as in the case of United States in the nineteenth century, which fuelled the American system of manufacturing; or, more generally, to social capabilities, including human capital, R & D institutions, the prevailing legal system, the government policy, etc. More recently, both the evolutionary tradition (Freeman and Louçā, 2001; Perez, 2002) and the institutionalist tradition (North, 2005) resumed and refined these approaches at the historical level, suggesting that new technologies reshuffle global industrial and political leadership and that institutions congruent with new technologies are the key factor to explain the difference in long-term growth performance of various countries.

The volume by Espen Moe can be enrolled in these research traditions. It starts from a Schumpeterian view of economic change pushed by a cluster of innovations, to investigate the institutional dynamics that can or cannot give rise to a sustained economic growth. On this side, his reference is Mancur Olson’s (1982) theory of social change: to exploit new technologies and to let economies grow, governments have to promote innovations while individuals must have the human capital to apply them. The problem is that established producers have incentives to block such innovations because they often destroy their incumbent market position. If old industrial leaders are able to capture the state, governments will raise barriers to change, privileging the status quo and thwarting technological progress. On the contrary, governments that are able to resist such interests facilitate the process of creative destruction and favor economic growth. To explain how the state can facilitate the process of innovation, Moe adds to Olson’s frame a further social condition: creating a “political consensus and social cohesion” (26) that allows new producers to compete openly with old ones.

According to this framework, the volume shows how it worked in history by considering the experiences of five leading countries (Britain, France, Germany, the USA, and Japan) during five periods of technological and corresponding economic leadership, from the Industrial Revolution to the beginning of the twenty-first century: the cotton textile industry and the iron industry in United Kingdom and France; the chemical industry in United Kingdom and Germany; the automobile industry in the United States; and, the information and communication technologies in the United States and Japan.

The mechanism at work in the volume can seem simplistic: (a) structural economic change is blocked by old and mature industries in an effort to preserve profits and employment in sectors that are no longer the engine of the economies; (b) only in countries where no strong vested interests exist can new sectors develop; or, (c) in countries where the state has the political autonomy and popular support to pursue policies of innovation and to curb the vested interest, sustained growth can be achieved. Despite this, the volume shows an enormous variety of historical experiences in the different phases of Schumpeterian clusters of innovations, avoiding in such a way any suspect of technological determinism. For example, Moe argues that neither in Germany nor in the US did vested interests unduly block economic policy, in the second part...