[For the record, I think the notion AI ‘winners’ is naive. Moreover, the comparison between AI and the introduction of printing is a flawed analogy. However, today’s paper has merit in terms of taking a novel approach to understanding the workings of China’s economic model. If Herr Schumpeter is new to you there’s a primer here. In brief, he’s the guy that first fingered ‘creative destruction’ as being essential for economic development.]
What if, instead of incessantly ragging on China’s economic model, cynics could be persuaded to rethink their analysis and see China as “..a major institutional innovation, combining a state-capitalist system with Schumpeterian entrepreneurship.”?
This is the idea Nikolas Neos of Harvard University unwraps in the paper highlighted today which considers whose approach to AI, the Chinese or the American, is likely to produce winning innovation.
Before that we’re taken on a tour of Western and Chinese political development which provides the background to why, although China ‘invented’ printing, it was the West that perfected the process and became the more fecund producer of books when Mr. Gutenberg got on the case.
The purpose of this history lesson is to remind us of the societal preconditions which have fostered progress in the past, and those which have retarded it.
Coming to the present day the author notes, although superficially the United States is a place entrepreneurs operate in a highly competitive and loosely regulated space government is in fact ever present and very important. China, which appears more constrained, in recent years has become ever less so. In short, in both environments innovation has flourished. The question is can it continue in both?
In the U.S. the capitalist model can lead to wasted effort, predatory monopolies and harmful capital misallocation. In China the statist model can stifle creativity, favor donkeys and similarly misallocate capital. Neither model guarantees long-term success, but neither points inevitably to failure.
This is the important conclusion. America is not destined to win the AI race; nor is China destined to lose it.
You can read the work in full via this link Gutenberg or the Great Firewall? Printing, AI, and the Politics of Innovation. Caveats aside, I enjoyed the full read very much, the argument being very pleasingly presented.
Happy Sunday.