Innovation and Economy
Lately, I’ve been thinking a lot about Bernie Sanders. Specifically, I’ve been thinking about the Social Democrats, Socialism, and the arguments that distinguish between them. I’ve also been reading up on the shenanigans surrounding the death of the pension, a large part of which happened between 1970 and 2010. What do these have in common? Well, innovation, of course.
Let me stake my position so that you know where I’m coming from. I began many years ago as a sort of idealist, eagerly consuming literature about the founding of the United States, the rise and subsequent fall of communism, and the petty dictators mixed throughout. Of the types of economic systems, I’ve always loved the emphasis that socialism puts on protecting the individual, over the capitalist model, which is seemingly in a perpetual battle to determine exactly how “laissez- faire” the economic activity should be, and whether the government should play any role in the economy. But, from my perspective and over the years, I’ve yet to see a single example of a successful socialist economy that has survived. And on paper, that’s a huge endictment. But lately, as of the last ten years or so, I’ve been engaging in that dangerous passtime of thinking. And it’s in this process that I challenged some of my own assumptions.
One of my assuptions was that socialism is doomed to fail. This may be true, or may not be, but there’s one thing that we must admit: socialism never had a fair shake. The problem with most of the socialist systems is that the revolutions, soft or hard, didn’t occur in a vaccuum. These events occurred in a world in which other, more established nations, lingered on the sidelines waiting, and sometimes not waiting, but in any event hoping for the experiments to fail. And, as with the ever evasive position of the electron, the very act of observing these things drove certain outcomes. I’m convinced at this point that the western world, which I love being a part of and I do lover our rich history, interfered extensively in the potential of any socialist economy. But also, revolutionary leaders, feeling the very real external threat, transitioned so quickly that they overburdened the systems for feeding people, and for maintaining stability, and thus generated things like the Great Leap Forward, for one example (there are many). I’m not suggesting socialism is the evolution of the economic system that we all should strive for, but only that it’s not the bogeyman that people seem to believe, and not inherently doomed to failure. Socialism, in a very real sense, is an innovation in itself though, and that fact is definitely interesting.
One point I have yet to convince myself on, and am researching currently, is innovation. The claim that I hear made the most whenever I hear someone attempt to discredit socialism is that socialism fails innovation. An easy thing to do is drag out the cars in cuba, decades old and many gas guzzlers. Aside from technically being an authoritarian government, which I should point out is independent of economic policy (i.e. authoritarian socialist and capitalist countries both exist today), there’s one thing Cuba caught my attention on regarding the topic of innovation: a lung cancer vaccine. This is something I can’t imagine even being attempted to develop in the United States, for fairly obvious reasons. This is what brought me to my first serious question about innovation: what innovation are we talking about when we discuss innovation in the United States?
After all, sub-prime mortgages were technically correctly called innovations. Machine-learning instant trades in the stock market are also examples of innovations. So are PEP (Pooled Employee Retirement Plans) and Cash-Account retirement plans. Three of these last four innovations disrupted the lives of millions, and all four were at play when the nation went through the Great Recession. Does the direction of innovation matter? It’s one thing to claim to innovate, and an entirely different thing to claim innovation at the good of society. For example, right now, artificial intelligence is being used to generate books en masse, which generally lowers the price that individual authors can charge, and makes readers more skeptical of quality as the quality of artificially generated books is not, as of this typing, up to par with actual authors. Expect that to change soon. And then an entire industry is at risk to disappear.
In both socialist and capitalist claiming economies (most are somewhere in between), it takes government intervention to reign in innovations that have gone off the rails. Also, it’s important to note that innovation comes from individuals, and, from what I can tell, a mixture of knowledge and opportunity, and room to fail. There is nothing about socialism or capitalism, either, that indicates to me that innovation is more likely in one versus the other. Between China’s rapid emergence of capabilities in space and autonomous vehicles and the entire Cold War, among other things, it’s safe to say that innovation is not chiefly an American thing, but a human thing. Where there are humans, there will be innovation. Freedom to fail is definitely a contributor, as experimentation contributes innovation too, and where such freedom is allowed (either by strategic experimentation or generally in the public), then innovation will follow.
As such, I’m sticking to my guns: it is not the economic system that causes a state to stagnate and fail, but the all-too-common propensity for corruption. I’ll talk more on the concept of corruption later, and have done so before. But the economic system isn’t the determiner, from my understanding. Corruption is much more the problem, and in a single-party system, as strict socialist states have tended to be, corruption may easily take hold, as it does in many of our states which have single-party rule. More on that later.
