<nettime> Rutger Bregman: Look at the phone in your hand – you can thank the state for that (Guardian)

[Patrice Riemens <patrice@xs4all.nl>]

Original to:
https://www.theguardian.com/commentisfree/2017/jul/12/phone-state-private-sector-products-investment-innovation
(bwo Barbara Strebel, with thanks)

 Look at the phone in your hand – you can thank the state for that
Rutger Bregman, The Guardian Opinion, 12 July 2017

We know the private sector has given us life-changing products. But we 
forget that it is state investment that makes innovation possible in the 
first place

• Rutger Bregman is the author of Utopia for Realists (translated by 
Elizabeth Manton)



Who are the visionaries who drive human progress? The answer, as we all 
know, is the geeks, the free spirits and the crazy dreamers, who thumb 
their noses at authority: the Peter Thiels and the Mark Zuckerbergs of 
the world; the likes of Steve Jobs and the Travis Kalanick; the giants 
with an uncompromising vision and an iron will, as though they have 
stepped fresh from the pages of one of Ayn Rand’s novels.

“Innovation,” Steve Jobs once said, “distinguishes between a leader and 
a follower.” Now, if ever there were a prototypical follower, it would 
have to be the government. After all, why else would nearly all the 
innovative companies of our times hail from the United States, where the 
state is much smaller than in Europe?

Media outlets including the Economist and the Financial Times never tire 
of telling us that government’s role is to create the right 
preconditions: good education, solid infrastructure, attractive tax 
incentives for innovative businesses. But no more than that. The idea 
that the cogs in the government machine could divine “the next big 
thing” is, they insist, an illusion.

Take the driving force behind the digital revolution, also known as 
Moore’s law. Back in 1965, the chip designer Gordon Moore was already 
predicting that processor speeds would accelerate exponentially. He 
foresaw “such wonders as home computers”, as well as “portable 
communications equipment” and perhaps even “automatic controls for 
automobiles”.

And just look at us now! Moore’s law clearly is the golden rule of 
private innovation, unbridled capitalism, and the invisible hand driving 
us to ever lofty heights. There’s no other explanation – right? Not 
quite.

For years, Moore’s law has been almost single-handedly upheld by a Dutch 
company – one that made it big thanks to massive subsidisation by the 
Dutch government. No, this is not a joke: the fundamental force behind 
the internet, the modern computer and the driverless car is a government 
beneficiary from “socialist” Holland.

Our story begins on 1 April 1984 in a shed knocked together on an 
isolated lot in Veldhoven, a town in the south of the Netherlands. This 
is where a small startup called ASML first saw the light of day. 
Employing a couple of dozen techies, it was a collaborative venture 
between Philips and ASM International set up to produce “hi-tech 
lithography systems”: in plain English, machines that draw minuscule 
lines on chips.

Fast-forward 25 years, and ASML is a major corporation employing more 
than 13,000 engineers at 70 locations in 16 countries. With a turnover 
of over €5.9 billion (£5.2bn) and earnings of €1.2bn, it is one of the 
most successful Dutch companies, ever. It controls over 80% of the chip 
machine market – the global market, mind you.

In point of fact, the company is the most powerful force upholding 
Moore’s law. For them, this law is not a prediction: it’s a target. The 
iPhone, Google’s search engine, the kitty clips – it would all be 
unthinkable without those crazy Dutch dreamers from Veldhoven.

Naturally, you’ll be wondering who was behind this paragon of 
innovation. The story told by the company itself fits the familiar 
mould, of a handful of revolutionaries who got together and turned the 
world upside down. “It was a matter of hard work, sweat and pure 
determination against almost insurmountable odds,” explains ASML in its 
corporate history. “It is a story of individuals who together achieved 
greatness.”

Government isn’t just there to administer life-support to failing 
markets. Without it, many would not even exist

There’s one protagonist you never find mentioned in these sort of 
stories: government. But dive deep into the archives of newspapers and 
annual reports – back to the early 90s – and another side to this story 
emerges.

From the get-go, ASML was receiving government handouts. By the fistful. 
When in 1986 a crisis in the worldwide chip industry brought ASML to its 
knees, and while several big competitors toppled, the chip machine-maker 
from the south of Holland got a leg-up from its national government. 
“Competitors who had survived the crisis no longer had enough funds to 
develop the next big thing,” explains the company’s site. So while its 
rivals licked their wounds, ASML shot into the lead. Is ASML an anomaly 
in the history of innovation? Not quite.

A few years ago the economist Mariana Mazzucato published a fascinating 
book debunking a whole series of myths about innovation. Her thesis is 
summed up in the title – The Entrepreneurial State.

Radical innovation, Mazzucato reveals, almost always starts with the 
government. Take the iPhone, the epitome of modern technological 
progress. Literally every single sliver of technology that makes the 
iPhone a smartphone instead of a stupidphone – internet, GPS, 
touchscreen, battery, hard drive, voice recognition – was developed by 
researchers on the government payroll.

Why, then, do nearly all the innovative companies of our times come from 
the US? The answer is simple. Because it is home to the biggest venture 
capitalist in the world: the government of the United States of America.

These days there is a widespread political belief that governments 
should only step in when markets “fail”. Yet, as Mazzucato convincingly 
demonstrates, government can actually generate whole new markets. 
Silicon Valley, if you look back, started out as subsidy central. “The 
true secret of the success of Silicon Valley, or of the bio- and 
nanotechnology sectors,” Mazzucato points out, “is that venture 
investors surfed on a big wave of government investments.”

True innovation takes at least 10 to 15 years, whereas the longest that 
private venture capitalists are routinely willing to wait is five years. 
They don’t join the game until all the riskiest plays have already been 
made – by governments. In the case of biotechnology, nanotechnology and 
the internet, venture investors didn’t jump on the bandwagon until after 
15 to 20 years. Venture capitalists are not willing to venture enough.

The relationship between government and the market is mutual and 
necessary. Apple may not have invented the internet, GPS, touchscreens, 
batteries, hard drives and voice recognition; but then again, Washington 
was never very likely to make iPhones. There’s not much point to radical 
innovations if no one turns them into products.

To dismiss the government as a bumbling slowpoke, however, won’t get us 
anywhere. Because it’s not the invisible hand of the market but the 
conspicuous hand of the state that first points the way. Government 
isn’t there just to administer life support to failing markets. Without 
the government, many of those markets would not even exist.

The most daunting challenges of our times, from climate change to the 
ageing population, demand an entrepreneurial state unafraid to take a 
gamble. Rather than wait around for the market, government needs to have 
vision, be decisive – to take to heart Steve Jobs’ motto: stay hungry, 
stay foolish.

This article was translated from Dutch by Elizabeth Manton

• Utopia for Realists: And How We Can Get There:
https://thecorrespondent.com/utopia-for-realists/
https://www.bloomsbury.com/uk/utopia-for-realists-9781408890264/

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