Promoting innovation in Europe: five lessons from the last millennium

Miguel Laborda Pemán

25 de Mayo de 2021, 10:15

We do not know yet if they will be happy, but we do know that they will be decisive. The 2020s will be depicted by would-be European chroniclers as a classic example of a "critical juncture". In a context of growing geopolitical competition, Europe is witnessing its loss of innovative capacity vis-à-vis China and the US: it is our "Sputnik moment". European prosperity is threatened, as threatened is our ability to avoid a new bipolar world. Charles Michel makes it clear when he states that, in this context, "our goals are ambitious and demanding: peace and prosperity." How to achieve it? Making Europe to evolve from a global regulator to a global innovator. From Venus to Janus, according to some analysts. From Plato to Leonardo, we could say too.

The pandemic has accelerated the transition from a Europe that projects ideas to a Europe that generates them. There is a roadmap and there is money to do it. Do we have the experience? We actually do. A thousand years of innovation and five centuries of global technological hegemony can help us to move forward. Keeping in mind how we did it in the past should allow us to make the 2020a decisive – and happy too. Herewith five key lessons from Europe’s last millennium of technological innovation:

First lesson. Do not miss a good catastrophe.- Simple as this: European leadership emerged from a landscape of (classical) rubble. Building upon that, whole new brand institutions flourished. Institutions already informed by our very modern belief about  the need of incorporating individual ingenuity into every decision about society.

When Charlemagne's grandsons drew up the map of Europe with the Meerssen treaty, they were making reality a historical law. We believe we are always in control of institutions: since at some point we decided to create them, they can only serve the purpose originally explaining them. This belief is often contradicted by the frequency with which institutions are captured by certain power groups or display an internal logic we cannot fully understand. Disasters, by temporarily but profoundly impacting our beliefs and inertias, offer us the opportunity to reassert our control over them.

This is the same logic that Merkel and Macron exhibited last spring when they decided to back the biggest push for European integration in 30 years. Although the intrahistory of the Merkelian moment has yet to be written, we already know that it will be a story linking beliefs (the fear of a new lost decade, the fear of German business associations of the collapse of the single market) and daring proposals for institutional design (last May’s Franco-German proposal, July’s European Council). From Meerssen to Meseberg, catastrophes offer us the opportunity to regain agency over our institutions in the face of inertias and vested interests. 

Second lesson. Ideas are in people, not in books (or Google).- We widely agree that the ultimate secret of economic progress lies in ideas, and that they arise from the stock of knowledge that a society accumulates. We have a pretty good idea of that relationship and strong evidence that this has been the case in Europe both in the more distant past and in the most recent.

But such statements miss an even more crucial distinction: for most of its long history as a technology leader, Europeans were fine with knowing how stuff worked instead of why they actually worked. Long before Newton or Leibniz deciphered scientific laws, innovation was already taking place – resting upon trial and error and professional practice itself rather than upon mere speculative work. Since this sort of useful knowledge can only be transmitted through observation and practice itself, individuals, not book nor websites, become the source and repository of creativity. European technological leadership owes, and will owe, more to apprentices than to philosophers.

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Third lesson.You’ve got a friend in me.- If tacit knowledge matters and it is stuck inside people's brains, calls for innovation necessarily become a call for attracting and grouping individuals in creative teams. From this perspective, the great challenge of economic development (actually, of human evolution itself) is identifying which is the set of rewards, punishments and surveillance mechanisms to best encourage collaboration and exchange of ideas.

Guilds, fraternities or communes have been often depicted in a pretty negative way: wherever there were benefits, there were strong incentives to exclude others from their enjoyment. But far from opposing long-run technical innovation and urban expansion in Europe, these networks of diverse people acquiring professional experience, exchanging knowledge and facilitating its dissemination, often sponsored by the authorities themselves, could actually explain our leadership.

Call them knowledge poles, clusters or technology-transfer platforms. You name it. The point is to understand the key role that cooperative, autonomous, and locally-based organizations had in the accumulation and exchange of ideas in Europe over centuries. This is what has been actually happening for years in places like Silicon Valley or Shenzhen.

Fourth lesson. Break the walls down.- Realizing that knowledge lies in brains (and not in books) leads to understanding not only the importance of teams but, especially, of diverse teams. In recent years we are realizing more and more how being different is just as important as being good and how a diverse team will always be better than the average individual (and, often, as good as a team of the brightest) when it comes to problem-solving. In other words: countries, societies, teams, know more because their members know different stuff.

Precisely, the most popular explanation today for why Europe is rich puts diversity at the center: wherever would-be entrepreneurs, workers, civil servants or political leaders could easily access their respective establishments, progress took place. European cities, where knowledge and innovation actually took place, seem to have been more open than we once thought. On the contrary, places lifting artificial barriers to members with new ideas (the serrata, or closure, of the Greater Venice Council as a vivid example) saw the cake shrink and struggles for its distribution increase.

Let’s keep it in mind when it comes to designing new EU policies on competition, immigration or gender equality, key levers in any successful European innovation model.

Fifth lesson. Act local, think continental.- Besides exclusive temptations, another great risk derived from intensive local collaboration is lack of coordination. When there are challenges impacting on a larger scale, thinking locally leads to bad outcomes. 

Locally-rooted innovation is among Europe's great contributions to progress. The many city-states, duchies, and petty lords populating Europe for centuries brought, with their permanent competition, new ideas and new institutions. This cooperation without power often degenerated into violence and wars (85 military conflicts a year on average between 800 and 1800!). This situation partly explains the emergence of strong states and bureaucracies as instruments to avoid destructive competition, a role that had previously been played by the ideas of Empire or Christianity. 

In some places this inaugurated a period of power without cooperation: local powers parasitized the state and were satisfied with distributing among themselves an ever-decreasing cake. Elsewhere, the state and local powers were able to create robust federations and compound republics in which to balance state-wide coordination, diversity, and local innovation. Local entrepreneurs faced there enough counterweights as not to degenerate into rent-seeking cartels and coordinate their actions when necessary. 

In short: faced with an increasingly oligopolistic US model and Chinese state capitalism, European historical experience with public-private partnership lends itself more easily to simultaneously exploiting continental scale (single market, technology diffusion, compensation schemes) and locally-based private innovation. Do not look for a brand new third way, guys: we already found it. 

Amomg calls for an elusive European ethos and the epic-less single market regulations, there is an intermediate space to think Europe’s future: institutions. Taking advantage of the shock that the pandemic has had on our values and beliefs to consciously design organizations fostering creativity and exchange is the great challenge we Europeans face in the coming years. A thousand years of technological innovation show us that it is possible, just as they warn us about oligarchic trends and lack of coordination. If we pay attention to a powerful European ethical tradition, the only human obligation is to persist in what we already are. If we look at the last millennium, clues are clear: shall we start?

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