In his latest book: The Smartest Places on Earth: Why Rustbelts Are the Emerging Hotspots of Global Innovation economist and investor Antoine Van Agtmael highlights signs of unexpected competitive resilience in developed economies. As the guy who coined the term Emerging Markets and a leader in revealing the value to found in those markets it seems Van Agtmael was somewhat surprised at the signs of metamorphosis in developed economies. The author points to the role of both individual agency and institutions in a possible reemergence of highly competitive value creating enterprise.
Individuals lead and individuals bleed. A society’s prosperity depends on its productivity – that is to say, for value to be shared it must at first be created. Individuals create value big and small. Wheels occasionally emerge, and teams peacefully collaborating toward shared ends catch everyday miracles. In this way, for the last 200 years all around the world we have lifted ourselves out of poverty. Why are there smartest places? Why have some people prospered and others are yet to do so? Why have some places forgotten how? What does and does not depend on us? Unless one has an extraordinary belief in coincidence, individual freedom and property rights matter.
Investigating bright green shoots of growth in former industrial wasteland, Van Agtmael identifies the classic role of enterprising individuals in value creation. He also sees the role of individuals forging bridges between universities, labs, industrial incumbents and startups. There are so very many layers of economic capital implicitly being leveraged in his examples. Individuals motivated by incentive striving for success and not crushed by social or economic oppression. Educational and research institutions that are not entirely hidebound to orthodoxy and the will of power. Rather that they enable human capital and the generation of ideas. Whether your economy is emerging, newly emergent, or reemerging from the rustbelt, institutions of law and exchange that are transparent and dependable seem now to be more important than ever.
Perhaps not surprisingly, after 8 long years of the Great Stagnation there are many seemingly willing to accept the false promises of one political P.T. Branum or another. And, so we see salesmen and suckers giving oxygen to Socialism, restrictions on free speech and thought in universities, and the zero sum logic of xenophobia and protectionism. Somehow it seems appropriate to misquote Mao Tse Tung saying 百鳞翅齊放, 百家爭鳴 ‘let a hundred butterflies bloom, let a hundred schools of thought contend’. Did Mao make a mistake that setback the Chinese people’s emergence from death and squalor by two generations? Or was it a cynical way of tricking a generation of a people’s best and brightest so that they could be eradicated like pests? Perhaps it doesn’t matter, for what depends on us is in the present.
Mao was right the first time, if you want a hundred flowers to bloom you need to allow for the contest of ideas. At a time when almost all emergent economies are struggling to deliver persistent growth and prosperity to their people the role of antifragile institutions just can’t be underestimated. So today of all days there appear to be lessons on the extraordinary value of institutional order if you are struggling to emerge, reemerging after a post industrial winter, or simply emergent.