Niall Ferguson: The “Killer Apps” of the West’s Rise now Power China, Chile, and the Rest

In the Wall Street Journal, I just read a provocative essay, “Does History Say China Wins?” The essay and the accompanying video focus on economic historian Niall Ferguson’s new book, Civilization: The West and the Rest.

Ferguson argues that six man-made social institutions, or “killer apps,” have helped the West develop more rapidly than the rest of the world.

1. Competition: The West has long been competitive, in economics and politics; China historically has been more monolithic.
2. Scientific Revolution: This changed the way science is done.
3. Rule of Law: Well-protected property rights give people an incentive to invest.
4. Medicine: Lifespans doubled over the course of a century.
5. Consumerism: Demand
6. Work Ethic: What innovation doesn’t require hard work?

Now these same factors boost non-Western countries. Ferguson specifies, “It’s not just an Asian story, it’s also a South American story.” In both Chile and China I’ve seen intense competition, enthusiastic consumerism, and a work ethic that outpaces that of the average American.

Urban wind turbine prototype on display in Civic Center Plaza, San Francisco (July 2011). In this industry, the "killer apps" of China and Chile have led to more innovation and implementation than in the United States.

Ferguson notes that this is a particularly interesting time in economic history, because we are seeing the end of American dominance. He predicts that within five years the Chinese economy will be bigger than that of the United States. He critiques the cliches that have come to dominate American discourse about foreign competition, like, American education makes us more innovative and creative. The Chinese just memorize, like robots …

But those assumptions are so far from telling the whole story! The WSJ piece continues:

Andrew Liveris, the chief executive of Dow Chemical, has pounded this drum for years, describing what he sees as a drift in engineering and manufacturing acumen from the West to Asia. “Innovation has followed manufacturing to China,” he told a group at the Wharton Business School recently.

“Over time, when companies decide where to build R&D facilities, it will make more and more sense to do things like product support, upgrades and next-generation design in the same place where the product is made,” he said. “That is one reason why Dow has 500 Chinese scientists working in China, earning incredibly good money, and who are already generating more patents per scientist than our other locations.”

My grandfather worked at The Dow Chemical Company for most of his career. Thanks to his hard work and generosity, I am a shareholder. I am happy to see The Dow leading the next waves in innovation in China.