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Book review - The shock of the old

New thing, old things
Toby_Barklem
Toby Barklem
Business Development Director

At the heart of historical enquiry are two simple questions: ‘What has changed?’ and ‘What has stayed the same?’ For investors, concerned with the future value of assets, these questions can be reframed: ‘What will change?’ and ‘What will stay the same?’

In uncertain times, we have a tendency to construct neat and orderly narratives of the past to help us understand the present. But these narratives can omit important details. A more nuanced understanding of history can help us identify what will change when everyone else expects continuity. Perhaps even more usefully, it can suggest what might stay the same when everyone else expects change.
A NOSTALGIC FUTURE

Technology is a particularly fine example. Since the eighteenth century, we have been taught to expect near constant change as a result of ever-improving science and technology. Each generation has reheated breathless futurology; our current age is no exception. The assumption of perpetual technological progress is employed to support both utopian and dystopian visions of the future. The coming of artificial intelligence is said to bring either a leisure- filled, post-scarcity future or the extinction of the human race.

So our idea of the future is quite old-fashioned. Physical space, nations, distances, manufacturing and objects, so the argument goes, become less important. Replacing them is a world defined by ideas, brands and services that can be transmitted instantaneously and at no cost between increasingly identical parts of the world. But the knowledge economy has existed for hundreds of years. We still live in a world in which huge amounts of raw materials are shipped around the globe, where nations and national identity still matter. This future has never arrived, yet the vision is still with us.

CONTINUOUS INVESTION?

David Edgerton’s book teaches us to be sceptical. We tend to focus far too much on novel things and the process of creating novelty. Invention and innovation trump continuity and resilience. Yet many of the fundamentally transformative impacts of technology have been diffusions of technology to new regions, classes or uses – decades or centuries after their invention. Both the motor vehicle and the bicycle remain transformative technologies. When we think about engineers, we think about people building (or coding) new things. Yet most engineers are engaged in maintaining things that already exist.

There is a tendency amongst public policy experts to associate innovation and invention with economic success: Germany and America were inventive nations in the twentieth century and therefore grew quickly. Spending sizeable proportions of GDP on research and development (3% rather than 1%) is encouraged; failure to do so causes hand-wringing. Yet it is not true to say that countries that innovate more, grow more. In 1900, Great Britain had a much higher output per head of population than Italy. Throughout the twentieth century, Great Britain spent considerably more on research and development. Yet, by the 1980s, both countries were shocked by il sorpasso – when Italy overtook Great Britain in output per head.

IMPERIAL TECHNOLOGY

Historically, technology has been considered as an indicator of civilisation, and has been used to fuel the narrative of western supremacy. Institutions of the British Empire – the merchant navy and the Indian railways, for instance – brought European technology to new places and put white technicians in charge. Non-whites were judged, explicitly, to lack both inventive and technical ability; they were carefully excluded. These arguments have been remarkably persistent.

The technological progress which emerged from East Asia in the 1980s drew accusations of imitation and plagiarism. The implication was that non-white nations lacked some fundamental spark of ideation.

A NOVEL PAST

In many ways, Edgerton prefigured a modern turn in this book. It is easier to imagine today, 14 years after publication, that older technologies may have benefits, and new technologies may have costs. In a world increasingly concerned with the climate emergency and where governments are more willing to implement drastic policies to deal with it, the idea that an old-fashioned technology might come back into use is conceivable again. Think of the shifting significance of wind power. Fracking, invented in the 1940s, has also re-emerged.

In a world that has seen steel, coal, cement and motor vehicle production reach new highs as China has risen to power, the transformative power of old technologies should not be underestimated.

The inconvenient characteristics of the material world – nationhood, manufacturing, physical distance – are fast reasserting themselves.

Ruffer Review 2021
Download our 2021 edition of the Ruffer Review. In it we explore the fate of traditional balanced portfolios, our latest big picture thinking – on regime change and inflation – as well as fresh perspectives on trust, belief and behavioural bias.
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This article was first published in The Ruffer Review 2021.

The views expressed in this article are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument, including interests in any of Ruffer’s funds. The information contained in the article is fact based and does not constitute investment research, investment advice or a personal recommendation, and should not be used as the basis for any investment decision. References to specific securities are included for the purposes of illustration only and should not be construed as a recommendation to buy or sell these securities. This document does not take account of any potential investor’s investment objectives, particular needs or financial situation. This document reflects Ruffer’s opinions at the date of publication only, the opinions are subject to change without notice and Ruffer shall bear no responsibility for the opinions offered. Read the full disclaimer.

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