Is the Venturesome Consumer Risky?
On October 1, 2012, I attended a presentation discussing the ramifications of techno-nationalism entitled, “The Venturesome Economy.” Amar Bhidé, the presenter, authored the book The Venturesome Economy which was used as a foundation for the discussion. Bhidé’s book resulted from his curiosity about what globalization meant for companies, “I didn’t mean to write a book, I was merely using my license to study entrepreneurship.” At the beginning of the talk, Bhidé warned that prior economics knowledge would be both a blessing and a curse in grasping techno-nationalism. He argued that the substance of the text would be challenging to understand without prior economics knowledge, but that having such knowledge could lead a person to becoming trapped in mathematical models which don’t account for techno-structure.
As a student at The Cooper Union, I took a macroeconomics course, and I am currently enrolled in a microeconomics course. I don’t believe that I face the danger of becoming trapped in models which Bhidé warns of; the micro and macro courses at my school are part of the humanities and social sciences department, and stress critical thinking of economic processes over a heavy use of mathematical models.
Bhidé believes that techno-nationalists, people who promote cutting-edge scientific and technological research, have misplaced anxiety about the fall in U.S. shares of scientific publications, patents, and engineering degrees. Bhidé addresses this anxiety through a paradox which he discusses in his book: why has the U.S. maintained its productivity per-capita income lead while other countries have increased their shares of representation in technology?
Bhidé argues that this apparent paradox can be resolved by recognizing that there are multiple levels of product development. In both his book and his presentation, Bhidé demonstrates the concept of high-level, mid-level, and ground-level development by referring to the microprocessor. As an electrical engineering student, I appreciated this explanation. High-level development is a breakthrough in the understanding of science. In the case of the microprocessor, high-level development involves the field of solid-state physics. Mid-level development utilizes the innovations from high-level development and creates tangible products such as the microprocessor itself. Low-level development customizes the innovations from mid-level development for localized adaptation which fulfills consumer demand. This includes personal computers and a variety of appliances that require microprocessors.
Bhidé claims that concern about foreign innovation is unwarranted. Foreign innovation is predominately high-level; therefore it shouldn’t matter where it takes place. In disputing the importance of where high-level technology is developed, Bhidé asserts that manufacturing and innovation no longer have to happen in the same place, “where IBM develops its technology has nothing to do with where its computers are produced and sold.” Therefore, we shouldn’t be afraid of an increased share of progress occurring in other countries, but should actually embrace and celebrate it. Economic stability is dependent on the culturally adapted low- and mid-level innovation within a country, which in turn is advanced by the high-level innovation from other nations. Furthermore, new technology provides advantages that cannot be easily quantified, “innovation benefits the common good by increasing overall productivity and consumer welfare.” The iPhone exemplifies this idea, as it has improved quality of life beyond the monetary value of its sales.
The U.S. is often thought of as a suitable place to innovate because of supply-side factors such as availability of venture capital and enforcement of intellectual properties. Bhidé suggests that the U.S. is more likely suitable because of “the venturesome consumer”: the consumer who holds risk in adopting new technologies. The average U.S. consumer is more willing to buy and use IT, and as Bhidé jests, “opens up their heart and their wallet.”
Is “the venturesome consumer” really acting out of risk? This idea bothers me because I believe that consumers act more out of necessity and competition than from risk. A person purchasing a new operating system such as Windows 7 is usually forced to do so because new software packages necessary for remaining competitive and up-to-date will no longer be supported by their current operating system. It is really only the initial adopters of technologies who are truly taking on risk, but perhaps this in itself is conducive for economic growth.
Bhide, Amar. “The Venturesome Economy.” The Cooper Union, 41 Cooper Square, New York, NY. 1 October 2012. Guest Presentation for the course S318: The Cooper Union World Forum.
Bhide (2008). The Venturesome Economy. Princeton: Princeton University Press.