The other day I took a walk in a certain neighborhood of Rome. And it was beautiful. It wasn’t a neighborhood, it was a time machine. The bars with the zinc counter, the public telephones, the atmosphere: everything magically remained from the 70s. But what does this have to do with an economics newsletter? It has something to do with it, because I wondered why the feeling that time has stopped is so pleasant. Easy answer, on a personal level: nostalgia is a powerful lever of the human mind. But on the level of a community of tens or hundreds of millions of people? In the context of Italy or Europe? Even in that case the answer is similar. Those who promise voters their little ancient world, the protection and freezing of that world forever, the resistance to the shocks of change imposed from outside, touch deep chords.
In Italy, as more generally in Europe, we see it in the successful political offer in this phase. And we see it for example in our schizophrenic attitudes towards China and in our relationship withelectric car. We hate the imposition of it by European law, but we hate it very badly that the producers of the Republic are further ahead and more capable than us in producing it at much lower prices. We make it a European public policy, an obligation for families, yet we want to protect ourselves from it thanks to high customs duties against Beijing which make that product (much) more expensive in Europe. Few issues today expose the contradictions of Italians and Europeans in general regarding the innovation of this era. But since economics is culture, to clarify the context I would like to give the floor to an intellectual who merges the two dimensions: Joel Mokyr.
Professor Mokyr and Europe’s delay in innovation
Professor Mokyr teaches economics and history at Northwestern University in Illinois and is a credible candidate for the Nobel Prize in economics. A few weeks ago, at the International Festival of Economics in Turin, I asked him exactly this: Is there a culture of growth? What are the attitudes that have made Europe the cradle of innovation in the modern age?
Here I bring you the answer of Mokyr, a man born in Holland in 1946 to two survivors of the Theresienstadt Nazi concentration camp. But I invite you to read his answer considering that for decades now Europe and Italy, in particular, have been late in all the great technological and industrial transformations. Today, it is no coincidence that they seem very sensitive to the charm of leaders who promise, more or less openly, the eternal maintenance of the world that once was.
The secret of progress: innovation is rebellion
«If you ask me what the origins of the modern economy are – began Mokyr – I will answer you with another question: to what extent is our culture willing to disrespect the knowledge of previous generations? The natural reflex in people is to think that those who lived before were smarter than they actually were. So for centuries in Europe and elsewhere, research was not done to answer a question. No experiments were done, no data were looked at. Ancient books were read and the answers were sought there. What happens in Europe is exceptional because, after 1450 or 1500, when the Renaissance had recovered all the knowledge of the Greeks and Romans, at a certain point people asked themselves: is it true? And they found big errors in Aristotle, in Ptolemy or in Galen. They understood that the ancients were wrong. So in the end the Europeans came up with completely new interpretations of the universe thanks to Galileo, Newton, Descartes. And they reject ancient knowledge. This willingness to abandon the knowledge of previous generations is the key to progress – continued Joel Mokyr – because every innovator is fundamentally a rebel. He is someone who disrespects the knowledge of previous generations. It’s never easy.”
Italy and the electric car puzzle
In other words, Mokyr was telling me that the ability to question accepted beliefs is the key to innovation and economic development. Does this conclusion have anything to do with the phase we are living in? With the fact, for example, that in China the market share of electric cars (including plug-in hybrid models) is already 40%, having risen by more than a third in the first months of this year compared to 2023? Does it have something to do with the fact that Italy is the only advanced country in which in the first quarter of this year the sale of electric cars fell by 20%, while it rose by 25% on average worldwide? And does it have anything to do with the fact that China will probably produce nine million electric cars this year, an amount equal to its needs and equal to more than half of global production? And that 60% of Chinese electric models already cost less – in China – equivalent internal combustion models? At least that’s what the International Energy Agency says in its latest report on the subject.
In any case, Professor Mokyr continued that day in Turin: «The turning point towards modernity comes when you start to abandon the idea that previous generations knew everything better than you. When you realize you’re better. From the moment you understand this, you live in a different world and your approach changes completely.”
Learn from others?
Then here Mokyr introduced me to a further variable, linked to the degree of openness of different cultures. He told me: «The second characteristic of growth is linked to the first. Every civilization has others around it. But how much is each of them willing to learn from the others? Starting from 1490, Europeans left Europe and traveled the world. And they are eager to learn from other civilizations. The Chinese for example at that time were better when it came to porcelain making. Eventually, Europeans copied Chinese techniques and began producing quality porcelain of their own. Same thing with Indian cotton. Europeans appreciate it very much and eventually learn to make cotton like the Indians. Then from South America they bring potatoes, corn and tobacco. In other words, they have no problem admitting to themselves that other peoples have knowledge that they do not have and decide that they want to learn from those peoples.”
Copying from the Chinese?
Here it is worth carrying out a mental exercise, again relating to electric mobility. Are we willing to openly try to copy from the Chinese? Are we willing to admit that Catl, number one in the world of batteries, is many years ahead of Europe in the techniques for recycling nickel, lithium and cobalt from used parts? Or do we agree not to attribute any competitive advantage China has to its subsidies alone, as if European governments did not pay any to producers directly or through “political” energy prices?
Mokyr continued with me on that day a few weeks ago in Turin: «The attitude to learn or not from other civilizations is similar in this to the attitude towards ancestors: whether the verb of the past is valid or one is willing to question it. The same goes for the willingness to learn from others, understanding that you can do better. It is a unique cultural phenomenon typical of the modern world in Europe, because for example the Chinese were very reluctant to learn from Europeans. The attitude towards innovation in China was to say: “If it were worth having certain knowledge, we Chinese would have invented everything already”. They looked at the rest of the world as if they were barbarians. The ancient Greeks were equal in this. They considered themselves the intellectual elite of the world and did not believe they had anything to learn from others. In Europe this has never existed in the modern age, in the age of rationalism. Europeans were always eager to learn from others and once they had learned, they used that knowledge. Europeans then plundered, enslaved and subjugated. They were not pleasant people. But they had no cultural arrogance and cultural arrogance is truly a defining, very common characteristic. Societies that have that characteristic will end up stagnant in innovation and economic growth. As China has been, for hundreds of years. At a certain point, however, the Chinese realized this, decided they couldn’t continue like this and started an explosion of creativity entirely based on Western technologies.”
Arrogant to whom?
Mokyr’s words lead to wondering if that cultural arrogance, which kept China backward for centuries, is now unique to Europe. And it is typical of Italy, which has very little production capacity for electric cars, which is among the last in the advanced world for penetration of electric cars and lives in the cult of its ancient combustion models. Italy is the country where the question of whether the future of mobility is electric is still questioned every day; where the installation of charging stations is slow; where we tell ourselves, trying to convince ourselves, that the phenomenon is a fad that is already passing away. Meanwhile this year 18% of new cars sold worldwide are electric (including plug-in hybrid), up from 14% last year; in the first quarter of this year, more electric cars have already been sold worldwide than all those sold in 2021.
And in the meantime, manufacturers around the world have already announced investments in the sector amounting to 500 billion dollars in the last two years. As for electric vehicle production in China in the first five months of 2024, it is 31.9% above year-ago levels. Nor is it true, as the G7 states and we repeat, that China has excess production capacity with the aim of flooding our markets: in the last month it produced 940 thousand electric cars and families in the People’s Republic bought 955 thousand . They buy more than they produce.
In essence we may not appreciate Xi Jinping’s political model and aggressiveness. I am among the many who hate him. But the Chinese at this stage are displaying some of the virtues of the Europeans of the sixteenth, seventeenth and eighteenth centuries. And we Europeans – Italians first and foremost – some of the Chinese characteristics of those same times. Let’s not give away, please, topics for another Mokyr book.
This article appeared in the Corriere della Sera newsletter, Whatever it takes, edited by Federico Fubini. To register, click here.
