Technology and Power

This commentary is part of Technology and Power, a series from the CSIS Strategic Technologies Program on the development and governance of key technologies and how they can be used to gain national advantage.

Power is the ability of individuals or groups to shape events. Technology is the practical application of scientific knowledge and the invention and use of devices to improve human performance. New technologies change economies, markets, and cultures by creating new opportunities. While some have a growing fear of technological change, technology remains the best source of continued economic growth and military strength.

This means the creation and use of technology has become a policy issue like never before. This includes security issues like supply chain security or cybersecurity, military uses for new technologies, tech governance (including rules for competitiveness and responsible use), and investments in research, workforce, and building the digital infrastructure.

Technology creates new sources of wealth and power. This began with the industrial revolution, when early industrial and agricultural devices changed how societies created wealth. Agriculture had been the source of wealth creation for millennia: those who controlled the land were the most powerful. Technology changed this: two centuries ago, land was replaced by factories and industrial production as the source of power and wealth. Now factories are being replaced by digital and networks technologies that provide services, the creation of intellectual property, and intangible goods. While the scope of technology’s application has increased exponentially, this is another phase of an upheaval that began at the end of seventeenth century and took off in the twentieth.

The policy issues created by technology are difficult but not unmanageable. They are difficult because they do not always map to the rules and concepts developed for the industrial age.

Recognizing this helps frame policymaking on several fronts: how to accelerate innovation, entrepreneurship, and expanded opportunities for wealth creation; how to build the digital infrastructure needed for growth; how to deal with the social and political consequences of technology’s disruptive effects; and how to use technology to improve national security. These issues mean that countries are really in two technology “races,” not only over how to create it but over how to govern it to produce the most benefit.

The pace of innovation means that to stand still is to decline. The ability of nations to create and use new technologies will determine national strength. This makes innovation and entrepreneurship policy issues. Innovation is the process of turning knowledge (often from research) into new products and services. Entrepreneurs—the individuals willing to take the risk of investing in new goods and services—are the crucial link between research and innovation. Some call this a “national innovation base.” The innovation base in advanced countries has many participants, including researchers, entrepreneurs, investors, and large companies.

As societies acquire new technologies, the result is to change the balance of power among nations. Technology has become a focal point in the geopolitical arena, particularly in the contest between China and the democracies. This is not a replay of the Cold War—China’s economy is too deeply intertwined with other nations and its market too large to be ignored. The Cold War involved a small number of advanced economies. Research, manufacturing, and finance were concentrated in these few countries. There was a clear bifurcation and little contact among the blocs. On one side, almost all were democracies, and many were NATO members or allies. This Western concentration was diluted in recent decades as wealth and manufacturing have become distributed, albeit unevenly, not only in China but now also in countries in the Middle East, Asia, and Latin America.

The end of the Cold War allowed a global market to emerge under a rules-based international order. This order created incentives to improve transport and telecommunications by shrinking the political risk of international finance and trade. A rules-based international order lowered costs for trade and created incentives for firms to take advantage of globally distributed resources for production and serve globally distributed markets. The lowering of transaction and transportation costs fueled the growth of international trade and investment, creating the much-discussed wave of “globalization” that began in the 1990s.

But the rules-based international order, its institutions, and the democratic values behind it are being challenged as they have not been challenged for decades. Russia and China believe now is the time to push hard against a weakened and befuddled West and the international order that the United States created with its allies in 1945. Technological leadership is a central part of this competition. One part of the technology contest is persuading the “new entrants” in the developing world that the existing order serves their interests better than the authoritarian alternative, and economic performance is important for making the case.

The terms of competition are economic and technological more than military. The United States is not in an arms race but in a contest over the rules for commerce and finance and for the creation and use of technology. Success will be the result of the ability to innovate and create new technologies, as well as the ability to effectively govern innovation in ways that not only manage risk but also create opportunity. Innovation is easily stifled. Perhaps that is why the ability to innovate is still relatively concentrated in perhaps a dozen countries that create the majority of new inventions—the result of culture, investment, and attitudes toward risk that make societies enhance or limit their ability to innovate. This picture is changing as the number of countries with innovative strength expands, but for now, the leading actors in this contest are China, Japan, the European Union, Canada, and the United States.

Having a large or powerful military does not guarantee success in this new contest, nor is military spending the fountain of innovation that it was in the last century. Technology and innovation are the products of private efforts, not governmental ones (although having the right framework of policy, regulation, and law shapes competition and provides advantage among nations and blocs). This gives private actors a degree of direct influence and power not seen since the late Middle Ages (think of the Medici or Fugger families) before the rise of the nation-state and its powerful institutions. This means that those countries that are most effective in aligning government and private actors will have an advantage (and this does not discount China and its skill in using political power to align private actors to national goals).

This series of short essays will examine key technology issues relating to governance, growth, and national power. It will look at cutting-edge technologies, how they are created, how they might be governed, and how they can be used to gain national advantage. The first will look at semiconductors, the “foundational” technology for the new digital economy, followed by discussions of digital currency, the metaverse, quantum computing, digital identity, 6G telecom, the political effect of networks, and other relevant topics. These will reshape the global order. This series will be an initial look at the foundations of technological strength in the future.

James Andrew Lewis is senior vice president and director of the Strategic Technologies Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).