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Russia dreams of Silicon Valley sheep

image The Economist has an interesting article on the Kremlin’s latest push to modernize Russia’s economy and kick-start a wave of innovation which would supposedly lead to a “Russia with nuclear-powered spaceships and supercomputers.”

Far-fetched as this premise sounded, the article raised many thought-provoking questions on whether or not (and how) Russia could hope to build an innovation hub similar to the US’s Silicon Valley. One tidbit I found very interesting was that this isn’t the first time the Kremlin has tried something like this. Apparently, the Soviet Union, had attempted something similar in the past with very interesting political ramifications:

In the 1930s leading Soviet engineers arrested by Stalin laboured in special prison laboratories within the gulag. After the war, when Stalin required an atomic bomb, a special secret town was established where nuclear physicists lived in relative comfort, but still surrounded by barbed wire. Subsequently hundreds of secret construction bureaus, research institutes and scientific towns were set up across the Soviet Union to serve the military-industrial complex. They also spawned a technical intelligentsia. In the 1980s it was this class of educated people—permitted more freedom and better food than the rest of the country, but still poorly paid and not allowed to go abroad—that became the support base of perestroika [former Soviet Leader Mikhail Gorbachev’s attempt to liberalize/open up the Soviet Union which ultimately resulted in its collapse].

Russia’s rulers, however, seem keen on breaking this link between political openness/democracy and innovation:

Yet the experience of Mr. Gorbachev’s perestroika—which started with talk of technological renewal but ended in the collapse of the Soviet system—has persuaded the Kremlin to define modernisation strictly within technological boundaries. Hence Mr Medvedev’s warning not to rush political reforms. His supporters argue that only authoritarian government is capable of bringing the country into the 21st century. “Consolidated state power is the only instrument of modernisation in Russia. And, let me assure you, it is the only one possible,” said Vladislav Surkov [the Kremlin’s “chief ideologist” who put forth the current plan]

Is Surkov right about the lack of importance of democracy and political freedom? It’s hard to say for sure, but the success of the Asian tigers (esp. Korea, Taiwan, Singapore, and China) in this arena suggests that, at first glance, Surkov is right. Innovation and rapid economic growth do not require democracy so much as:

  1. effective and (relatively) un-corrupt governments
  2. free market systems which allow for consumer/business choice and property rights protection
  3. government investment in “innovation hubs” (e.g., Silicon Valley) where companies/universities/individuals readily share insights and collaborate

Of course, the flip side of the argument, is that its pretty rare for (1) and (2) to exist without democracy and at least basic political systems in place around due process and the respect for individual rights.

imageA successful attempt on (3) is difficult, regardless of the type of government authority (think of the countless failed attempts by cities, states, and countries to replicate Silicon Valley), but is especially difficult for “command regimes” in attempting to encourage innovation. It’s much simpler for an authoritarian government to find ways to double steel production (a la the Soviet Union’s Five-Year Plans) than it is for an authoritarian regime to encourage the trial & error, open exchange of ideas, and “disorganized” development which is necessary to drive innovative technology disruptions (which by definition can’t be “commanded”).

I’ve even heard it theorized that one reason the Soviet military elite allowed the perestroika which helped lead to its eventual collapse was their recognition that authoritarian regimes were not effective at encouraging the sort of innovation needed to build the computer technology which was giving (and still gives) the US its military advantage over the rest of the world.

But the harshest (and snarkiest) indictment of Russia’s short-sighted strategy here comes at the end of the Economist piece:

Mr Surkov is quite right when he argues that democracy would not stimulate technical innovation. The reason for this, however, is that under democracy a country with a declining population, a frighteningly high rate of birth defects, crumbling infrastructure and deteriorating schools might find a better use for taxpayers’ money than pouring it into Mr. Surkov’s Silicon Valley dreams.

Russia’s economy will likely grow quickly, regardless of the success of the Kremlin’s latest plans, by virtue of its resourceful population and economic convergence, but I suspect its future in terms of quality of life and innovation depends on whether it ever gets around to its much-needed political reforms.

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One Comment

  1. […] It also provides some interesting lessons for countries like Russia who are struggling to gain their own foothold in the lucrative technology indu…: […]

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