The Olympics and the wider struggle

The last three Summer Games have seen a titanic battle between the US and China to head the medals table. Combining the three, China is just ahead, having 121 golds to America’s 116. But America headed the table in both 2004 and 2012, and it is the massive haul in Beijing which just edges it for the Chinese.

Is this a portent of the wider struggle for global hegemony in the 21st century? Just 20 years ago in Barcelona, the US was well ahead with 37 golds to China’s 16. The Chinese have caught up – or so it seems.

Building a team for success is a major challenge, and massive respect to those behind the triumph of Team GB. But from an organisational perspective, it is straightforward and clear. The aim is unequivocal. To win. The methods are well known, look at Mo Farah’s brutal training regime. To succeed in distance running, an absolutely punishing routine is needed.

The same can be said for the transition the Chinese are making from a peasant to an industrialised economy. The goal is clear. The way of achieving it is well understood, many countries have already done it. But how do you move beyond this to create a successful post-industrial economy?

We have been here before. The old Soviet Union used terror, iron discipline and massive inequality to build an industrial economy. They succeeded. But they had no idea of how to move beyond this, to the complexities and subtleties of an information age economy.

It is easy to make a case for American weakness. The twin deficits of the balance of payments and the massive public sector gap between expenditure and income, the increasingly divided and embittered nature of policy discourse in the country.

But in terms of the ability to innovate in a complex globalised society, witness the spectacular success stories of the past 30 years, such as Microsoft, Google and Facebook, all of them American.

The networks which make up American society are fluid and dynamic. They have the sorts of structure which both encourage innovation in the first place, and stimulate its widespread adoption.

The network of government, the network of companies, the network of universities, all of them are strongly coupled to each other. The US has learned how to make public-private partnerships work, not by reams of turgid legal contracts a la Gordon Brown, but by honing the structure of connections between these three crucial sectors of the economy.

In contrast, the networks of Chinese society are much more rigid and hierarchical. The Communist Party is the prime example. But Chinese culture in general is far more inclined to defer to authority, to the established wisdom.

The 21st century will belong to those who are best at technological innovation. The open, fluid dynamic structure of the networks of American society put the US still in prime position.

Paul Ormerod is an economist and partner at Volterra Partners LLP, and author of Positive Linking: How Networks Can Revolutionise the World