Learning by Doing

“Learning by Doing”—the Ultimate Source of Technology Innovation

This explanation of China’s unstoppable rise in manufacturing is a response to the institutional theorists and many commentators on China. 

They may question China’s ability to innovate once it moves to the frontier, given its authoritarian government and “extractive” political institutions (see, e.g., Acemoglu and Robinson, 2012). 

They argue that China’s one-party political system implies that it necessarily constraints (or lacks) the freedom and incentives of technological innovations. 

Hence, China’s rapid development and miracle growth so far cannot have been propelled by innovations but instead by its backwardness and through duplicating technologies from advanced countries. 

Such institutional views are misleading and are not supported by economic history (e.g., Japan, Germany, and Russia before World War II and South Korea and Singapore after World War II).

For the sake of argument, consider the historical path traveled by the United States. 

A proto-industrial developmental stage took place in the United States before it detonated its first Industrial Revolution in the middle 19th century. 

Charles Morris (2012) noted that by 1812 (similar to China in the 1980s), the countryside of the northern states were thoroughly commercialized, the manufacturing activities were carried out in little hamlets around water falls, which provided the power to turn the mill wheel. 

This was an organic, bottom-up form of proto-industrialization during a natural market-fermentation period, originating in the increasing prosperity of ordinary farmers. 

Even during the late 18th century before 1812, American farmers had already become increasingly entrepreneurial and had engaged in market activities through commerce—exchanging homemade consumer goods. 

By the 1820s, such market exchanges were rapidly replaced by networks of organized commerce—built by rich merchants. 

Wage labor became a popular form of farm employment, and farm surpluses were often invested in mercantile and industrial undertakings instead of invested in land. 

Local merchants provided the impetus toward new enterprises.

However, this rapid proto-industrial development—which would soon set off the American Industrial Revolution and its economic takeoff—went completely unnoticed by the British. 

No, not even Karl Marx noticed. 

In the same way, China’s proto-industrialization in the 1980s and its significance for detonating the 21st century Industrial Revolution went completely unnoticed by the West in the 1980s and 90s and even until today. 

Through a European lens, America at that time looked very backward because of its overwhelmingly rural demography. 

In the 1820s, more than 90% of Americans still lived in the countryside, a pattern that changed very little even by the middle of the 19 century. 

“[B]ut America’s agrarian patina concealed a beehive of commercial and industrial activity.” (Charles Morris, 2012, “The Dawn of Innovation,” p76).

The well-known British man of letters, Sidney Smith once wrote in 1820 that “Americans are a brave, industrious, and acute people; but they have hitherto given no indication of genius, and have made no approach to the heroic…. 

Where are their Foxes, their Burkes, their Sheridans?....Where their Arkwrights, their Watts, their Davys?…. 

Who drinks from American Glasses? Or eats from their plates?” (Charles Morris, 2012, “The Dawn of Innovation,” p76).

However, as Charles Morris (2012) also keenly noted, the secret of the American surge in the middle and later half of the 19th century to overtake Great Britain did not lie first in advanced technology. 

Not until the United States had overtaken the British to become the workshop of the world after the 1890s. 

Throughout the entire 19th century Americans were students of the British in steelmaking and most other science-based industries.

The same could be said about 1980s’ or 90s’ China (to paraphrase Sidney Smith): “The Chinese are a brave, industrious, and acute people; but they have hitherto given no indication of genius, and have made no approach to the heroic…. 

Where are their Thomas Edison, Andrew Carnegie, Henry Ford, J.P. 

Morgan, John D. 

Rockefeller and Cornelius Vanderbilt.?…. 

Who wears cloths made in China? Or builds home with Chinese made tools?” But merely 10 years later in the 2000s after China joined the WTO, the Americans could not say such things anymore. 

However, they could say this today: “Who rides in Chinese trains? Or drives in Chinese cars? Or flies in Chinese airplanes?” Perhaps in another 10 to 20 years these questions will be answered, firmly.

So, to return to the original question of this chapter: Why is China’s rise unstoppable? The entire nation has been mobilized and posed for technology adoption and innovation, thanks to its successful detonation of its first and second industrial revolutions, but more importantly because major technological progresses and innovations throughout history and even today do not come from pure science or from a handful of geniuses, but from wide-spread manufacturing practices, from grassroots practitioners and their hands-on experiences in daily manufacturing processes. 

It is “personal contact that is most relevant in learning” to adopt and invent new technologies (Kenneth Arrow, 1969, quoted in McCloskey, 2010, p.162).

The English Industrial Revolution (e.g., the division of labor and the spinning jenny and the steam engine and the factory system) was not a revolution in scientific theory, but rather a revolution in practical knowledge, in industrial organization, in manufacturing skills, in the art of making things, in organizing practical matters, and in the way people produce, distribute, travel, communicate, and consume. 

Such breakthroughs and discoveries and accumulations of manufacturing knowledge can only be based on and driven by the activities of manufacturing itself, by hands-on learning process of producing and organizing things. 

Any country can become the global leader of technology innovations as long as it can embark on the path of industrialization and become the workshop of the world (or dominate a segment in global value chains), because technological knowledge and innovations are tacit, come from repeated practice, from concrete industrial buildup, from competition for excellence, from incentives for satisfying market demand and grabbing market shares, from the manufacturing process itself. 

By the same token, an already industrialized nation can completely lose its technological advantage and innovative power as soon as she gives up manufacturing.

This iron Law of “learning by doing” or “innovating by practicing” has repeatedly been proven to be a powerful force in human history. 

The German philosopher Hegel formalized this law in his philosophical analysis of the master-slave (Herrschaft und Knechtschaft) dialectic relationship (Hegel, 1807, The Phenomenology of Spirit). 

True knowledge and source of innovation belong to the practitioners (“slaves” or “apprentices”) instead of the masters or lords. 

The same logic of industrial innovation has applied equally to China. 

Through an American lens, throughout the 1980s, 1990s, and 2000s or even up to today, China has been merely the “blue color worker” for her American boss, using 100 million t-shirts to exchange for one Boeing 737 airplane. 

China still may appear backward despite decades of hyper-growth (now the world’s second-largest economy) because of its enormous agrarian population and low levels of per capital income (again: only 1/20th of the U.S. 

in the 1990s and 1/8th of the U.S. 

in 2014) and even still lower per capital consumption level (only 1/30th of the U.S. 

in the 1990s and 1/12th of the U.S. 

in 2014). 

China today still has more than 50% of its population living in rural areas. 

However, The Chinese are now the world’s busiest manufacturing practitioners, they discover new practical knowledge daily by manufacturing and assembling and moving and shoveling things around. 

For example, to build high-speed trains for travel and cargo across massive mountainous areas with dramatic day-night temperature fluctuations, Chinese engineers need to solve numerous practical and technical problems that German and Japanese engineers did not encounter. 

Moreover, Chinese engineers must conquer practical problems in all fields of manufacturing on a daily base to compete with other manufacturing giants and remain the world’s largest manufacturing powerhouse. 

Ten years ago, German high-tech companies might have allowed the Chinese engineers (but not Japanese engineers) to see their blueprints and not worry about their ideas being stolen, but no more. 

The Chinese have already caught up to the frontier of key manufacturing technologies in electronics, information, telecommunication, satellite navigation, supercomputing, semiconductors, precision lathes, material science and nanotechnology, shipbuilding, bullet trains, tunnel and canal construction, power generation and transmission, space science and military technology, among many others, through “learning by doing.”

Such advances through “learning by doing” and “inventing by practicing” may appear humble in the beginning, but from inches to miles and drops to waterfalls the Hegelian master-slave dialectic logic will propel China to the height of technological achievement in the not-so-remote future because it has the world’s largest manufacturing center to practice and innovate and push the frontier. 

Once one learns how to build, one opens the door to knowledge for creation and innovation. 

Without understand the tacit nature of technology knowledge, the history of the American Industrial Revolution, and the fact that the iron laws of “learning by doing” and “innovating by practicing” govern all nations’ industrial revolutions, one’s perceptions will be clouded. 

No wonder U.S. 

Vice President Joe Biden has repeatedly expressed in public critical views of China (similar to what Sidney Smith had said about America in the 1820s). 

He specifically responded in 2012 and 2014 to concerns that China was overtaking the U.S. 

to become the manufacturing superpower:

“We are the world’s largest GDP. 

We have the most innovative companies and productive workers, the finest research universities in the world, an entrepreneurial instinct that is unmatched by any country in the world. 

And within a decade North America will be the epicenter of energy in the world, not the Arabian Peninsula.” China, by contrast, had not developed “one innovative project, one innovative change, one innovative product.” “I challenge you, name me one innovative project, one innovative change, one innovative product that has come out of China.”

Of course, it is hard to separate political speeches from personal beliefs, but people resist change, whether a change to their status or a change in their own perceptions of how the world works. 

The irony here is that, just as Americans were the best students of the British in the 19th century and eventually surpassed them; just as American ingenuity and innovative powers were hidden behind their low-grade low-value-added but dynamic manufacturing that had yet to manifest itself in grand innovations and fundamental scientific breakthroughs; just as Americans were adept primarily in learning, copying, absorbing, and even “stealing” advanced technologies from Britain; and just as Americans were constantly inventing practical, small-step technologies in the industrial manufacturing process (such as in cotton harvesting/processing and turnpike building) that were often invisible to outsiders, so also have the Chinese been the best students of the Americans. 

What may be the most frightening thing about China is not how much China tries to “steal” from America just as the America “stole” from the British, but perhaps how much China resembles America. 

China is able to absorb and digest the most advanced frontier technologies in such short time without the top universities in the world, such as Harvard and MIT, to train first-rate scientists. 

China has, instead, the world’s largest manufacturing “campus,” where their practitioners can learn, practice, discover, and train younger generations of engineers and innovators, just as America in the 19th century absorbed the frontier of British technology, despite its lack of Trinity College (where Isaac Newton graduated and taught) or Oxford or Cambridge.

In the entire 19th century or even the 20th century, America produced no philosophers like Kant and Hegel, no scientists like Newton and Darwin, but American later on (after finishing its first industrial revolution and kickstarting its second industrial revolution) produced the world’s greatest inventors such as Thomas Edison and industrial giants such as Andrew Carnegie, Henry Ford, J.P. 

Morgan, John D. 

Rockefeller, and Cornelius Vanderbilt. 

The late 19th and early 20th century America was a time “which called for giants and produced giants—giants in power of thought, passion and character, in universality and learning.” (Friedrich Engels, Dialectics of Nature, Moscow, 1974, p. 

20)

The British must therefore give the Americans credit for their ability to absorb technologies from Britain in the entire 19th century. 

In the 19th century, China and India did not have the capabilities of the U.S. 

to learn and innovate and mimic or even steal British textile and rail industrial technologies, let alone the ability to improve upon them and invent their own. 

China and India (unlike Japan after 1860s) lacked a businessorientated mercantilist government to mobilize their grassroots craftsmen through village industries to kick-start a proto-industrialization, and thus lacked the powerful market demand to create the mass supply, the manufacturing base to “learn by doing” and “invent by practicing.” However, in the 19th century, the United States had created the powerful market demand and detonated the chain of industrial revolutions, and hence was in the position to become the next world superpower, thanks to one of its founding fathers, Alexander Hamilton (1755-1804), for his vision and advice of not to build America through its static comparative advantage of agriculture (at the time) but on its future strategic competitive advantage of (textile) manufacturing. 

Based on Hamilton’s development strategy manifested in the “American System,” it took America only 60 years (starting from 1820s) to catch up with Great Britain and her technology supremacy. 

By the late 1880s and especially around the turn of the 20th century, America had become the world manufacturing powerhouse and leader of industrial technology.

The ability to mass-produce capital (or mass-reproduce capital) was achieved in history through the second industrial revolution. 

The Second Industrial Revolution took place in Britain after the 1830s, and finished around the 1900s, started in the United States around the 1870s and finished around the 1930s, started in Japan around the 1920s and finished around the 1970s (interrupted by WWII for about 10 years). 

China has entered this stage after a decade of booming light-industrial activity and infrastructural buildup since the late 1990s. 

China just became a net capital (FDI) exporter by the end of 2014. 

Over the next decade, China is expected to export $1.25 trillion in fixed capital to finance global infrastructure buildup.

China’s expansive industrial growth and progress have borne fruit on an international scale: The first direct China-to-Spain freight train arrived in Madrid on December 10, 2014, from China’s Yiwu city on the east coast, after traveling 13,000 kilometers (8,000 miles) in a 21-day journey through Kazakhstan, Russia, Belarus, Poland, Germany, and France. 

The epic 13,000 kilometer journey cuts the traditional maritime shipping time by more than 50%.152 This newly operational route is the longest railway route in the world and is reminiscent of the Silk Road connecting China’s ancient capital city Xi’an and the Mediterranean Sea some 2,000 years ago.

Britain built the world’s largest railroad system in the 19th century, driven by a demand for transportation and market expansion so as to mass distribute raw materials and manufacturing goods. 

China is now building the world’s largest speed-rail system both domestically and internationally. 

It is always the capital suppliers who manage the production and distribution of massproduced goods, not the goods-demand side. 

China is now the workshop and manufacturing powerhouse of the world, and hence the supplier of goods and mass-produced capital. 

So China by nature needs a first-rate world distribution system to deliver its mass-produced goods/capital and intake raw materials from other corners of the world. 

Thus, building a new worldwide system of infrastructure to facilitate the delivery and distribution of its mass-produced goods is the natural manifestation of China’s capitalism.

Since Columbus, the cheapest way to navigate through the globe was ocean travel, which paved the way for the British Industrial Revolution. 

Hence, all the old industrial powers relied on the Atlantic, Pacific, and Indian oceans for trade and mass distribution. 

But times have changed, or at least China is bringing about this pivotal change. 

With its low manufacturing costs and know-how in mass producing roads, railways, ports, natural gas pipelines, high-speed trains and other infrastructure, China is connecting and integrating Southeast Asian, the Middle East, Central Asia, Russia, and Europe by rail, including another new line stretching 15,000 kilometers from China’s south coast city Shenzhen to Rotterdam. 

This is what the media called China’s “New Global Marshall Plans.” Rail transportation is much faster and more punctual and predictable than ocean transportation, and thus meets the 21st century’s needs for truly globalized industrialization. 

A new age of international trade based on land transportation is being created by China. 

There may not be a world economic event more significant than this new Silk Road—at least since the great voyage and the English Industrial Revolution. 

This reveals in just one particular angle the force of China’s rise and its magnificent impact on the economic and geopolitical structure in the 21st century.