Why Industrial Espionage Is Good for Mankind
WHY YOU SHOULD CARE
It may no longer be politically acceptable, but stealing technology is actually great for economic development.
By Tom Cassauwers
I’m from Belgium, a country that has dedicated statues to industrial spies. In Ghent, right next to a medieval cathedral, you find the likeness of Lieven Bauwens, who, in the 18th century, helped make Belgium one of the first countries to industrialize after the United Kingdom. How? By stealing British technology.
Bauwens stole British machine designs and even lured away skilled British workers — highly illegal at the time — to set up his own textile factories in Ghent. Eventually some bad political and economic dealings bankrupted him, and he died alone in Paris. But his shady moves kick-started the industrial revolution on the continent.
Today, of course, Belgium is a well-behaved follower of patent law, and it no longer builds statues to economic spies. But that doesn’t change the fact that the historical prosperity of most Western countries was built atop this sort of stealing. Which makes it all the more ironic that the West is currently having a collective temper tantrum about Asian, and particularly Chinese, industrial espionage.
[V]ery often industrial and economic espionage is a beneficial force.
Klaus Solberg Søilen, Copenhagen Business School
Having your technology stolen, of course, isn’t fun. But it’s a way in which weaker countries can quickly develop themselves economically and technologically. It’s a type of forced technology transfer that allows the weak to steal from the rich and push themselves out of poverty sooner.
For all its taboo, industrial espionage might actually be a good thing when we zoom out. “If you look at the perspective of mankind, so what is best for all of us, very often industrial and economic espionage is a beneficial force,” says Klaus Solberg Søilen, professor at Sweden’s Halmstad University and Copenhagen Business School, where he researches these sorts of espionage.
Søilen says there is evidence backing up that industrial espionage (when companies steal technology) or economic espionage (when governments do it) — two terms I use interchangeably here — benefit economic development.
The United States, for example, had its own Lieven Bauwens. In 1790, a recent British immigrant named Samuel Slater opened the first water-powered textile mill in the U.S. And he did so with stolen technology he took from his home country, earning the nickname “Slater the Traitor.”
Similar stories are found all over the European mainland, where countries generally developed by stealing state-of-the-art British technology. In turn, the British tried to protect their privilege by making the export of machines and immigration of skilled workers illegal. Primitive patent law, if you will.
This pattern was then reproduced in the post–World War II period, where large parts of Asia developed economically by playing fast and loose with Western intellectual property, often blatantly copying certain designs. Western countries, the old thieves, now were the most fervent opponents of these sorts of actions. The allegations made today against companies like Huawei, the Chinese telecom giant, of stealing U.S. technology are just the latest in a long trail. At the same time, now that Asia is quickly becoming a technological leader, countries like China are more enthusiastically applying intellectual property law. They don’t want poorer countries to do to them what they did to others.
Even economic studies confirm the beneficial side of economic espionage. Researchers at Barcelona’s Universitat Pompeu Fabra and Sweden’s Stockholm Institute for Transition Economics, for example, found that if East Germany had not engaged in economic espionage of West Germany during the Cold War, the gap in productivity between the two would have been over 9 percent larger by 1989. This would have had real results on the living standards of East Germans, although the study authors mention espionage contributed to less development in homegrown R&D.
So maybe we shouldn’t flip out too much about weaker countries stealing our technology, and start seeing this as a natural element of the development process, which will be paid back in things like lower worldwide poverty rates or fewer wars.
Of course, industrial espionage is still hurtful on an individual level. “It often is damaging to one nation and in particular to an individual company,” warns Søilen. So even though the spread of technology is great for humanity, individual countries and companies, which bankroll expensive research and development only to see it stolen, are hurt quite a bit.
So making the process of technology transfer between rich and poor countries less hurtful (and cloak-and-dagger) might not be a bad move here. In 2016, for example, pharmaceutical companies, after years of negotiations, agreed to relax their patents in developing countries on certain drugs like anti-AIDS medicines. This way poor countries could produce generic, cheaper alternatives without risking lawsuits from multinational corporations. Perhaps the West should embrace the spirit of Bauwens and Slater the Traitor, and start being less uptight about giving away our secrets voluntarily.
- Tom Cassauwers, OZY Author Contact Tom Cassauwers