Last Monday, Adrian Wooldridge, management editor of the globally famous Economist newspaper (probably the most influential weekly journal read by the global elite) and author of its famous “Schumpeter” column — a management column named after the famous Austrian economist — made a public lecture in Jamaica entitled “The Fourth Revolution — the Global Race to Reinvent the State”.

He was here at the invitation of the new regional Caribbean manager of the Inter-American Development Bank (IDB), Therese Turner Jones, to deliver the keynote address at their Jamaican rebranding launch. As we learned from Turner Jones, the IDB now focuses on six core attributes — closeness, responsibility, guarantee, innovation, quality of life, knowledge — all under a new tagline “Improving lives”.

It was therefore appropriate that the core message from Wooldridge is that re-inventing the state to meet the needs of the modern era is one of the most powerful ways of improving lives — particularly the billions in developing countries such as Jamaica.

Wooldridge describes the West as gripped by a mood of discordant apathy. “In the Republican election contest the front-runner is a protest candidate who insults his fellow candidates and journalists and makes ridiculous boasts about building a wall and forcing the Mexicans to pay it”, with similar discontent and discord in Greece, the UK, Europe etc.

The history of the state is, however, one of constant reinvention, his thesis being that the past four centuries had seen three-and-a-half great revolutions in government, and that this consolidated the lead of the West. Now a fourth revolution is upon us, with no certainty that the West will triumph.

Security

The first “security” revolution was the emergence of the European nation states in the sixteenth and seventeenth centuries. At the beginning of this period, life was “nasty, brutish and short” in the words of political theorist Thomas Hobbes, with wars of religion that had drenched Europe in blood.

In his key work, “Leviathan”, Hobbes outlined the basis of a new contract between rulers and the ruled, security in exchange for handing power to a sovereign.

To this, Wooldridge adds competition, meaning the European nation states competed fiercely with each other — such as using gunpowder for their galleons — as part of their global race to create overseas maritime Empires. In contrast, China used gunpowder for fireworks, and withdrew into itself.

Liberty and efficiency

The second revolution, in the eighteenth and nineteenth centuries, was one of liberty and efficiency, best explained by the great theorist John Stuart Mill. In his classic work On Liberty, the job of the state was to preserve ‘individual liberty’, the only justification for state interference being to prevent people from doing harm to others.

This ‘night-watchman state’ was created by the Victorian ‘liberal’ reformers who ripped out regal patronage systems, then known in England as ‘old corruption’, and replaced ‘cronyism’ with meritocratic and accountable government, including a professional civil service.

Staggeringly, Wooldridge observes, the British state shrunk in size even as it added police forces and schools, with taxation falling by one third from 80 million to 60 million pounds despite a 50 per cent increase in population between 1816 and 1836.

Welfare

The third revolution was the rise of the ‘compassionate’ welfare state, promoted by the founders of Britain’s Fabian Society, Sidney and Beatrice Webb. The idea was to apply scientific management to the business of the state, which would ‘do good’ by levelling inequality, eradicating poverty and making the unfair fair.

As a result of the spread of their ideas, the British state (and that of other major economies) got much bigger during the Great Depression, saw a further great expansion in the UK with the promise to build a New Jerusalem, eg, the National Health Service, implemented after World War II.

After several decades, a backlash occurred when the government seemed to fail at everything it touched in the 1970s, setting the stage for the promises of Reagan and Thatcher to end big government. However, their revolutions were, according to Wooldridge, only ‘half revolutions’. Despite success in the area of privatisation (which spread around the world), in her 11 years in office Thatcher only succeeded in reducing social expenditure from 22.9 per cent of UK GDP in 1979 to 22.2 per cent of GDP in 1990.

Similarly, in America, Reagan failed to get the spending cuts that were supposed to accompany his tax cuts, increasing the fiscal deficit, while George W Bush increased public spending faster than any President since Lyndon Johnson in the 1960s.

Wooldridge believes this understates the impact of big governance — the ever-expanding collection of rules that govern everybody’s lives — which has continued to increase under President Obama, especially in health care and finance.

Fourth revoloution

Wooldridge argues that we are now at the beginning of the fourth revolution in government, where things will change because they have to. The state cannot keep borrowing (Mckinsey calculates that developed world governments have added US$17 trillion in government debt since 2007), and now we have the problem of demography.

In Europe, the working age population peaked in 2012 at 308.2 million, and is set to decline to 265 million by 2060. The dependency ratio (the number of over 65s as a proportion of 20-to 64-year-olds) will rise from 28 per cent to 58 per cent.

In the US, the Congressional Budget Office reckons the bill for medical benefits alone will rise 60 per cent in the next decade, and faster thereafter.

It will also change because the state is out of date, due to the advance of technology and new ideas. Information technology may produce the same sort of productivity improvements in the service sector that the industrial revolution brought to manufacturing. A good teacher, previously consigned to just a few students, can now reach millions across the Internet.

Wooldridge argues that at some point, you have to decide what sort of state you want. His answer is much less.

“The modern overloaded state is a threat to democracy: the more responsibilities Leviathan assumes, the worse it performs them and the angrier the people get.” He adds, “Not only do people vote for more, only to be dissatisfied”, but “it is also a threat to liberty”.

When the state “takes half of everything that you produce” and “prevents Floridians from earning a living braiding hair without an expensive licence”, it has become a master rather than a servant. Better to do fewer things — and to do it better.

There are similarities between the bloated patronage-driven state of the early Victorian era and the entitlement-driven state of our own period. “Our Leviathan is just as out of tune with the spirit of the internet age as the early Victorian state was with the railway age.”

Most importantly, the West no longer has a monopoly on ideas to improve the state. Singapore has created the world’s most effective administrative machine, what Wooldridge describes as “Best education. Best value for money in health care. A small state but an effective one.”

Authoritarian China has racked up astonishing achievements — creating a world-class university system in a couple of decades, and extending pension coverage to an additional 240 million rural people in the past two years, far more than the total number of people covered by Social Security, America’s public-pension system.

In his book, Wooldridge describes the China Executive Leadership Academy (CELAP), a campus that looks like Harvard, “as redesigned by Dr No. In the middle stands a huge bright red building in the shape of a desk, with an equally monumental scarlet ink-well beside it. Around this, spread across some 42 hectares, are lakes and trees, libraries, tennis courts, a sports centre and a series of low brown dormitory buildings, all designed to look like unfolded books”.

CELAP’s students are China’s future leaders, with a syllabus that eschews ideology in favour of technocratic solutions. The two most common questions, says one teacher, are: what works best? And can it be applied here? The Chinese hurtle round the world, studying successful models from Singapore to Sweden.

Wooldridge observes that “Just as China deliberately set out to re-master the art of capitalism, it is now trying to re-master the art of government. The Chinese have important advantages. They know that they are in a race. They know what it is to lose.”

His key message is that the reinvention of a leaner, more efficient state is a key part of any country’s global competitive advantage, and that information technology now offers the prospect of a level of productivity improvement in the “knowledge worker” segment of the service sector similar to that formerly experienced by manufacturing.

To this long-awaited “public sector transformation”, I would argue, in Jamaica one could add the need for the completion of the previous three revolutions — in law and order, a meritocratic and accountable government (particularly the elimination of corruption), and a modern welfare state. In the first two cases, this is something Jamaica had and lost. In the latter case, we need to work out how to make it affordable in advance.