Democracy and growth in the twenty first century the diverging cases of china and italy

DEMOCRACY AND
GROWTH IN THE
TWENTY-FIRST
CENTURY
The Diverging Cases
of China and Italy

Francesco Grillo and
Raffaella Y. Nanetti


Democracy and Growth
in the Twenty-first Century
“All social and political systems need to evolve so as to survive and thrive,
adapting to changing times and technologies. Francesco Grillo and Raffaella
Nanetti pose the right questions about our overly-rigid liberal democracies,
while illuminating the challenge through a powerful comparison between their
own sclerotic Italy and the currently more adaptive authoritarian China”.
—Bill Emmott, former Editor of The Economist
and author of The Fate of the West
“By now the literature on China is huge, yet this book stands out in terms
of originality and quality. China’s economic and technological advancement is
systematically linked to its political system. The comparison with Italy is useful
to understand what Western democracies may learn from China’s case”.
—Romano Prodi, former Prime Minister of Italy
and President of the European Commission
“This book compares China and Italy, providing a novel perspective. The
Chinese people need to find the future direction to maintain sustainable innovation and growth after 40 years of economic success. China may draw some
lessons from Italy on how to keep the balance between democratic governance
and innovation. Can we have Democracy promoting innovation and innovation promoting democratic governance at the same time?”
—Liu Jianxiong, Institute of Economics, Chinese Academy of Social Sciences

“When considering matters of innovation and growth, great value comes from
comparing case studies that differ significantly from one another. Patterns that
may be invisible in one single context can pop into view when carefully contrasted and compared. This book occupies valuable terrain between long-term
structural features, and medium-to-short-term adjustments subject to politics
and policy manipulation. It confirms Francesco Grillo’s and his coauthor’s
unique capability to master different academic approaches to make sense of
a problem which is going to be fundamental. Their four-sided approach to
explaining innovation is eminently applicable in these and other settings where
stakeholders seek to advance innovation”.
—Ernest Wilson, Dean of the Annenberg School of Communication,
Los Angeles, USA and visiting fellow at Stanford University, USA


“This book offers an interesting view on how societies manage or mismanage innovation strategies in practice and how the wider political and institutional context acts as the intermediary in converting the stated policy goals
into actual outcomes. Francesco Grillo and Raffaella Nanetti show how liberal
democracies could learn from other regimes in this conversion process without
at the same time compromising their core principles. Solutions to such fundamental problems are never simple, but the comparison of the Chinese and
Italian case outlined in this book makes it apparent where one could start”.
—Mihkel Solvak, Institute of Political Studies, University of Tartu, Estonia
“How can democracy can still benefit from a knowledge-based society? How
and to what extent are our social systems increasing their ability to transform
information into knowledge and wisdom as we need to face the big global
challenges? This book addresses in a very original and provocative way some of
the basic issues we need to face nowadays at the global level. I strongly suggest
this reading as one of the most interesting contributions to the international
debate you can currently find”.
—Stefania Giannini, Assistant Director General for Education at UNESCO,
Former Italy’s Minister of Education Universities and Research

Francesco Grillo · Raffaella Y. Nanetti

Democracy and
Growth in the
Twenty-first Century
The Diverging Cases
of China and Italy


Francesco Grillo
Sant’Anna School of Advanced Studies
Pisa, Italy

Raffaella Y. Nanetti
University of Illinois at Chicago
Chicago, USA

ISBN 978-3-030-02013-2
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To my father the first to teach me that you are what you know.
—Francesco


To take part in a severe contest between intelligence, which presses forward,
and unworthy, timid ignorance obstructing our progress.
—James Wilson, Businessman and founder of The Economist


Preface

As Xi Jinping repeatedly reminds, China has still to “solve major difficulties” in order to transform an economic miracle that lasted four
decades into a “moderately prosperous society in all respects”. And yet
it is extremely interesting to look at China when we are in search of
solutions for a crisis of the West which is serious and deserves the best
intellectual resources we are capable of. In a nutshell, this is the reason which has made the authors invest energy and dive with enthusiasm into this book and has been the motivator for so many people who
helped us in China, Italy and elsewhere with this research undertaking.
The age is gone when Western intellectuals used to come back from
visiting a country supposed to be on the verge of developing what
would have ultimately been ‘the perfect society’, saying that in Moscow

even the snow was whiter. Today there are no longer models to be
exported and the Chinese leadership knows this better than many of his
admirers.
China is a country governed by one of the best trained and selected
political leaderships which has experimented innovative methods to
develop policies and which is using technologies to solve problems in
original and interesting ways. We will argue that the Chinese approach
ix


x    
Preface

to progress is one of the interesting methods to tackle the “innovation
paradox” which is, as we will try to explain, one of the greatest challenges that define the twenty-first century. And yet it is a leadership
confronted by some major intellectual and political puzzles. This work
is an attempt to describe both the nature of China’s success and to better understand how it can continue to grow avoiding middle-income
traps and solving those puzzles.
As a matter of fact, a key difference between today’s China and the
Soviet Empire that fell in 1991 is the unique Chinese capacity to combine pragmatism and vision, humbleness and ambition. They have the
advantage of a framework they call “ideology” but this ideology is constantly tested and adapted through “practice”.
The other difference is that today the West is weaker than it used to
be when it was challenged by the Soviet Union during the “cold war” or
even by Japan at the start of the 1990s. In terms of today’s challenges,
China is strong relative to the West. And yet in our work, we will argue
that a stronger West suits China well.
The West is weaker not as much in terms of its economy; even
though our research shows that our capacity to create prosperity from
technological progress has declined. We are weaker politically because
we hold on to a mode of experiencing democracy which became obsolete in its participatory structures, while we are still a long way from

providing an alternative theory on how complex societies should be
governed.
Italy provides an interesting case as one of the core countries of the
liberal democracy order which has been a pioneer of a wider European
decline. We offer an interpretation of the crisis which goes beyond analyses which seem to be short-sighted and recommend a framework for a
“renaissance” which is still possible. After all, Italy is the country where
the idea of the West itself was arguably born through the vision of its
artists and it is not a case that Italy has anticipated an economic, cultural and symbolic decline which is now shared by the countries partaking of the post war world order: France, Spain, Germany, the United
Kingdom and the USA.
Above all, the West is weak in terms of its current collective psychology, which is betraying the yearning to explore, that combination of


Preface    
xi

enthusiasm and curiosity which was powerful enough to define what
the West is about. The West used to make history; it is now waiting for
history to happen sitting in front of the screen of a TV set.
This is why an intellectual travel to China is still what it must have
been for Marco Polo at the sunset of the Middle Ages: one of the most
effective ways to recover the memory of what we are about. It should
also be an opportunity for the East to better engage, void of reciprocal
prejudices, with the West in the reflection on democracy of the future
and its relationship with innovation and prosperity in the twenty-first
century: a discussion which is going to be central in London, Rome and
Brussels as well as in Beijing.
However challenging, it will be the debate of the next decade.
Essential for its consequences on the policies to be chosen and implemented, the relationships between people and institutions, the industrial and environmental strategies to be envisioned and pursued, the
business ventures to be encouraged. It will be crucial to learn from each
other to navigate more wisely unchartered waters and to develop the

intellectual instruments needed to make sense of a mutation that we
still have to fully understand.
The objective of this book is to start a debate relevant for policy makers, public opinions and intellectuals and to offer fresh ideas—like the
ones we offer at the end of sections on China and Italy, as well as in the
concluding chapter—needed to move knowledge forward.
Pisa, Italy
Chicago, USA

Francesco Grillo
Raffaella Y. Nanetti


Acknowledgements

The undertaking of this book and the work which will take off from it
would have not been possible without the support of many friends and
colleagues to whom we express our gratitude.
Francesco thanks his co-author Raffaella: her extraordinary patience,
capacity to work, academic coherence and speed have been vital to
complete this undertaking. In part, this book leverages research conducted during his Ph.D. years at the London School of Economics
by Francesco with Prof. Robert Leonardi (Bob) who is also Raffaella’s
lifetime partner. For his insights while she was working on this book,
Raffaella acknowledges her husband Bob, the critical mind and the loving care she has relied upon for fifty years.
We thank Romano Prodi, former Italy’s Prime Minister and President
of the European Commission and Stefania Giannini, Deputy Director
at UNESCO and former Italy’s Minister for Educations, Universities
and Research for their advise and comments.
Francesco wants to thank his colleagues at the University of Oxford
who provided support, insights, feedbacks and useful critiques. Roger
Goodman and Margaret McMilan, current and former warden of St

Antony’s College; Rana Mitter, Director and Anna Lora-Wainwright
xiii


xiv    
Acknowledgements

of the University China Centre; Kalypso Nikolaidis, Director of the
Center for International Studies and the Department of Politics and
International Relations; Hartmut Mayer and Paul Betts, current and
former Director of the European Studies Centre. Conversations on
democracy with Cristina Blanco Sio-Lopez and on free trade with
Yuraki Areda were inspiring and Yuraki helped to liaise with Japan. It
was also useful to talk about possible explanations of innovation and
“innovation paradox” with Ian Goldin and Pantelis Koutroumpis of
the Oxford Martin School and Peter Tufano, Dean of the Said Business
School. Many thanks to Jan Zielonka who reminds that intellectuals
ought to be ready to acknowledge mistakes.
He acknowledges with gratitude Nicola Bellini at Sant’Anna in Pisa
whose constant intellectual and moral support has been critical to many
of Francesco’s projects. The same applies to Bill Emmott, former editor
of The Economist, who to Francesco is another comrade in arms. Their
opinions maybe have been critical at times, which makes their friendship
even more valuable. A third comrade to Francesco is Ernest Wilson III,
Dean of the Annenberg School of Communication and now teaching at
Stanford.
Francesco is particularly grateful to the many friends who made possible three extraordinary periods of fieldwork in China in 2018. Wang
Gangy, the President of the China International Publishing Group with
whom he shared very inspiring conversations and whose organization
set up most of the meetings in Beijing in the first field work; Chen

Jian of the China Radio International with whom Francesco travelled
through the Sichuan province and Chengdu (discovering how delicious
is the Chinese cuisine); Prof. Shouji Sun and Prof. Sun Jie, Dean of
University of International Business Economics who invited Francesco
to teach at the summer school in July where Francesco gave lectures to a
class of sixty one very passionate and smart students. Amongst the students at UIBE, Francesco needs to remind Gao Yu Xuan William, Zhu
Hong Judy, Cheiry Yang and Cong Yu Carrie and their support and
great contribution of ideas.
Amongst the people met during the field works, we thank Xu
Xiujun, Executive Director, and Chengyi Peng, Researcher, Institute of
World Economics and Politics; Ma Tian, Secretary of the Communist


Acknowledgements    
xv

Party of China in Huopu in the Sichuan Province; Zhang Guangping,
Deputy Director General, International Poverty Reduction Centre; Liu
Xu, Deputy Director General, Chinese Academy of Macroeconomic
Research; Ji Feifeng, Research Development of China Development
Bank in Shanghai. It was also inspiring to meet young colleagues at
some of the most brilliant Chinese firms like William Cheng at Alibaba
and the team of the Alibaba Research Institute; Meichen Zeng, Senior
Assistant to President, Chendong Li and Terence Wang at Hanergy
Holding, Rong Pan, Deputy General Manager, and Yan Song, strategic
development supervisor, IFLYTEK; Michael Pu, General Manager of
NIO and his colleagues.
We are particularly indebted with Francesco’s very good friends Mick
Dunford former Professor at Sussex University and now at the Institute
of Geographical Sciences and Natural Resources Research within the

Chinese Academy of Sciences and Liu Jianxiong, Associate Professor,
Institute of Economics, Chinese Academy of Social Sciences. It was a
privilege to talk with Prof. Wang Yiwei, Deputy Director of Institute
of Xi Jinping Thought on Socialism with Chinese Characteristics for
a New Era, Prof. Li Shigang, Director of the Institute of Economic
Research of the National Development and Reform Commission
and Prof. Zhang Yansheng, Principal Researcher of China Center for
International Economic Exchanges. Conversation with Prof. Li Li about
the debate in the Communist Party of China while visiting the National
Museum at Tiananmen: it was essential to reflect on how Marxism is
still worthwhile to be studied.
We got some interesting insights from Rogier Creemers from Leiden
Institute. Our friend Siim Espenberg introduced us the Estonian practice on electronic voting; Prof. John Keane and Prof. Kelly Burns helped
us from Australia.
It was useful to compare China with Japan with Sato Shunsuke and
Soshei Nishumura, Director and Deputy Director at the METI in
Tokyo.
Important feedback and support came from The Economist bureau in
Beijing and especially from David Rennie, John Parker and Ted Plafker.
Michael Pettis of the Carnegie Endowment for International Peace gave
an original insight of Beijing artistic life and creativity.


xvi    
Acknowledgements

It was interesting to meet Anna Facchinetti and Alessandro Zadro
at the Galileo Galilei Italian Institute established by Sant’Anna at
Chongqing University, Serena Rovai Founder and Director of the
Europe-Asia Centre for Management and Innovation at Grenoble

Ecole de Management and Luca Dell’Anese, Vice Dean of the School
of Economics and Business Administration at Chongqing University.
Discussions on how to trigger and manage innovation with Roberto
Barontini and Alberto Diminin at Sant’Anna were, as always, encouraging and important.
Special gratitude goes to Italy’s ambassador in Beijing Ettore
Francesco Sequi and his deputy Giuseppe Fedele. Zhang Aishan of
China’s Embassy in Italy and Davide Antonio Ambroselli, Director of
the Italian Institute of Chinese culture, were essential for the organization of part of the meetings and we hope that this has been the start of a
long, fruitful partnership.
Francesco is also deeply thankful to his colleagues at Vision who
helped him as a sounding board on his writing and sometimes as
patient editors. Amongst them Gianfilippo Emma, Giovanni Esposito
and Filomena Berardi.
Francesco’s greatest gratitude goes to his mother and father who gave
him the enthusiasm to pursue knowledge, to his nephew Matteo who
followed Francesco in Beijing, to his daughter Chiara of the younger
generation which nourishes the curiosity which makes the world go
round and to Antonella because love is about to share a challenging and
fascinating voyage.


Contents

1 Introduction: Democracy, Innovation and Growth1
1.1 The Innovation Paradox and the Puzzle of Democracy 6
1.2 The Sunset of an Idea 14
1.3 Innovation, Democracy and Efficiency: The Theoretical
Foundation of the Research 27
1.3.1 Disintermediation of Knowledge Holders,
Loss of Trust in Institutions of Democracy

and Emergence of New Political Actors 28
1.3.2 Technology’s Unfulfilled Promises, Exclusion
and Selection of the Few 29
1.3.3 Stagnation, Intergenerational Conflict
and Loss of Efficacy of Traditional Instruments
of Economic Policy 30
1.3.4 Internet, Individualism, Anomie and Social
Disconnect31
1.4 The Thesis: Knowledge Democracy to Solve the
Innovation Paradox 33
1.5 Back to the Classics 35
xvii


xviii    
Contents

1.6 Democracy: Looking for a Policy-Tuned Definition
of a Classical Concept 38
1.6.1 Identification of Needs 42
1.6.2 Access to the Judicial System 43
1.6.3 Diffused Knowledge into Knowledge-Based
Policies44
1.6.4 Media for Analysis, Monitoring, and Evaluation 46
1.6.5 Citizens’ Engagement in Changing Policy
Implementation48
1.6.6 Accountability Tools 49
1.6.7 General Elections 50
1.6.8Referenda 51
Bibliography52

2 Making Democracy Work for Innovation57
2.1 The Transformation of Civil Life and Democracy:
A Social Capital Update 57
2.2 IT Enabling Multilevel Governance 65
2.3 Innovation as Technology-Enabled Societal
Transformation68
2.4 Linking Technological Innovation, Civic Engagement
and Sustainable Prosperity 72
2.5 Democracy of the Future in Action: The Research
Strategy76
Bibliography78
3 China: Advantages and Risks of the Entrepreneurial State 83
3.1Introduction 83
3.2 The Flight of the Dragon 88
3.2.1 The Growth Syndrome 88
3.2.2 Beyond GDP: Health and Education 92
3.2.3 The Dream of a Society with No Poverty 94
3.2.4 From Imitation to Innovation 99
3.3 The Seven Challenges and the Way Forward 104
3.3.1 The Battle for “Clear Water and Green
Mountains”105


Contents    
xix

3.3.2 What Does Corruption Really Mean? 109
3.3.3 Will China Be the Centre of the Next Global
Financial Crisis? 111
3.3.4 Deglobalization, Robots and New Dragons 114

3.3.5 The Cost of “Letting Some People Get Rich
First”118
3.3.6 Silver China 121
3.3.7 Navigating Unchartered Waters 122
3.4 Internet, Socialism and the Six Characteristics
of Chinese Knowledge Democracy 124
3.4.1 The Nervous System of China’s Society 129
3.4.2 Bottom-Up Democracy 132
3.4.3 Local Experimentalism Within a Centrally
Planned Economy 134
3.4.4 Beyond Bell: The Evolution Meritocracy 137
3.4.5 Harmony and Animal Spirits 142
3.4.6 Internet as a Political Space and Industrial Policy 145
3.5 The Argument Expanded. China and Its
Neighbourhood: Is There an Asian Model? 147
3.6 Conclusions and Ideas for a New “Normal” 153
3.6.1 Characteristics to Be Leveraged 154
3.6.2 Vulnerabilities to Be Kept at Bay 155
Bibliography159
4 Italy: Simultaneous Crisis of Democracy, Innovation
and Economic Efficiency165
4.1 Introduction: The Background of the Italian Case 165
4.2 Italy as a Laboratory of the Decline of the West 176
4.2.1 Weak Capability to Maintain, Attract
and Use Human Capital 178
4.2.2 Economic Crisis as a Cognitive Problem 184
4.3 Italy’s Innovation Paradox and Obsolescent Democracy 192
4.3.1 A Torn Social Contract 193
4.3.2 The Limits of Reforms Without Change 195
4.4 Cycle and Counter Cycle: A Strategy for a

Twenty-First-Century Renaissance 199


xx    
Contents

4.5 The Argument Expanded: Europe at a Crossroad
Between Transformation and Decline 219
4.5.1 The Whammy Against Democracy 220
4.5.2 The Whammy Against Economic Prosperity 224
4.5.3 The Whammy Against the Social Fabric 226
4.5.4 The European Union: Transformation
and Not Decline 227
4.6 Conclusions and Ideas for a Possible Renaissance 231
4.6.1 Vulnerabilities to Be Overcome 232
4.6.2 Assets to Build Upon 234
Bibliography236
5 Knowledge Democracy as Key to Twenty-First Century241
5.1 What the Cases Underscore: Limits of Comparability
and the Risk of “Exporting” Democracy Models 248
5.1.1 Evidence from the Two Case Studies 249
5.1.2 Questions252
5.2 Laboratories of the Democracy of the Future:
Australia, Estonia, Canada, Switzerland 253
5.3 Ten Ideas for Developing Knowledge Democracy
as a Solution to the Innovation Paradox 264
5.4 Limits of Our Investigation and Areas for Further
Research276
5.5 Marco Polo and the Spirit of the West 278
Bibliography281

Index283


List of Figures

Fig. 1.1
Fig. 1.2
Fig. 1.3
Fig. 1.4
Fig. 2.1
Fig. 2.2

Fig. 2.3
Fig. 3.1
Fig. 3.2

Productivity growth rates, G7, average of yearly increase
(Source Authors on OECD data)
8
Income per habitant; yearly growth rates; 1970–2017
(Source Authors on OECD data. Accessed 28 August 2018) 19
The framework of the previous research on “democracy,
innovation and efficiency” (Source The authors) 33
A policy-tuned redefinition of democracy in an Internetbased society and its participatory channels: an information
system (Source Authors) 41
The relationship between democracy, innovation
and growth (Source Authors) 72
GDP growth rates (1996–2016; horizontal axis)
and The Economist ’s democracy index 2015 (vertical axis).
Differences versus global averages (Source Authors,

using data from the World Bank and The Economist )74
The thesis on a global level (Source Authors) 77
Evolution of life expectancy in selected countries,
from 1960 to 2015 (Source Authors based on WHO data) 93
Number of people living in absolute poverty; millions;
1990–2015 (Source Authors on UN data) 95
xxi


xxii    
List of Figures

Fig. 3.3

Percentage distribution of worldwide kilometres
of operating subways in cities (left) and high-speed trains
(right) in 2018 (100% 16,339 km subway; 41,820 km
high-speed train) (Source Authors, using data from UIC
[Union International des Chemins Fer] and International
Association of Public Transport)
Fig. 3.4 Evolution of air quality in selected global cities—annual
mean, PM 10 and PM 2.5 concentration (Source WHO)
Fig. 3.5 Evolution of share of renewable energy (left) and electric
(BEV and PHEV) cars (right); % of world total in 2016
(Source Authors based on BP’s [Statistical Review
of World Energy] and Global EV Outlook)
Fig. 3.6 Percentage evolution of debt over GDP in China
(2012–2017) (Source Authors based on IMF data)
Fig. 3.7 Percentage exports over GDP for selected countries
and the world (1960–2017) (Source Authors using

World Bank data)
Fig. 3.8 Share of total national income for different segments
of the Chinese population by income levels (1978–2015)
(Source Authors based on the World Inequality Database)
Fig. 3.9 Percentage share of total population of working age in
selected countries (1960–2016) (Source Authors based
on World Bank data)
Fig. 3.10 Percentage investments over GDP for selected BRIC
and G7 countries (1990–2017) (Source Authors based
on World Bank data)
Fig. 4.1 Comparison of Italy’s GDP with other countries’
(1996–2015) (Source Authors on World Bank Data)
Fig. 4.2 Italian emigration of young people (15–34 years)
(Source ISTAT)
Fig. 4.3 NEET (neither in education, nor in employment, nor
in training) % of total population within the age
segment (15–34 years), 2016 (Source Eurostat)
Fig. 4.4 NEET (neither in education, nor in employment,
nor in training) % of total population within the segment;
by geographical area, First Trimester 2018 (15–29 years)
(Source ISTAT)
Fig. 4.5 Employment rates by age; 2000–2017 (Source ISTAT)

100
106

108
112
115
119

121
125
177
179
180

181
182


List of Figures    
xxiii

Fig. 4.6

Fig. 4.7

Fig. 4.8

Public expenditure on retirement benefit and public
expenditure on education and research as a percentage
of GDP (%; 2015; 6 major European economies)
(Source Elaboration of the authors on Eurostat
and OECD data) 185
Distribution of civil servants working for the cabinets
of ministries by highest educational achievement
(%; 2015; selected G7 countries) (Source Elaboration
of the authors on National Open Data) 198
The virtuous cycles of social capital induced community
innovations in Italy 202

List of Tables

Table 3.1 Comparison amongst East Asia, Southeast Asia
and Selected Western Countries 149
Table 4.1 Case study operational framework of community
generated innovations in Italy 202

xxv


1
Introduction: Democracy,
Innovation and Growth

Knowledge is power.

—Thomas Hobbes

“You are what you know”. This is what the Director of the National
Development and Reform Commission said to us during the first of our
encounters in Beijing.
“We are what we know”. It sounds obvious in a society that should
be based on the ability to access, process and transmit information and,
more importantly, to transform information into knowledge that can be
used to solve problems. It seems natural to think that our strength as a
society is dependent on how much we know about the nature of obstacles that prevent us from increasing our prosperity in a way that is sustainable for generations.
Knowledge should be, after all, the principle according to which
individuals live, and local communities, states and civilizations should

be organized. Yet, paradoxically, today the prevailing sensation is that
just when the need for knowledge has become greater, we have trapped
ourselves into a formidable cognitive problem that makes us less trusting of our own power to solve collective problems through collective
intelligence.
© The Author(s) 2018
F. Grillo and R. Y. Nanetti, Democracy and Growth in the Twenty-first Century,
/>
1


2    
F. Grillo and R. Y. Nanetti

At the end of the second decade of the twenty-first century, it should
be clearer than ever that the success or failure of countries depends neither on natural resources—sparking appetites that may well have nasty
consequences for the local population, as the permanent wars in the
Middle East have taught us dramatically over many years—nor on single economic or financial decisions, such as those we expect from central bankers, whom we beg for solutions to problems of stagnation that
go way beyond their responsibilities.
There is a growing consensus that the “wealth of nations”, more than
ever before in human history, depends instead on the presence of mechanisms through which social systems develop knowledge from within
themselves that is instrumental to the pursuit of general goals. Processes
through which social systems can systematically learn from mistakes
and through which they gather citizen preferences and use them to
develop policies; systems through which intelligence that is dispersed
across civil society is aggregated so that intelligent collective choices can
be made.
This book calls such enabling mechanisms “democracy” (we will
later define it as “knowledge democracy” to differentiate it from other
notions of democracy) meant as the “information system”—an information system made of rational and emotional interactions amongst
human beings that technologies are changing—whose purpose it is to

transform individual preferences into collective choices. Democracy,
thus, is not about just elections as the ultimate or only way for politicians to be accountable to citizens, but it is about collecting—through
a continuous, multidirectional consultation—dispersed intelligence
so that more informed, effective policies can be designed and implemented. Such collective problem-solving is, in our interpretation, also
what makes a group of people feel that they are part of a community,
that they are citizens who are responsible for their decisions and committed to making contributions to others.
From this perspective, the book argues that it is the crisis of enabling
mechanisms—and therefore the crisis of democracy—that has trapped
much of the West, comprising the European Union (EU) and the
United States of America (USA), in a stagnation of ideas and economic
growth. It is the failure of our collective learning processes that explains


1  Introduction: Democracy, Innovation and Growth    
3

the “productivity paradox” that is preventing Europe and the USA from
using our enormous technological potential to its fullest for diffused
societal benefits.
The relative decline of the West has been paralleled by the rise of the
East, which, surprisingly, seem to possess mechanisms for collective
problem-solving that, while falling way short of the Western definition
of “liberal democracy”, nonetheless appear to be better able to accommodate the social mutations and expectations that are triggered by an
ongoing and upcoming technological revolution.
Defining the essence of democracy as problem-solving—and more
precisely as a complex system that goes beyond mere electoral procedures to tap into citizens’ preferences and by which information is
transformed into knowledge for the benefit of society—may appear to
be new but it is not.
It is certainly a concept born out of the dissatisfaction with a “power
by the people” notion that while it has never been realized and it

has been proven technically impossible by Robert Dahl (1989) and
Kenneth Arrow (1963) to be applied in large communities, it is latently
dominant in mainstream debate. We believe that this produces an
hypocrisy which has hindered serious debate on what democracy could
and should be and caused an enormous waste of political energy on
institutional reforms which are born, as we will see in Italy’s case, with
no reference to the challenges posed by the twenty-first century.
Democracy as a problem-solving process is a classical idea that dates
back to ancient Greece, and more recently it has been highlighted in
the literature by the link between the performance of democratic institutions and civil society’s social capital (from Tocqueville to Putnam).
Democracy as a collective problem-solving, community-building exercise may even be seen as coinciding with the very notion that defines
what the West is about.
Therefore, this book also argues that the crisis of the West that many
lament is mostly an identity crisis of the most developed area of the
world that unconsciously betrayed its own spirit (Geist as in Hegel) of
systematically seeking to improve its citizens’ life conditions and happiness through civil debate and engagement. Paradoxically, it is a crisis that is the result of the fast-advancing technologies that have created