The Fourth Revolution

From the bestselling authors of The Right Nation, a visionary argument that our current crisis in government is nothing less than the fourth radical transition in the history of the nation-state

Dysfunctional government: It’s become a cliché, and most of us are resigned to the fact that nothing is ever going to change. As John Micklethwait and Adrian Wooldridge show us, that is a seriously limited view of things. In fact, there have been three great revolutions in government in the history of the modern world. The West has led these revolutions, but now we are in the midst of a fourth revolution, and it is Western government that is in danger of being left behind.

Now, things really are different. The West’s debt load is unsustainable. The developing world has harvested the low-hanging fruits. Industrialization has transformed all the peasant economies it had left to transform, and the toxic side effects of rapid developing world growth are adding to the bill. From Washington to Detroit, from Brasilia to New Delhi, there is a dual crisis of political legitimacy and political effectiveness.

The Fourth Revolution crystallizes the scope of the crisis and points forward to our future. The authors enjoy extraordinary access to influential figures and forces the world over, and the book is a global tour of the innovators in how power is to be wielded. The age of big government is over; the age of smart government has begun. Many of the ideas the authors discuss seem outlandish now, but the center of gravity is moving quickly.

This tour drives home a powerful argument: that countries’ success depends overwhelmingly on their ability to reinvent the state. And that much of the West—and particularly the United States—is failing badly in its task. China is making rapid progress with government reform at the same time as America is falling badly behind. Washington is gridlocked, and America is in danger of squandering its huge advantages from its powerful economy because of failing government. And flailing democracies like India look enviously at China’s state-of-the-art airports and expanding universities.

The race to get government right is not just a race of efficiency. It is a race to see which political values will triumph in the twenty-first century—the liberal values of democracy and liberty or the authoritarian values of command and control. The stakes could not be higher. | Joe Scarborough, “Morning Joe”:
“This is an important book. This book changes everything.”

Tyler Cowan, Marginal Revolution:
“It is probably the best current manifesto on the proper roles for market and state….  This book is also the single best statement of the thesis that these days government simply is not working very well, and that such an insight is recognized by many voters better than by many intellectuals. Definitely recommended.”

The Daily Mail (UK):
“Splendid.”

The Telegraph:
“Superb…. Micklethwait and Wooldridge’s must-read manifesto is a plea for more reform, inspired this time by successful reforms in other countries and the harnessing of the digital revolution.”

Seattle Times:
“[The authors] offer thoughtful proposals…. a useful look at America from the outside in.”

Times of London:
"The basic argument of this well-written, intelligent book is twofold. First reform [of the state] is essential. Second, reform is possible because it is happening all over the world and because new technology is available. By the end of reading The Fourth Revolution it is hard to deny either of these points."

Kirkus Reviews:
“A different, provocative view of the challenge emerging in Asia.”

Fareed Zakaria, author of The Post American World:
"This is a book with an important message. It is also one that brims with intelligence, erudition, and—best of all—common sense. I found myself nodding in agreement on almost every page."

Walter Russell Mead:
"This brilliant and courageous book is also a gripping read. At a time when most politicians and pundits on the left and the right look back to past golden ages, the Economist’s John Micklethwait and Adrian Wooldridge dare to ask what must be done to make democracy work again. Their answers point beyond the dull nostrums of conventional politics toward new ideas and reforms that could renew the democratic systems in both the US and Europe. This is a landmark study of a vital subject, told with great verve and dash, and it is a book that no one who cares about the future of politics can afford to miss."

Financial Times
“[The Fourth Revolution’s] case is elegantly made, with big-picture philosophy and political economy punctuated by colourful detours into the world’s rising economies.”

David Brooks, The New York Times
“Micklethwait and Wooldridge do an outstanding job of describing Asia’s modernizing autocracies. In some ways, these governments look more progressive than the Western model; in some ways, more conservative.”

Michael Ignatieff, The New York Review of Books
“The Fourth Revolution has.…an insatiable curiosity and an enthusiasm for reform.”

The Wall Street Journal
“This book's message is simple but severe: If the state promises too much to too many, cynicism grows, and democracy is damaged.” | John Micklethwait is the editor in chief of Bloomberg News. After studying history at Magdalen College, Oxford, he worked as a banker at Chase Manhattan before joining The Economist as a finance correspondent in 1987. He served as The Economist’s editor in chief from 2006 to 2015 and was named an Editors’ Editor by the British Society of Magazine Editors in 2010.

Adrian Wooldridge is The Economist’s management editor and writes the Schumpeter column. He was previously based in Washington, D.C., as the Washington bureau chief, where he also wrote the Lexington column. Together they are the authors of five books: The Witch Doctors, A Future Perfect, The Company, The Right Nation, and God Is Back. |

Praise for The Fourth Revolution

“This is an important book. This book changes everything.”

—Joe Scarborough

“This is a book with an important message. It is also one that brims with intelligence, erudition, and—best of all—common sense. I found myself nodding in agreement on almost every page.”

—Fareed Zakaria, author of The Post American World

“This brilliant and courageous book is also a gripping read. At a time when most politicians and pundits on the left and the right look back to past golden ages, the Economist’s John Micklethwait and Adrian Wooldridge dare to ask what must be done to make democracy work again. Their answers point beyond the dull nostrums of conventional politics, toward new ideas and reforms that could renew the democratic systems in both the U.S. and Europe. This is a landmark study of a vital subject, told with great verve and dash, and it is a book that no one who cares about the future of politics can afford to miss.”

—Walter Russell Mead, James Clarke Chace Professor of Foreign Affairs and Humanities at Bard College

“[The Fourth Revolution’s] case is elegantly made, with big-picture philosophy and political economy punctuated by colorful detours into the world’s rising economies.”

—Financial Times

“Clever and sharply argued.”

—G. John Ikenberry, Foreign Affairs

“The Fourth Revolution is a lively book.”

—The New York Times Book Review

“Micklethwait and Wooldridge do an outstanding job of describing Asia’s modernizing autocracies. In some ways, these governments look more progressive than the Western model; in some ways, more conservative.”

—David Brooks, The New York Times

“This book’s message is simple but severe: if the state promises too much to too many, cynicism grows, and democracy is damaged.”

—The Wall Street Journal

“The Fourth Revolution has . . . an insatiable curiosity and an enthusiasm for reform.”

—Michael Ignatieff, The New York Review of Books

“A different, provocative view of the challenge emerging in Asia.”

—Kirkus Reviews

“There is much to praise in Micklethwait and Wooldridge’s account, and it has been lauded widely. The bloat they take aim at is undeniable. Also the need for technological and managerial innovation. Truly government has overreached in a way that is deeply intrusive in our lives. What is more, Micklethwait and Wooldridge are deeply right to insist that beyond technological innovation, we need to think about ideas: namely, the idea of what we want our government to be.”

—Roger Berkowitz, Hannah Arendt Center for Politics and Humanities blog

“Superb . . . Micklethwait and Wooldridge’s must-read manifesto is a plea for more reform, inspired this time by successful reforms in other countries and the harnessing of the digital revolution.”

—The Telegraph (UK)

“The basic argument of this well-written, intelligent book is twofold. First reform [of the state] is essential. Second, reform is possible because it is happening all over the world and because new technology is available. By the end of reading The Fourth Revolution it is hard to deny either of these points.”

—The Times (London)

“This book’s success is rooted in its case studies that prove something beyond doubt: government can be made slimmer and better. Facing aging populations and an entitlement-born disaster, this book offers an alternative to ­partisan ‘theaterocracy’ and a call to much-needed revolution.”

—The Washington Times

“[The authors] offer thoughtful proposals. . . . It is a useful look at America from the outside in.”

—The Seattle Times

“It is . . . refreshing to read a contemporary analysis that advocates for the importance of ideas—and which understands that, in the case of how to improve governance, the ideas that matter are not just found in developed countries. The ability to make comparisons—to share ideas for smarter governance across borders—is a key aspect of the ongoing fourth revolution.”

—Formar Hub

“This is a big and important idea whose time has come. The great failing of American politics is not that the Tea Party wants to shrink the government or that the Democrats want to keep every single entitlement in place. The great failing is that the country’s leaders can’t seem to have a real debate on what kinds of things a twenty-first-century American government should or should not do. Instead they argue about cutting the whole thing down or they argue about protecting every last nickel. And in the interstices of that non-debate, rent seekers of all sorts from Medicare scammers to Wall Street gamblers are sucking the legitimacy out of the government. We should heed the call of The Fourth Revolution.”

—Elaine Kamarck, Brookings Institution

INTRODUCTION

BURIED IN A SHANGHAI SUBURB, close to the city’s smoggy Inner Ring Road, the China Executive Leadership Academy in Pudong appears to have a military purpose. There is razor wire on the fences around the huge compound and guards at the gate. But drive into the campus from the curiously named Future Expectations Street and you enter 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 inkwell beside it. Around this, spread across some forty-two hectares, are lakes and trees, libraries, tennis courts, a sports center (with a gym, a swimming pool, and table-tennis tables), and a series of low brown dormitory buildings, all designed to look like open books. CELAP calls all this a “campus” but the organization is too disciplined, hierarchical, and businesslike to be a university. The locals are closer to the mark when they call it a “cadre training school”: This is an organization bent on world domination.

The students at the leadership academy are China’s future rulers. The egalitarian-looking sleeping quarters mask a strict pecking order, with suites for the more senior visitors from Beijing. And as with other attempts at global supremacy, there is an element of revenge. Thirteen hundred years ago, CELAP’s staff remind you, China set up an imperial exam system to find the best young people to become civil servants. For centuries these “mandarins” ran the world’s most advanced government, but in the nineteenth century the British and the French (and eventually the Americans) stole their system—and improved it. Since then better government has been one of the West’s great advantages. Now the Chinese want that advantage back.

When the leadership academy was established in 2005, President Hu Jintao spelled out its purpose: “To build China into a modern and prosperous society in an all-round way and to develop socialism with Chinese characteristics, it is urgent for us to launch large-scale training programs to significantly improve the quality of our leaders.” Rather than focus on indoctrination like the party schools, CELAP and its two smaller sisters in Jinggangshan (CELAJ) and Yan’an (CELAY) have been designed to be practical places. The talk is of leveraging your skills, strengthening your global mind-set, and improving your presentation abilities. It is all meant to complement what goes on in the party schools. But the fact that CELAP is based in Shanghai while the central party school is in Beijing adds a competitive frisson. When one trainee in Pudong explains that the party school focuses on “why,” while CELAP looks at “how,” there is no mistaking which question he thinks is more important to China’s future. If CELAP had a motto, it might be Alexander Pope’s couplet, “For forms of government let fools contest/What’er is best administer’d is best.”

Driven by the desire to “best administer,” about ten thousand people a year attend courses at the school, nine hundred for the first time. Some arrive ex officio: If you are a bureaucrat who has just been put in charge of a state-owned company, a governor who has been given a province to run, or an ambassador en route to a new posting, you are sent to Pudong for a refresher course. (As a thank-you, the ambassadors are supposed to send the library a book to symbolize their new posting. The man who sent The Rough Guide to Nepal has some explaining to do.) More generally, a course at the leadership academy has become a prize to be pocketed by any ambitious bureaucrat. Every Chinese civil servant is expected to have clocked three months of training every five years, or about 133 hours a year. Courses at CELAP are oversubscribed by a factor of three, with most of the candidates drawn from the ranks of deputy director generals, the fourth-highest rung in the Chinese system.

The two most common questions, says one teacher, are “What works best?” and “Can it be applied here?” A typical course is divided into three parts, with lectures soon giving way first to fieldwork, with the mandarins sent out to study something that could be useful, and then to discussion about how to apply it. The subjects vary from the relatively small, such as the most convenient way to demolish houses for infrastructure projects, to the monumental, such as designing the most equitable pension system. The appetite for ideas is rapacious: ideas from local businesses (there are two hundred field-study centers in the Yangtze River delta, including a mini CELAP campus in Kunshan city); ideas from various national universities; ideas from Western management thinkers.

When the Chinese modernized their economy, they turned to the West for inspiration, and the leadership academy still sends people to Silicon Valley to look at innovation. Government is a different story. There is talk of CELAP being “China’s Kennedy School,” and Joseph Nye, the former dean of Harvard’s Kennedy School of Government, has given a talk there. But there are also hints that Harvard is a little too theoretical for what China needs now. Historical examples are not what is called for, let alone historical examples that celebrate the ­virtues of democracy or soft power. CELAP is about delivering ­efficient government in the here and now, about providing cheap health care and disciplined schools. And from that point of view there are better places to look than gridlocked America—most notably ­Singapore.

The city-state may be tiny, but it has delivered most of the things that the Chinese want from government—world-class schools, ­efficient hospitals, law and order, industrial planning—with a public sector that is proportionately half the size of America’s. For the Chinese, it is the Silicon Valley of government. Even the idea at the heart of CELAP—training an elite civil-service cadre—is based on a Singaporean model, though the Chinese boast that their requirements are more onerous. So it is not surprising that the leadership academy proudly features pictures of its senior figures attending meetings in Singapore and of Singapore’s creator, Lee Kuan Yew, visiting the campus.

The leadership academy can sometimes look a bit comical. ­Officials tie themselves in knots trying to explain why some governmental ideas that work well abroad, like democracy and free speech, will not work in China for “cultural reasons.” A teacher quotes a proverb about some orange trees tasting sweet “only on the south bank of the river.” Corruption in Washington is denounced in ringing terms regardless of the fact that the published wealth of the fifty richest members of ­Beijing’s National People’s Congress is $95 billion—sixty times the combined wealth of the fifty richest members of America’s rather more strictly monitored Congress.1 The local Web sites in Shanghai are full of tales of inefficiency and graft. Indeed, the reason CELAP exists is that the Chinese know they have to do better.

Yet taken as a whole, the correct response of any Western politician visiting CELAP is similar to that of a Western manufacturer visiting a Shanghai factory two decades ago: awe, and perhaps a degree of fear. Just as China deliberately set out to remaster the art of capitalism a couple of decades ago, it is now trying to remaster the art of government. The main difference is that the Chinese believe that nowadays there is far less to be gained from studying Western government than they did from studying Western capitalism.

LEVIATHAN AND ITS DISCONTENTS

CELAP may be extraordinary, but it is hardly unique. Around the world, from Santiago to Stockholm, the cleverer politicians and bureaucrats are also scouring the world for ideas. The reason is simple: The main political challenge of the next decade will be fixing gov­ernment. In The Federalist Papers Alexander Hamilton urged his fellow Americans to decide “whether societies of men are really ­capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force.”2 His words are just as true today. Countries that can establish “good government” will stand a fair chance of providing their citizens with a decent standard of life. Countries that cannot will be condemned to decline and dysfunction, in much the same way the Chinese once were.

For the state is about to change. A revolution is in the air, driven partly by the necessity of diminishing resources, partly by the logic of renewed competition among nation-states, and partly by the opportunity to do things better. This Fourth Revolution in government will change the world.

Why call it a fourth revolution? Not least as a reminder that the state can change dramatically. Most of us in the West only know one model—the ever-expanding democratic state that has dominated our lives since the Second World War. However, history before then tells a different story. Indeed, Europe and America surged ahead precisely because they kept changing: Government was engaged in a continual process of improvement. Looking back, others might identify dozens of small revolutions, such as Thomas Cromwell’s “revolution in government” in Tudor England or Otto von Bismarck’s pension reforms in nineteenth-century Germany. In this book we simplify and argue that the Western state has been through three and a half great revolutions in modern times.

The first took place in the seventeenth century, when Europe’s princes constructed centralized states that began to pull ahead of the rest of the world. In the 1640s, when a middle-aged royalist on the run called Thomas Hobbes produced his anatomy of the state against the background of the English Civil War there were good reasons to believe that the future lay with China or Turkey. Hobbes decided to name the state, which he regarded as the only answer to the nastiness, brutality, and brevity of human life, after a biblical monster, Leviathan. But what a successful monster it proved to be! Europe’s network of competing monsters threw up a system of ever-improving government: Nation-states became trading empires, then entrepreneurial liberal democracies. The struggle for political and economic prowess was often bloody and messy—Britain has waged war on virtually every Western European country—but that contest has also ensured that the West left other regions of the world behind.

The second revolution took place in the late eighteenth and nineteenth centuries. It began with the American and French revolutions and eventually spread across Europe, as liberal reformers replaced regal patronage systems—“Old Corruption,” as it was known in ­England—with more meritocratic and accountable government. We focus on the British manifestation of this revolution partly because its better-known twins have more distractions—the French Revolution degenerated into a bloodbath while the American one had the peculiar virtue of having a continent-sized country to work on—and partly because it is the Victorian one that seems to be most relevant today. English liberals took a decrepit old system and reformed it from within by stressing efficiency and freedom. They “stole” China’s idea of a professional civil service selected by exam, attacked cronyism, opened up markets, and restricted the state’s rights to subvert liberty. The “night-watchman state,” advanced by the likes of John Stuart Mill, was both smaller and more competent. Even though the size of the British population rose by nearly 50 percent from 1816 to 1846 and the Victorians improved plenty of services (including setting up the first modern police force), the state’s tax revenues fell from £80 million to £60 ­million.3 And later reformers like William Gladstone kept on looking for ways to “save candle-ends and cheese-parings in the cause of the country.”

However, as often happens, one revolution set up another. Throughout the second half of the nineteenth century, liberalism began to question its small-government roots: What good, wondered Mill and his followers, was liberty for a workingman who had no schooling or health care? And if that man (and eventually woman) deserved the right to vote, and it would be illiberal to think otherwise, then that schooling needed to be broad and ambitious. And if governments were in competition with one another—and that was increasingly the view as Bismarck welded Prussia into a Great Power—then surely those who educated their workers best would triumph.

Thus an improved life for every citizen became part of the contract with Leviathan. That paved the way for the aberration of communism but also for the third great revolution: the invention of the modern welfare state. That too has changed a great deal from what its founders, like Beatrice and Sidney Webb, imagined; but it is what we in the West live with today. In Western Europe and America it has ruled unchallenged since the Second World War—except for during the 1980s, when Margaret Thatcher and Ronald Reagan, inspired by classical liberal thinkers like Milton Friedman, temporarily halted the expansion of the state and privatized the commanding heights of the economy. We dub this a half revolution because, although it harked back to some of the founding ideas of the second “liberal” revolution, it failed in the end to do anything to reverse the size of the state.

The twists and turns of each revolution, as we shall see, have been significant. What is clear, however, is that for the past five hundred years Europe and America have been the font of new ideas about government. Not all of them worked, but even in its more grotesque deviations of fascism and communism, the West was still striving, at least in theory, to forge the future. The rest of the world followed. The Chinese and the Russians followed Marxism. India, when it became independent in 1947, embraced British Fabianism even as it put a torch to British imperialism. In Latin America, despite their citizens’ love-hate relationship with the gringos in el norte, the region’s economies lurched forward two decades ago when most of them embraced “the Washington consensus” (a phrase invented by John Williamson to mean a combination of open markets and prudent economic management). Even in Pudong there is a recognition that, until recently, the Western model represented the gold standard of modernity.

Freedom and democracy have been central to that. The rise of the Western state was not just a matter of setting up a competent civil service. Even Hobbes’s monster, as we shall see, was a dangerously liberal one for a royalist to propose, because Leviathan relied on the notion of a social contract between the ruler and the ruled. The Victorian liberals saw a well-run state as a prerequisite for individual emancipation. Their Fabian successors saw a welfare state as a prerequisite for individual fulfillment. As it has expanded, the Western state has tended to give people more rights—the right to vote, the right to education and health care and welfare. Things like a university education that a century ago were regarded as a white, male, wealthy privilege are now seen as a public service, in some cases a free entitlement, for everybody.

Yet the Western state is now associated with another trait: bloat. The statistics tell part of the story. In America government spending increased from 7.5 percent of GDP in 1913 to 19.7 percent in 1937, to 27 percent in 1960, to 34 percent in 2000, and to 41 percent in 2011. In Britain it rose from 13 percent in 1913 to 48 percent in 2011, and the average share in thirteen rich countries has climbed from 10 percent to around 47 percent.4 But these figures do not fully capture the way that government has become part of the fabric of our lives. America’s Leviathan claims the right to tell you how long you need to study to become a hairdresser in Florida (two years) and the right to monitor your e-mails. It also obliges American hospitals to follow 140,000 codes for ailments they treat, including one for injuries from being hit by a turtle. Government used to be an occasional partner in life, the contractor on the other side of Hobbes’s deal, the night watchman looking over us in Mill’s. Today it is an omnipresent nanny. Back in 1914 “a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman,” the historian A.J.P. Taylor once observed. “He could live where he liked and as he liked. . . . Broadly speaking, the state acted only to help those who could not help themselves. It left the adult citizen alone.” Today the sensible, law-abiding Englishman cannot pass through an hour, let alone a lifetime, without noticing the existence of the state.

There have been periodic attempts to stop the supersizing of the state. In 1944 Friedrich Hayek warned that the state was in danger of crushing the society that gave it life in The Road to Serfdom. This provided an important theme for conservative politicians from then onward. In 1975 California’s current governor, Jerry Brown, in an earlier incarnation, declared an “era of limits.” This worry about “limits” profoundly reshaped thinking about the state for the next decade and a half. In the 1990s people on both the Left and the Right assumed that globalization would trim the state: Bill Clinton professed the age of big government to be over. In fact, Leviathan had merely paused for breath. Government quickly resumed its growth. George W. Bush increased the size of the U.S. government by more than any president since Lyndon Johnson, while globalization only increased people’s desire for a safety net. Even allowing for its recent setbacks, the modern Western state is mightier than any state in history and mightier, by far, than any private company. Walmart may have the world’s most efficient supply chain, but it does not have the power to imprison or tax people—or to listen to their phone calls. The modern state can kill people on the other side of the world at the touch of a button—and watch it in real time.

There are powerful demographic and economic reasons why many people think that the state will continue to grow. Entitlements grow as populations age. Governments dominate areas of the economy, like health and education, that are resistant to productivity improvements. But the other reason for the state’s sprawl has been political. Both the Left and the Right have indulged its appetites, the former singing the praises of hospitals and schools, the latter serenading prisons, armies, and police forces, and both creating regulations like confetti. The call that “something must be done,” i.e., that yet another rule or department must be created, comes as often from Fox News or the Daily Mail as it does from the BBC or the New York Times. For all the ­worries about “benefit scroungers” and “welfare queens,” most state spending is sucked up by the middle classes, many of them conservatives. Voters have always voted for more services; some people just resent having to pay for them more than others. The apocryphal sign at a Tea Party rally warning “big government” to “keep its hands off