Nobel laureates James Robinson and David MacMillan on growth without stability and science without curiosity

Nobel laureates David MacMillan and James A. Robinson, who were on a recent visit to India on behalf of the Tata Trusts, in an exclusive interaction with Fortune India, spoke on a range of topics that linked science, economics, culture, and global change. MacMillan, honoured for his pioneering work in asymmetric organocatalysis, and Robinson, recognised for his influential research on how institutions shape prosperity, shared their political-economic perspectives, and how scientific innovation could create an inclusive and sustainable future.

James, you spoke about how Western development economics often misconstrues the way it sees the world, particularly by assuming that the “problems of the world,” as defined by the West, apply universally, when that may not be the case for emerging economies such as Southeast Asia and India. You also mentioned in another interview that Asia and the West view the world through distinctly different cultural lenses. Could you elaborate on what exactly you mean by that?

In the United States (U.S.), there’s all this literature on family-owned firms of how these firms are inefficient, have bad management practices, and so forth. But in Korea, all the major firms are owned by families, such as Samsung, Daewoo, Hyundai and the like. They’re all family-owned, and according to the U.S. way of thinking, that should never work.

But it works in Korea, because it’s completely melded with the Confucian structure of society, where everything is based around family and organised around family. So, for me, that way of organising business is a complete match for the underlying culture. But in the U.S., it doesn’t work. But in Korea it does, precisely because those businesses sit within a very different kind of society.

But why is it that it doesn’t work in the U.S?

Well, I think the Asian model, particularly the East Asian model, has to do with the history of the state, with the history of political centralisation, which is connected to Confucianism as well, in the sense that Confucianism was a philosophy of governance and social organisation. And that, to me, is what really distinguishes nations such as Korea, Taiwan, and China.

Japan is somewhat different in terms of how the state developed and how they built a state in the 19th century. But again, those cultural differences and different state histories. And then there’s Vietnam, their examination system for example, which created certain kinds of possibilities in East Asia. That’s what creates the foundation for this economic transformation.

You don’t have that in India. You don’t have that in Indonesia. You don’t have that in Myanmar. So, there’s variation, of course. But within that broader Confucian cultural zone, if you read Lee Kuan Yew’s autobiography, for instance, he talks a great deal about this.

One popular comparison that often comes up is China’s model of growth versus India’s model of inclusive growth. What China has been able to achieve, despite its centralised, state-intervention-driven approach, and what we in India have achieved are very different. But what’s your assessment of the growth models and the social development approaches of both nations?

Well, I think they both have limitations. My view about China is that power tends to corrupt, and absolute power corrupts absolutely.

In some sense, the success of the Chinese model is often attributed incorrectly, in my understanding of the evidence, to the genius of whoever it was, Deng Xiaoping or whoever. The ironic fact is that in the transition, for example, in the rural economy towards the market, the household responsibility system, the Communist Party spent years trying to stamp that out. It was only in the 1980s when they gave up and realised it was too late.

That transition happened because the central state lost control of large parts of the country during the Cultural Revolution. So that wasn’t the genius of the Communist Party; it was quite the opposite. It was the lack of control of the Communist Party.

So, I think what President Xi Jinping has been doing is trying to re-establish a lot of control over institutions, over central state institutions, replacing people with his own people he trusts. If you look at world history, that is always going to end badly.

I think India has a much more robust political system than China does. It has a much more accountable, inclusive political system, but it has a lot of weaknesses. It has state institutions that can’t provide basic services for many people in society.

It has enormous sociological problems with the legacy of the caste system as an impediment to inclusion, and you still have a lot of marginalisation in society. China doesn’t have that problem. So, both have different problems.

So, which one’s a superior model? Because if China can provide that per capita GDP, that’s what people want: a better lifestyle, better income. For India, given the way it's structured, the journey is quite long.

Well, the journey is long, but India has a much more sustainable model. I don’t think the Chinese model is sustainable.

You know, some people say, “Oh, the Chinese Communist Party has to legitimise itself through economic growth.” I don’t think that’s true at all. I mean, if the Gang of Four [[Jiang Qing, Zhang Chunqiao, Yao Wenyuan, and Wang Hongwen, who led the Cultural Revolution during 1966-76] had taken power in the 1970s instead of Deng Xiaoping, then China would look like North Korea, and the Communist Party would still be completely stable and happy.

For me, the whole thing in China is going to go into reverse. I don’t know how this is going to happen.

Do you think that the story has finally hit its end?

I haven’t seen signs of it. People talk a lot about the economic growth rate slowing down. But, you know, that’s inevitable. You can’t keep growing at 10% a year. That’s well understood in economic theory. I don’t know how it will come unstuck, but I think it will come unstuck. That’s what happens when you have personalised… you know, when you have a cult of personality in China.

What is that one indicator that is giving you that kind of discomfort about the fact that the Chinese model is flawed?

Think about Jack Ma. Okay, so Jack Ma is sort of the leitmotif of the first wave of entrepreneurs and whatever. He makes a mild criticism of the regulatory framework. He disappears. He basically disappeared. He reappeared earlier this year, and it’s like something out of Stalin: he’s in some gray uniform, kind of kowtowing to President Xi. You can’t have an inclusive, dynamic economy that can sustain with that kind of threat.

So, I just think this totalitarian aspect of the system…you can’t sustain an inclusive, dynamic economy like that. I mean, you could ask the question: how has it lasted so long? And I think that’s an interesting thing to discuss.

But the Soviet Union did well for 50 years. There are, as we point out in our book, quite a few examples like that in world history of what we call extractive growth.

What’s happening with Trump and the U.S., that whole era of globalisation is now turning to de-globalisation. So, what Trump is doing, would you say he is an outcome of a flawed globalisation model?

Yes, absolutely. He’s an outcome, yes. He’s a symptom of the problems. I mean, he’s part of the problem, you know, but I don’t think it’s mysterious why the U.S. has kind of turned away from globalisation because most people in the United States are poorer now than they were 50 years ago.

I mean, that’s an absolutely astonishing fact. If you don’t have a college education, your real wages, adjusted for inflation, are lower now than they were 50 years ago. So, most Americans have not benefited from globalisation or the spread of computers or anything else.

So, that tells you all you need to know about why the majority of people are indifferent to putting taxes on Canada, or rejecting the North American Free Trade Agreement, or withdrawing from this or that.

So, is the capitalist model broken in the U.S.? Because the corporations have become rich by leveraging cheap labour in Southeast and East Asian economies, and it worked well it worked well for Wall Street, and companies alike. Has that model broken now? And with what Trump is trying to do, is it only going to get worse from here?

Capitalism is not a word I use, but I think there’s definitely a different model of the economy. You know, like Musk’s ideas: We don’t need all those workers in India and China anyway. We’re going to have robots doing everything. So, who needs cheap labour in China when you can get robots, basically just plug them in and switch them on? So, you could say there’s a whole different kind of production model emerging because of technological change.

Does that worry you?

It’s absolutely frightening. There are economists now proving theorems about the impact of artificial intelligence—one of my former PhD students, actually, who is now a professor at Yale, kind of conjecturing, that one of the consequences of artificial intelligence is that the share of national income that accrues to labour will basically go to zero. Meaning capital — machines, robots—will completely replace people. But then robots don’t vote. That’s my response to that.

But is our inability to comprehend what the future would lead you to kind of conjuring up a scenario that may not necessarily be as dark as what’s been implied? Or are we there?

If you look at the big picture of 200 years or 250 years, that’s a much more optimistic view. That’s a view, you know, which maybe David has, where: okay, these things can go in different ways. I agree science doesn’t have any implication one way or the other. It’s what humans do with science. Science creates all sorts of potential. Technology creates all sorts of potential for transforming society and doing all sorts of good things. And I think the bigger picture over 250 years is that the good things have triumphed over the bad things. Because we’ve learned, and we’ve struggled, and the world has become a better place on average. There are still enormous problems and many poor people and people struggling, but on average, it’s a much better place.

So, I think that means we somehow have to adjust to this, and we have to find a way of adjusting to it. And we have to find a way of making this technology work in the collective interest. And many of us are grappling with what exactly that looks like.

David: I think this is a perfect point. Because if you think about AI, I hear James saying that there’s a possibility of this nightmarish, doomsday scenario. And if you think in science, people talk about climate change in exactly the same framework. But identifying the possibility of what could happen is critical to motivate people to do something about it, or at least think about it and decide: what are we going to do with this possibility? And I think that’s the critical and constructive aspect of thinking about things in this way. You have to look at what it could be to decide that you don’t want to do that.

How do you see this whole industrial partnership between universities and companies really transitioning?

So, I just talked in the previous interview about how we need this portfolio approach to funding, and we certainly do that. I would say that I have relationships with lots of charitable organisations, many different pharmaceutical companies, in some cases chemical companies, in some cases flavors and fragrance companies. And it’s been really critical for us to get the critical mass and scale we need to do the research we do, because we need lots of people. We can’t do it with six or seven people; we need a large group.

What is the concern here?

The problem we’re running into, though, and I’m maybe part of the problem, is that the university system in the U.S. and abroad is moving away from a basic research model. You’re getting much more of a short-attention-span thing, where people want to see what the direct impact of science is right now. And companies are investing with the belief that even if it’s somewhat basic research, it will still be useful very quickly. Whereas the idea of pursuing purely curiosity-driven research has shrunk dramatically.

If you look at the National Institutes of Health, in the 1970s, about 50% of it was curiosity-driven. Now it’s 5%. So, the pendulum has swung a little too far towards direct application, because we sometimes really do miss out on creating fundamental things that are phenomenally useful.

The famous example is chemists in the 70s who created NMR [nuclear magnetic resonance] to figure out the structures of molecules. Now when something happens to you and you go to a doctor, you get an MRI. That MRI is NMR. They took out the “N” because the word “nuclear” scared people, but it’s the same thing. If people hadn’t been interested in that fundamental little thing, we wouldn’t have MRIs in hospitals today. It wouldn’t have been discovered otherwise. So, there is a value in fundamental research, which we’ve sort of moved away from, and that’s because of the collaborative nature of research being driven by basically vested interests.

The chemical industry is going through a phase of consolidation. Everything is about capital allocation, and in a high-interest-rate environment, companies can’t be as liberal as they would want to be. So, in advanced chemistry, what is left now is only the electronic chemicals, related to AI and semiconductor kind of, you know…

But the pharmaceutical industry has been investing in R&D

Yes, so are these the only last bastions where real research is taking place

No. I would say that number one [where research is active] is pharmaceuticals, so I’m always going to say developing chemical reactors for medicines is one thing. But the other major players are going to be energy, as energy research is going to be critical in how we actually drive energy. That obviously ties into climate change and how we overcome climate change, and the need to develop chemicals. It’s going to be a chemical problem, and it’s a chemistry-industry problem as well. And the last one, which is a little bit more difficult for people to think about, but is just as critical, is sustainability. And sustainability is a word people hear a lot of the time, but I think they don’t always fully understand what it means. We are just chewing through resources on Earth that we can’t get back.

Like, if you were to go into the streets of Mumbai or the streets of Glasgow or the streets of New York, and you put your finger on the road, you would have all these palladium nanoparticles on your finger that you will never be able to reconstitute, energetically, to use for a useful process. And we are chewing through things such as palladium at an enormous, enormous rate. And if we keep doing things like that, we’re going to take away all these potentially incredibly valuable metals that we could use for fundamental research in the future. So that sustainability is becoming a huge problem.

You mentioned that your spouse created a molecule that eventually led to a two-billion-dollar sale. So, my question is this: can research institutions and universities create breakthroughs that, perhaps I’m being a bit judgmental here, serve a larger public good in the pharmaceutical industry, rather than producing innovations that ultimately end up benefiting only the private sector?

Well, I would argue that most universities are trying to do that anyway.

It may not be direct return on investment in terms of money, but most of them, I think, are doing that. The academic pursuit and fundamental research, the idea behind it is to create foundations and train people to do that. A vast majority of universities in America and in Europe are now building models that are based on intellectual property as well. They want to create things that make money, things that do good for society, but also make money for the university. Princeton has certainly done that. Harvard is doing that. Stanford is incredible at doing that; it’s one of the top varsities in the world. So, you really are seeing this model grow, where intellectual property is becoming a key component of the research they’re doing.

The good news, though, is that I don’t believe, thus far, people have been hired with a mindset of are they going to do that? But once they are in the system, it is being incentivised to do that. Some of that is very valuable, obviously, but some of it, I feel like the pendulum again may be swinging too far toward industrialisation versus fundamental research.