Creating the Cold War University: The Transformation of Stanford

"As I said with Chang’s book, America does not believe that it has an industrial policy, but where it actually does, and where you really see it, is in defense policy. The United States spends hundreds of billions of dollars on manufacturing weapons, tanks, ships—everything that the military and the Pentagon need. This is where factories get made; this is how universities get funded. The literature on this is unfortunately fairly light, but it’s really important. What Lowen has done is explore—from the 1930s to the 1970s—why universities expanded the way they did. The thesis is that in the post-World War Two era, universities needed funding. In the 1930s, the entire university system in the United States was impacted by the Great Depression, from their own endowments to the people paying the tuition and also donations. The universities were looking around and saying, how do we grow in this coming era? Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . What Lowen finds is that the universities start looking for funding from the federal government. They start asking for more research grants, they start asking for more subsidization of the system, and on top of that, they’re also looking to private industry for the first time for support. Transport yourself back to a 1930s university—they’re not looking for anything commercial anywhere near their ivy-covered gates. But now, for the first time, they’re willing to open up to industry and say, ‘Who could sponsor a center? Who could sponsor some research? Who could fund a laboratory?’ It’s also in this era that we see the rise of what’s dubbed Big Science, where you move from the individual entrepreneurial scientist to Manhattan Project-scale science teams. What we see (and she’s actually fairly negative on it) is over the course of about forty years, the university transitions from a bastion of Arcadia—this place where you think, philosophize, and debate the trivium of logic, rhetoric and grammar—to a model of laboratories that make money, that raise funds and, at some point later, spin off companies. Those spin-off companies then sponsor research back at the university, creating what we now think of as Stanford and Silicon Valley. Yes, so the other book along this line is Christophe Lecuyer’s Making Silicon Valley , which was written in the mid-2000s. He writes about an important part of industrial policy that almost everyone gets wrong. which is that while it’s mostly centred on economics—how money gets allocated, how you fund this—ultimately it’s people who build this stuff. People have to create the ecosystems behind it. Lecuyer’s book is the best I know of that really gets at the sociology of how an innovative industrial ecosystem gets built. Right now in the United States, if we were trying to build a fab in Arizona or in Columbus, Ohio, where do the people come from? How do businesses get started? Who starts them? Who funds them? How does the culture change over time to allow different types of industries to happen? For instance, fabs require tens of billions of dollars to build and when operated, demand a military-like discipline to stay optimized in order to have the most number of chips produced with the most profitability. That’s very different from an innovative software startup ecosystem that’s building a bunch of different types of companies with small teams and a lot of creativity. Lecuyer really shows—similar to Lowen, starting in the thirties and going into the eighties—how Silicon Valley itself specifically developed this unique culture of startups and small firms. There’s resonance there because if you look at other countries, there’s a really wide mix. Taiwan is relatively well known for having a robust small-and-medium enterprise industry, whereas South Korea’s economy is dominated by these huge conglomerates like Samsung which are known as chaebols . Lecuyer does a really great job of opening up a lens on ways of understanding how these kinds of diverse regional economies come to be. You’re getting at one of the challenges with industrial policy, which is: you can study it at a school; you can go to the Kennedy School at Harvard or other places and study it. You have this notion that, okay, you’re in charge of an economy—a job that, by the way, mostly doesn’t exist in America, but does exist in many other more state-directed economies. How do you actually do the job? Unlike a central bank governor, industrial policy isn’t about looking at the past and trying to modulate and stabilize the economy today. You actually have to create economies, new ones. You’re actually looking forward and saying, ‘Okay, here we are today, where should we go in the next five to ten years, and how can we catalyze that to actually take place?’ For instance, to pick some popular themes in technology these days: artificial intelligence, the metaverse, quantum computing. Shouldn’t the United States try to coordinate action around quantum computing? We did this in the fifties and sixties around semiconductors. We did this around the space program. We went from having no space program to a man on the moon in ten years. That didn’t happen because a bunch of people just suddenly got together randomly and tried to make that work. All the books we’re talking about today are lenses. They’re ways of understanding the world. They’re not guides. There’s really no guide to go do this. You have to imbibe all these lenses, and then if you’re in a position of trying to catalyze this, hopefully all those lenses add up so you’re able to zoom in on a particular topic and say: ‘Okay, I need this group of people here, another group of people there, this finance has to show up in a certain way at the same time, we have to have the right regulations in place and the right infrastructure. And if all that happens, we’re going to have something amazing.’ It’s a little bit like being a chef. You can read about being a chef, but at some point, you’ve got to cook. I think the way to think of industrial policy is: I need to know which ingredients exist. I also need to know I have fire that I can use, and I know I need to be in a kitchen. A lot of steps have to happen in the right order. But, if I do it all right, I have a soufflé. But if I just told you, ‘we need to have a soufflé’ you would have no idea how to make it."