Alumnus Paul Alexander (LSE MSc International Strategy and Diplomacy, 2016) looks at how China, and its bureaucratic capitalist model, has challenged the post-cold war assumption that Western capitalism is best at scaling innovation. He reflects on how the US could match China’s natural political power to support the rollout of driverless cars, and in so doing create a template for other market interventions.

China is pulling alongside the US on driverless cars, despite starting five years later. Tesla’s deal for fully self-driving ‘robotaxis’ reflects a natural advantage: infrastructure. Places like Wuhan have an unmatched array of cameras, alongside 5G coverage and digital navigation maps.

It’s unmatched partly because of the mass surveillance it delivers too. Driverless cars are closely associated with electric cars, where China is also ahead. However their catch up also reflects a political system very different from the West, and one challenging it on many fronts. This is a political systems-level challenge.

[China’s] catch up also reflects a political system very different from the West, and one challenging it on many fronts. This is a political systems-level challenge.

The end of the Cold War promised not just a safer, but simpler, world. One where the capitalist system, and the individual freedoms it both relies on and enables, had won. As if to emphasise the point, technology giants like Microsoft and Apple, then Google and Facebook, covered the globe.

Then came China, with its ‘Bureaucratic Capitalism’ model (other monikers for it, eg Market Communism, are available). China’s model combines rampant capitalism and state control of citizens – and many corporations too. From it has sprung the likes of Alibaba, Tencent, Huawei and Tik Tok.

Not all are global, but Tik Tok is, and Huawei somehow worked its way into the heart of British telecommunications infrastructure. Huawei is state subsidised, which helped it knock out its rival Marconi. Where it doesn’t fund companies, it still has power over its billionaire owners (even Jack Ma).

The bureaucratic in the capitalism implies a certain caution, which isn’t always the case. Ma was censured for calling for more regulation. It means permission for state influence, supposedly granted by both citizen and corporation. This apparent social bargain contrasts sharply with America.

In the case of driverless cars the Chinese system can bring not just an infrastructure and network advantage. It could also offer a rollout and adoption one too.

However, in the case of driverless cars the Chinese system can bring not just an infrastructure and network advantage. It could also offer a rollout and adoption one too. These stem from the uniqueness of both the software algorithm choices and the road testing environment.

Should a driver, in a split-second decision, place the safety of an adult pedestrian below that of a child? Should that calculation change with car passengers? At present human instinct, under severe pressure, makes those decisions. In future, computer code will codify such moral choices.

These are still human choices, but ones now amplified by the necessity to pre-programme, and pre-ordain, these decisions. Software corporations are currently navigating these moral dilemmas with circumspect influence from US and Western governments.

Alongside this is the necessary testing on roads. Unlike planes and trains, bystanders on roads are more typically drawn into accidents. All road-users, and pedestrians, will effectively take part in this mass testing. We all become risk-loving ‘early adopters’ whether consenting to it or not.

All road-users, and pedestrians, will effectively take part in this mass testing. We all become risk-loving ‘early adopters’ whether consenting to it or not.

These algorithmic-choices and road-tests present a unique problem. The US has left its buccaneering Wright brothers, and cars on carriage paths, days behind it. Human life is more protected. This is reflected in a litigation system that empowers corporations, and individuals against corporations.

‘No win no fee’ personal injury lawyers operate at the extreme end of capitalism. Payouts to plaintiffs for road accidents can vary greatly based on the case, representation, and wealth of the defendant. It is still typically individual vs individual though, with compensation often capped by law.

Not so with driverless cars. The defendant might be corporations: car manufacturers, software companies, or even network operators. The individual plaintiff might sue these companies for operational negligence after an accident, or for the algorithm choices it made during it. Or possibly both.

It’s a minefield for these corporates, and a potential gold mine for corporate lawyers. Insurers loathe uncertainty, and will respond with premiums that raise costs, reduce profit and risk investment. This liability could shape algorithm choices, and not necessarily to society’s greatest benefit.

All this complex, controversial, decision-making will be magnified with the first multi-vehicle, multiple fatality, crashes.

All this complex, controversial, decision-making will be magnified with the first multi-vehicle, multiple fatality, crashes. These pile-ups will get endless media coverage, with their analysis further heightening the sense of danger from it: the costs of it now, rather than its future benefits.

Rollouts will pause as investigations ensue, and some politicians will be moved to question its overall benefits. It will slow down a base requirement for any new technology development: testing and iterating – the cycle of test, fail, iterate and test again that needs that tolerance of failure.

Failure here means casualties and should, of course, merit caution. However, the status quo is far from ideal either. In the US over 40,000 die, and over 2 million are injured, in road traffic accidents. Europe has around half that number. Driverless cars could make our roads many times safer.

China suffers around 250,000 road deaths annually giving it a stronger case to take risks. China can intervene with their car makers, and software developers, to determine algorithmic choices. Make it a state, not private sector, decision. It can influence courts to limit liability from injury and death.

China can intervene with their car makers, and software developers, to determine algorithmic choices. Make it a state, not private sector, decision. It can influence courts to limit liability from injury and death.

All this would be under their definition of ‘regulation’, which is far wider reaching than in the West. Beyond this, its system largely controls its media. Accidents can be framed as technology ‘birthing pains’, and their news cycles is limited. All these powers are reflective of their bureaucratic capitalist model.

It can lend China the edge – not in invention, or innovation, but adoption and rollout. This power, on transformative technology, might help it overtake the most entrepreneurial and daring nation on earth – due to its own bureaucracy, lawyers and fear of failure – on a technology it invented.

What can America and the West do? Firstly, the state can take responsibility for algorithm decisions. Debate the moral choices, making them explicit and transparent. Then make decisions enshrined in law. Hence removing an individual’s right to sue corporations for their algorithmic choices.

What can America and the West do? Firstly, the state can take responsibility for algorithm decisions. Debate the moral choices, making them explicit and transparent. Then make decisions enshrined in law.

Secondly, the state can place a cap on liability for injuries and deaths and make that payout equal for all. Implicit with this would be a startling proposition: all deaths count the same. The US constitution asserts that all are born equal. That’s not yet true, but death can be different.

This would need a new bargain between state and citizen. A social contract where each citizen accepts the randomness of road accidents, and fixed compensation. Setting these moral, and practical, parameters would redefine regulation power. A form of democratic paternalism, just for this case.

It would require real political leadership and resilience to withstand those inevitable early pile-ups. Public narratives can focus on stories of lives lost now, and imagining future lives saved, as well as the freedom of cheap transport. Reviled political pioneers would be revered, over time.

It would require real political leadership and resilience to withstand those inevitable early pile-ups. Public narratives can focus on stories of lives lost now, and imagining future lives saved, as well as the freedom of cheap transport.

The US can match China’s natural political power to support the rollout of driverless cars. In so doing create a template for other market interventions, where necessary. The US and China can silently collaborate too; borrow and hone each other’s narratives on the net benefits of the technology for all mankind.

Follow Paul on X/Twitter: x.com/centrefsn

Banner photo of Shuttle bus inside Shougang Park N509FZ, CC BY-SA 4.0, via Wikimedia Commons

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This article represents the views of the author, and not the position of the Department of International Relations, nor of the London School of Economics.