January 16, 2021

Analysis

# Supercomputer

In March 1976, Deputy Secretary of the Department of Defense (DOD), William “Bill” Clements invited William “Bill” C. Norris, CEO and Chairman of the supercomputer producer Control Data Corporation (CDC), to a closed-door meeting at the Pentagon. Secretaries and undersecretaries from the United States Army, Navy, and Air Force were to attend, as well as a selection of spokespersons from the public university system and private sector. Clements requested Norris come prepared with “any important aspect of Defense management or posture that… warrants perspective” and to be candid in his comments.

Preparing for the meeting, Norris wrote a note. The subject was “East-West trade.” The DOD was not giving enough attention to export administration, the CEO wrote. The Department of Defense’s “inconsistent” approach to reviewing export applications for computer technology to Central and Eastern European countries, Norris continued, was fostering an “unhealthy,” “adversarial” relationship between the military and private industry.

### CDC, proto-global value chains, and a first wave of globalization

What then is to be learned from CDC’s failed Cold War-era venture in Central and Eastern Europe? Although CDC’s dealings with Comecon states in the late 1960s and 70s were certainly particular, they were not singular. Looking at the supercomputer producer’s relations with Central and Eastern European states during this period one can find features of globalization—meaning, narrowly, global financial integration and the internationalization of production—in the era between the first and Second Cold War.

The standard narrative of globalization is that in the early 1990s, with the breakdown of the Soviet Union, the international system was restructured as a global system to support the liberalization of both trade and finance. This was seen in the expansion of the International Monetary Fund (IMF), the World Bank, Organization for Economic Cooperation and Development (OECD), multilateral (‘free’) trade agreements like North American Free Trade Agreement (NAFTA), and the making of the World Trade Organization (WTO). Capitalism won out. History had ended.

There have been many correctives posited to this narrative. Quinn Slobodian argues that the desire to construct a supranational system to protect international capital against nationalist economic interests can be seen as early as the interwar period. Others have sought to push the timeline of globalization back from the Washington Consensus of 1990s to the 1970s, before the final days of the Cold War, to acknowledge the earlier growth of international finance. This was seen through the rise of international capital markets and subsequent debt crises seen in Eastern Europe, Sub-Saharan Africa, and Latin America in the 1980s, and the early decades of the OECD, whose membership hinged on the lifting of capital controls, allowing for hotter money flows.

The case of CDC aligns with the lattermost studies, demonstrating that neoliberal globalization was quite tangible as early as the 1970s. But CDC’s activities in Central and Eastern Europe reveal the other side of globalization—not global financial integration, but the internationalization of production. The development of globalization ran through not only the realms of ideas and finance, but also through Romania’s national computer industry.

A study of CDC’s ventures in the Eastern Bloc helps us consider the economic imbalances inherent to internationalized production. In fact, the geographic dispersal of the firm’s commercial relations abroad could be seen as a kind of proto-global value chain (GVC). The supply chain CDC was hoping to construct for computer peripherals in Central and Eastern Europe adhered to a smile curve—meaning, the so-called higher value stages of production (i.e. R&D, design, and trademarking) were largely located in the United States, while the lower ones (i.e. parts and components and assembly) were outsourced to low-wage countries, such as Romania. The higher value stages of production were effectively governed by an intellectual monopoly: technical knowledge was enclosed and thereafter leveraged to create global commercial dependencies.

CDC’s activities in the Eastern Bloc challenge the image of a standard global value chain; the firm was not explicitly scouting cheaper labor, but more distinctively market access. The firm was, thus, advancing intellectual property rights for computer technology in tandem with the geography of the Cold War to gain a global market advantage with political ramifications, ones that the State Department found highly favorable during the Nixinger-era and less so under Ford. This Cold War context helps to magnify the geopolitical embeddedness of internationalized production—a dynamic with new relevance today. Just look at Trump’s “war” on Huawei. Arguably, there isn’t a more striking contemporary example of the geo-politicization of technology transfers.

In turn, returning to the contest between CDC and the DOD, this competition throws the open secret about globalization into sharper relief: globalization is just as much a political project as an economic one. This is perhaps somewhat obvious regarding the DOD, whose attempts to insert itself as a supervisory power over “intangible,” high-tech global knowledge flows proves inextricable from the ambitions of a newly emboldened Cold War national security state. However, CDC’s efforts to globalize production likewise look eerily imperial in its efforts to leverage the ownership of technical knowledge to create global dependencies.

In other words, CDC’s ventures behind the Iron Curtain reveal that globalization was never really about making ‘free’ markets. The fight over trade terms was, and increasingly is, an embittered one, inextricable from the explicit interests of ad hoc international actors—ranging from firms and domestic agencies to states and economic blocs. Technology transfers, although often framed as a mechanism to share or ‘democratize’ information, instead should be understood as fine-tuned instruments deployed exclusively to benefit the arbiter.

1. John Lewis Gaddis, George F. Kennan: An American Life, Penguin Random House, 2012.

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