Why better small guns do not end the calibre race

Can newer technology make a smaller gun more effective than an older larger gun?

Yes, but the advantage fades when the same technology is applied to larger guns, restarting the competition.

Newer technology can make a smaller weapon competitive with an older, larger one. That advantage fades when the same technology reaches the larger calibre. New ammunition and control systems often appear first in the 40 mm class, perhaps because production volume and price make experimentation worthwhile. Larger weapons then adopt scalable versions of those developments, as programmable ammunition has moved into modern five-inch systems. Once that happens, the larger gun regains its range and destructive advantage.