This very concept is well explored by Mariana Mazzucato's Entrepreneurial State[1]:
> the United States' economic success is a result of public and state funded investments in innovation and technology, rather than a result of the small state, free market doctrine that often receives credit for the country's strong economy.
I really liked this Freakonomics episode[2] if you're more the podcast kind of person.
I don't agree with the article, but Mariana Mazzucato makes a strong argument in defense of the critical role government funding plays in entrepreneurial innovation [0].
She also did a talk at Stewart Brand's Long Now Foundation a few years ago [1]. It's worth a listen.
You might enjoy the book "The Entrepreneurial State" by Mariana Mazzucato makes a similar argument that a lot of innovation is actually driven by the state, because they can afford to invest a lot in research without an immediate payoff. The author mentions DARPA in particular as a great example of the US stimulating innovation that then later benefits companies. For example, while the iPhone is a great piece of innovation, it built on innovations made possible by state funded research.
This is exactly the argument made by Mariana Mazzucato in The Entrepreneurial State. It argues that the state is a major driver of innovation. DARPA is a great example of that. It argues that governments should be receiving some of the returns that private companies make because of this innovation. E.g. Apple makes enormous amounts of money selling iPhones that is full of technology like GPS, Internet, etc. that wouldn't be possible without the state as a driver of innovation. It seems fair that they get a share of those earnings in return.
See the book The Entrepreneurial State by Mariana Mazzucato who covers this topic.
"Her book comprehensively debunks the myth of a lumbering, bureaucratic state versus a dynamic, innovative private sector. In a series of case studies—including IT, biotech and nanotech—Professor Mazzucato shows that the opposite is true: the private sector only finds the courage to invest after an entrepreneurial state has made the high-risk investments. In an intensely researched chapter, she reveals that every technology that makes the iPhone so ‘smart’ was government funded: the Internet, GPS, its touch-screen display and the voice-activated Siri. And in another chapter she argues that the green revolution is today is missing the kind of patient public sector financing, and de-financialized private sector, that got the IT revolution off the ground."
"In the movie Steve Jobs, a character asks, “So how come 10 times in a day I read ‘Steve Jobs is a genius?’” The great man reputation that envelops Jobs is just part of a larger mythology of the role that Silicon Valley, and indeed the entire U.S. private sector, has played in technology innovation. We idolize tech entrepreneurs like Jobs, and credit them for most of the growth in our economy. But University of Sussex economist Mariana Mazzucato, who has just published a new U.S. edition of her book, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, makes a timely argument that it is the government, not venture capitalists and tech visionaries, that have been heroic.
“Every major technological change in recent years traces most of its funding back to the state,” says Mazzucato. Even “early stage” private-sector VCs come in much later, after the big breakthroughs have been made. For example, she notes, “The National Institutes of Health have spent almost a trillion dollars since their founding on the research that created both the pharmaceutical and the biotech sectors–with venture capitalists only entering biotech once the red carpet was laid down in the 1980s. We pretend that the government was at best just in the background creating the basic conditions (skills, infrastructure, basic science). But the truth is that the involvement required massive risk taking along the entire innovation chain: basic research, applied research and early stage financing of companies themselves.” The Silicon Valley VC model, which has typically dictated that financiers exit within 5 years or so, simply isn’t patient enough to create game changing innovation."
On the topic of that last point, Dr. Mazzucato proposes the alternative of greater licensing of government developed technology as a more realistic alternative in her book "The Entrepreneurial State". I wrote a summary here if you're curious: https://medium.com/@seanaubin/book-review-the-entrepreneuria...
Very good speech and an important national dialog to spark. I'd like to call attention to one thing though:
"I don't believe that a state-run economy can be as viable as market capitalism in producing mass wealth."
This demonstrates a basic confusion that we Americans have about ourselves, even most "lefties" and "libertarians": The false belief that we live in a free market economy.
The truth is, the state plays a massive role in our economy.
This is especially true for us Silicon Valley entrepreneurial Americans. Because the government's hand is especially strong in high tech.
The Internet. Microcomputers. Lasers. Jets. Robots. Siri. You name a major high-tech innovation, and it's probably got DARPA or NASA behind it in the earliest, highest-risk, most capital-intensive stages. Look again and you'll probably find lots more government support in bringing the technology to market through procurement.
This is all the more damning for our system's poverty. The rich and powerful are fully in favor of a strong, powerful state-run economy that serves their needs. That's why it's done under the rubric of military spending -- "we have to spend trillions of taxpayer dollars on this because we have to defend ourselves" sounds better than "because we need it to produce the Silicon Valley economic miracle."
Because the latter would suggest it's fair to direct major taxpayer support for other economic investments like education, health care and housing.
Instead, the state-supported rich and powerful can claim we live in a "free market economy" that just happens to have trillions of state-sponsored investment, for them.
Can you point to other situations where an advanced infrastructure created by government led to an increase in entrepreneurial activity?
I ask this because about every state nowadays has special departments and programs to promote hi-tech startups. But of course they are actually only flourishing in a small number of spots. I've worked with a few of these programs, and some are led by extremely talented and skilled administrators. And they're well funded. Is your premise that direct involvement like this will not work but that indirect involvement would? Kind of like putting out a fire by building a swimming pool?
Not trying to mock you or start an argument, but I don't understand how much indirect contributions can actually help. Seems to me, and it's just my opinion, but societies with lots of government-provided goodies actually have less startups. It's the ones where there's this balance between chaos and order where you get the most growth. Not ones with lots of danger or ones with lots of cushions.
I don't have much of an opinion on this topic, since it seems to me that any large concentration of money and smart people produces innovation (so do lone geniuses). But I thought this article was interesting.
"In the movie Steve Jobs, a character asks, “So how come 10 times in a day I read ‘Steve Jobs is a genius?’” The great man reputation that envelops Jobs is just part of a larger mythology of the role that Silicon Valley, and indeed the entire U.S. private sector, has played in technology innovation. We idolize tech entrepreneurs like Jobs, and credit them for most of the growth in our economy. But University of Sussex economist Mariana Mazzucato, who has just published a new U.S. edition of her book, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, makes a timely argument that it is the government, not venture capitalists and tech visionaries, that have been heroic.
“Every major technological change in recent years traces most of its funding back to the state,” says Mazzucato. Even “early stage” private-sector VCs come in much later, after the big breakthroughs have been made. For example, she notes, “The National Institutes of Health have spent almost a trillions dollars since their founding on the research that created both the pharmaceutical and the biotech sectors–with venture capitalists only entering biotech once the red carpet was laid down in the 1980s. We pretend that the government was at best just in the background creating the basic conditions (skills, infrastructure, basic science). But the truth is that the involvement required massive risk taking along the entire innovation chain: basic research, applied research and early stage financing of companies themselves.” The Silicon Valley VC model, which has typically dictated that financiers exit within 5 years or so, simply isn’t patient enough to create game changing innovation."
> For an advanced country that actually has to create new things, the cost:benefits shifts in favour of more IP then the earlier stage.
This is a myth; a very destructive myth.
To quote professor Mazzucato:
”According to conventional wisdom, innovation is best left to the dynamic entrepreneurs of the private sector, and government should get out of the way. But what if all this was wrong? What if, from Silicon Valley to medical breakthroughs, the public sector has been the boldest and most valuable risk-taker of all?
[Mazzucato] comprehensively debunks the myth of a lumbering, bureaucratic state versus a dynamic, innovative private sector. In a series of case studies—from IT, biotech, nanotech to today’s emerging green tech — Professor Mazzucato shows that the opposite is true: the private sector only finds the courage to invest after an entrepreneurial state has made the high-risk investments. In an intensely researched chapter, she reveals that every technology that makes the iPhone so ‘smart’ was government funded: the Internet, GPS, its touch-screen display and the voice-activated Siri.
Mazzucato also controversially argues that in the history of modern capitalism the State has not only fixed market failures, but has also actively shaped and created markets. In doing so, it sometimes wins and sometimes fails. Yet by not admitting the State’s role in such active risk taking, and pretending that the state only cheers on the side-lines while the private sector roars, we have ended up creating an ‘innovation system’ whereby the public sector socializes risks, while rewards are privatized.” [1]
Also, what is your definition for 'advanced country’? Are you talking about global north countries like the US, UK etc.?
What you likely see as making up an 'advanced country’ I see as global north imperialist institutions designed for gatekeeping and withholding important knowledge; and denying all of the working class access to our inheritance - a process that Ha-Joon Chang calls 'kicking away the ladder' [2].
> It's still possible to have too much restriction though, I think the copyright duration is ridiculous for example.
If you're only critiquing copyright - and not patents, trade secrets and others - what do you personally see as the redeemable parts of those other forms of IP (and the systems used to enforce them)?
We're in an age where instantaneous digital planetary replication and transmission technologies could give birth to an enormous collaborative web of cooperation, at an incredible near-zero marginal cost; which would enable the working class to get on the same page globally (and stay there) in order to further develop technologies in a beautiful mutually-beneficial dance (described more by people like Steele [3], as well as many socialist/marxist researchers [4]).
Why is it, according to you, beneficial to continue to have the private-property enforcing capitalist state hand out monopolies to profit-seeking entities/capitalist firms, which gives them 'ownership' over decontextualized/siloed scientific knowledge and technology and allows them to prosecute other humans for using this (or ‘their’) commoditized knowledge? In the end all knowledge is derivable and re-derivable, which is why many discoveries in the past were made in tandem in different (unconnected) places around the world [5]. Many forget this.
Scientific discoveries are essentially 'built into' the universe, and I believe they emerge at the right time for us to tackle the biggest challenges of our times (now climate change + 6th mass extinction event). Back on topic: does this mean those who make new discoveries are lone geniuses? No, not even close; they build on the things left by behind by those who came before. Yet unfortunately the capitalist lone genius myth is the predominant (and harmful) story of our time. [6]
What bottlenecks do you see for an emergent open, universally accessible, scientific commons-centered world? A world that doesn't allow the commodification and monopolization of our shared inheritance?
I think humanity has been waiting for patterns to emerge that allow for radically participative, distributed and open collective sense-making systems. I believe that the organizational patterns that help to remedy the current collective challenges have finally started to emerge in the form of http://valueflo.ws and holochain. I'm talking about intricate distributed systems that do a much better job of meeting the high level of variety in our world, and which allow us to govern our global commons without compromising on individual agency, as today’s systems do.
Our world today is divided in two: the working class and the propertied class. The propertied class unfairly dominate by 1.) having created knowledge hierarchies by setting up harmful artificial-scarcity -enabling systems of law - in effect weaponing knowledge, as well as 2.) having created undemocratic and private systems and symbols for measuring and communicating/expressing wealth, in the form of a.) siloed capitalist resource measuring systems (through capitalist Enterprise Resource Planning software that obscures economic human relations), and b.) centrally controlled and centrally issued currencies instead of mutual credit systems and protocols that allow mutual issuance and evolution (hence why I linked to Valueflo.ws, since it uses the Resources-Events-Agents ontology).
In other words: so far, today's systems are violent capital-enabling straightjackets because we have not been able to “encode as much variety as exists in the system it wants to control” (the system I’m referring to here being our global interconnected civilization) [7]. The cybernetic concept described above is called Ashby’s ‘law of requisite variety’ which I first learned about through Eric Harris-Braun, one of the people who stumbled on this novel pattern for fully distributed protocols now known as holochain, which “combines ideas from BitTorrent and Git, along with cryptographic signatures, peer validation, and gossip.“.
On the topic of innovation policy, Mariana Mazzucato argues that governments should take a more active role in driving innovation towards particular goals. Be it electronic warfare / military electronics that begat Silicon Valley as detailed in this presentation by Steve Blank, or getting to the moon before the commies (Apollo program).
Well, if you'd like the anti-statist take on state innovation, how about this?
"The economy relies very heavily on the state sector. There is a lot of agony now about socialization of the economy, but that is a bad joke. The advanced economy, high technology and so forth, has always relied extensively on the dynamic state sector of the economy.
"That's true of computers, the internet, aircraft, biotechnology, just about everywhere you look. MIT, where I am speaking to you, is a kind of funnel into which the public pours money and out of it comes the technology of the future which will be handed over to private power for profit. So what you have is a system of socialization of cost and risk and privatization of profit. And that's not just in the financial system. It is the whole advanced economy." (http://www.stwr.org/global-financial-crisis/the-financial-cr...)
That's from Noam Chomsky, an anti-capitalist who favors forms of anarcho-syndicalism. Obviously, it's hard to bring up such opinions in polite company. Much easier to quote Mazzucato, who'll present the truth in a more politically correct way... :)
Of course, the exact opposite dynamic also exists in full bloom - when did you last see an advocate for government action invite falsification?
Mariana Mazzucato's work on The Entrepreneurial State makes frequent appearances in these parts, typically in the shape of references to internet startups not really being innovative, because the internet/GPS/touch screens/Siri have roots in government research programs.
Yes Internet is a very good example. It was not originally developed by private companies but later yes. So it looks like state has a big role in developing innovations which don't seem to bring immediate profit to any one company. Even the whole patent-system is something that only governments can provide. And patents drive innovation I think
We will never know the opposite wont we? It is not that state is not capable of investment on innovation. They are just terrible at it. There are many rebuttals on the issue of "government is necessary for innovation". Here is one of them: https://www.youtube.com/watch?v=tbR4cjA-Few
> You can bootstrap or replace the private market in the beginning with government orders or funding for stuff like airplanes, ship, logistics, energy, defense, machining, but not for consumer tech.
Where do you think consumer tech comes from, except from initial government funding (often military-related). Mazzucato has an entire chapter in her book on the iPhone and all the tech that was originally government-funded:
What became CUDA (originally "Brook") was developed with government grants:
> Ian Buck, while at Stanford in 2000, created an 8K gaming rig using 32 GeForce cards, then obtained a DARPA grant to perform general purpose parallel programming on GPUs.
> the United States' economic success is a result of public and state funded investments in innovation and technology, rather than a result of the small state, free market doctrine that often receives credit for the country's strong economy.
I really liked this Freakonomics episode[2] if you're more the podcast kind of person.
[1]https://en.wikipedia.org/wiki/The_Entrepreneurial_State
[2]https://freakonomics.com/podcast/mariana-mazzucato/
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