Since the Enlightenment and its corresponding assumptions of social-technological progress, scholars have debated what political and economic systems best facilitate technological growth.
These days, one of the common assumptions of the technology sector is that the government is fundamentally a limiting force when it comes to innovation. This view is a well-established conservative position since the advent of the Chicago School of Keynesian Economics, but even among progressives, there’s a strong sentiment that the government doesn’t have what it takes to innovate and bring new technologies to the helm. Headlines seem to support this theory: it takes the private sector a fraction of the cost to send rockets to space, new laws banning disruptive technology companies like AirBnb and Uber seem to crop up every week. A cursory glance at this issue would seem to suggest that when it comes to developing new technologies, Thomas Jefferson’s maxim still rings loud and true: That government which governs best, governs least.
Enter Mariana Mazzucato. Currently the RM Phillips chair in the Economics of Innovation at the University of Sussex, she also has a long resume of academic positions at other prestigious universities, including University of Denver, London Business School, Open University, and Bocconi University. Her research focuses on the role of the State in modern capitalism, and her analysis runs counter to the tech communities’ common understanding of how technologies come to market. Mariana Mazzucato’s research shows that many of the technologies that form the backbone of our technological revolutions were the direct result of multi-decade research by the state. Consider the examples of computers, the internet, and GPS–all of these technologies were developed and funded by the government for decades before entering the consumer market, and it’s impossible to imagine an iphone without these technologies.
In his 02011 SALT talk, Geoffrey West noted that the average lifespan of a company is merely 10 years. On such short time scales, it’s hard for companies to invest in technologies that don’t have immediate market potential. It’s not a coincidence that Apple or Google came to fruition under the auspices of a government that heavily invested in these technologies: the computer manufacturer was able to build its first machine by virtue of a $500,000 investment from an obscure government entity, and the search engine’s revolutionary algorithm was developed through research that was funded by the National Science Foundation. When one then considers the network of publicly-funded universities and labs (which developed technologies such as HTML and touchscreens), the mythos of the lone entrepreneur/inventor starts to look incomplete at best.
Mazzucato’s analysis forces us to ponder a rather uncomfortable question: Why do we systematically downplay these long-term investments by the government, and champion the companies that bring these mature technologies to market?
To learn more about the economics of innovation, come see Mariana Mazzucato on March 24th at the SFJAZZ Center in San Francisco. You can reserve tickets, get directions and sign up for the podcast on the Seminar page.