Wednesday’s Book Review: “The Economic Laws of Scientific Research”

The Economic Laws of Scientific ResearchThe Economic Laws of Scientific Research. By Terence Kealey. New York: Palgrave Macmillan/St. Martin’s Press, 1996. Illustrations, figures, notes, index. 382 pages. ISBN: 978-0312128470. $51.00 paperback.

Terence Kealey is a clinical biochemist, his profession at Cambridge University, who journeys out of his chosen discipline to offer a keen critique of the current structure of scientific research and development. His thesis is simple. He makes the case that scientific research is most effectively pursued through the free market.

Kealey challenges the idea that government support of scientific research is counterproductive to wealth-generating technology, and that private enterprise can supply most if not all of the funds required for both pure and applied research. This criticism is critical in any analysis of spaceflight in the United States, hence my reason for reviewing this book despite its publication date of 1996.

Furthermore, Kealey contends that command economies and totalitarian states do not achieve great success in science. He argues for a libertarian/neo-liberal perspective in which the free market would determine the direction of science, and of its practical application in technology. Indeed, he asserts that government funding of science is really a curse, inefficient and relatively ineffective.

The Economic Laws of Scientific Research is essentially a manifesto, making a case for a reordering of the scientific/technological apparatus of the modern world from one that has a mix of government/private sponsorship and funding to one that is largely if not entirely a private enterprise. Kealey claims that the current mix of funding/sponsorship is unhealthy and inefficient. As a society we could have much more in the way of useful outcomes, he insists, from a market-driven approach in which corporations and other private entities such as foundations and research centers invested in research with clearly understood objectives.

His libertarian argument is twofold. First, Kealey insists that government has for too long dominated scientific research and development and turned it to ends that are in too many cases counterproductive to society as a whole. At some level he is correct about this, for it has overwhelmingly been the sponsor of efforts to enhance military capabilities. It is in this context that much of the government sponsorship of aerospace R&D has been made over the years of the twentieth and into the twenty-first century. He is also right that this is a realm of activity that does not directly and immediately benefit citizens as a whole unless maintaining safety is a concern. He contends that these efforts are inefficient; they are, but they are also the types of R&D that few would question as an appropriate realm of heavy government involvement.

Second, Kealey insists that the private sector has been far more efficient in achieving recognizable scientific achievements than any government anywhere at any time. He deploys the argument that such states as the Soviet Union, which employed larger numbers of scientists and engineers than any other comparably-sized nation, including the United States, achieved far meager results than should have been the case. He would argue it was because of an ineffective sponsorship apparatus, one that stifled creativity and innovation. Kealey also uses such ideological constructs as Lysenkoism in the Soviet Union and its ideological bent that set back genetics in the Eastern bloc for decades.

There are several important implications for this study. Kealey is only partially correct with his criticisms of government supported scientific research. We can point to its many successes, whether in public laboratories or through contracts and grants to outside entities such as universities and corporations of outstanding success stories that would never have come to pass without that investment. For example, the United States led the world into the air age but by 1915 it had fallen so far behind the capabilities of other nations as to be both a major embarrassment and a national security risk. It took the creation of the National Advisory Committee for Aeronautics as a unique government entity to climb back out of that deep hole of technological backwardness. The same held true for the establishment of NASA in the 1950s, seeking to overcome a major military threat through investment in key space technologies. It took years of federal investment in these technologies to become the world leader and continued support to assure long-term success.

I also want to mention something about the historical episodes discussed in The Economic Laws of Scientific Research. Kealey demonstrates in this book that he is certainly no historian. His analyses might serve his thesis but it does not stand up to historical scrutiny. For example, his assertion that the Roman Empire’s collapse was brought on by too much government intervention into the economy is overdrawn and obtuse. So to, his discussion of the economy of what he persists in calling the “Dark Ages” while all historians have come to deride that term not only as biased but also as inelegant, inexact, and inaccurate. He claims that the less powerful nature of the emerging governments of that era enabled local innovation and more personal liberty. Really! Tell that to serfs! Those first seven chapters, with their ideologically driven historical accounts are really quite embarrassing when read by anyone with a modicum of understanding of the story.

The remainder of the book essentially deals with the twentieth century and is less history than a political tract. His arguments, while I find them a bit sophomoric and unconvincing, are worthy of consideration. His core point is that basic research contributes almost nothing to progress in industry and that industry should rely on itself to fund whatever research is needed.

If Kealey were to have his way, government investment in science would not take place and everything would be market driven. At some level this has been taking place as a broad neo-liberal experiment in the U.S. as government is viewed not just as a benign sponsor of research but a detriment to scientific advance. Beginning with the Reagan administration in 1981 private sector investment in scientific research in the U.S. surpassed government investment for the first time since World War II. It has been gaining ever since, so much so that by 2000 $170 billion was invested annually by private entities to $55 billion—in 1996 constant dollars—for the federal government. And of the increases of federal investment in the 1990s, and there were some, only the life sciences sustained a five percent increase for the decade. During that same period 63.2 percent of the aerospace industry’s R&D dollars came from federal sources; the remaining 36.8 percent came from the private sector. In contrast, pharmaceuticals financed 100 percent of its R&D from company funds; machinery, 93.4 percent; computers, 83.3 percent; non-air transportation, 95.3 percent; and information services, 96.8 percent.

This is the level of investment that has brought us to the world that we live in today. Kealey would extend the trends already present. The question to be considered; is this an acceptable place for the United States as it proceeds into the twenty-first century? If Kealey is right, the nation is moving in the right direction. But I doubt he is correct. Private sector investment works well for R&D with near term payoffs, but not so well on great ideas that need long gestation and incubation periods. All of the successful innovations of the recent era—computer technologies, the internet, and the sequencing of the human genome—required significant government investment to get the process of innovation started. Once the gains were understood and the path to profits clear many private sector firms entered the arena and ultimately put considerable investment into it, but not until the technologies were advanced enough to show marketability.

Kealey’s final statement is a call to arms: “If this book has a message, it is this: relax. Economic, technical and scientific growth are free lunches. Under laissez faire they just emerge, like grass after the rain, through the efforts of individual entrepreneurs and philanthropists. Once the State has initiated the rule of law and sensible commercial legislation, the goodies will flow—and laissez faire is morally superior to dirigism as it maximizes the freedoms and responsibilities of the individual.” Really? Where would the effort to explore space be in such an environment?

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