The Myth That Without Gov't Monopolies Or Subsidies, Discoveries Will Be Hidden By Secrets
from the look-at-the-data dept
Stephan Kinsella sends over a fascinating talk by Dr. Terence Kealey, a UK biochemist and professor, discussing why -- contrary to what most people think, "science" is not a public good, and that government-funded science actually tends to do more damage than good for global economies:The problem, it turns out, is that as with patents there is no actual data to back this up. Kealey points out that there is no historical or econometric data anywhere that supports this claim. For example, he points to the OECD's sources of economic growth report (pdf), where it found very high correlation between economic growth and countries that had high levels of private R&D. When it came to publicly supported R&D, the report found no impact on economic growth... but, more worrying, it found evidence that public funding of science tended to crowd out private funding of R&D, which (again) correlated highly with economic growth. Now, of course, correlation is not causation, and there may be many other factors at play here. However, it is interesting that there doesn't appear to be any direct evidence that public expenditure in science leads to economic growth.
Dr. Kealey points out that many people believe in the importance of public funding of science based on the same thinking as Bacon above: the idea that science is a public good. That is, that once it's out there, anyone can use it -- and thus, it either needs to be enclosed and limited in some manner, or funded by the government. In the last couple decades, however, more and more economists have begun to realize that this thinking on public goods is not only overly simplified, but it's often wrong. It appears to be the case here again. Kealey points out that science is not, in fact, a public good.
Why? Because of a combination of social mores and the need to do your own research to understand what others are doing:
The standard story... was that science was a public good, in the sense that anybody can go to the journals -- or the internet today -- and pick up the Journal of Molecular Biology and read the papers for free... We can get it for nothing. Or we can go to the Patent Office, which very kindly publishes all this stuff... and read all the patents... and get ideas, blah blah blah.... We all know that "science is publicly available," and therefore is easy to copy and all the rest of that.This is a huge point that fits with similar points that we've made in the past when it comes to intellectual property and the idea that others can just come along and "copy" the idea. So many people believe it's easy for anyone to just copy, but it's that tacit knowledge that is so hard to get. It's why so many attempts at just copying what other successful operations do turn into cargo cult copies, where you may get the outward aspects copied, but you miss all that important implicit and tacit information if you're not out there in the market yourself.
But hold on a second.
How many people in this room can read the Journal of Molecular Biology. How many people in this room can read contemporary journals in physics? Or math? Physiology? Very, very few. Now the interesting thing -- and we can show this very clearly -- is that the only people who can read the papers, the only people who can talk to the scientists who generate the data, are fellow specialists in the same field. And what are they doing? They are publishing their own papers.
And if they try not to publish their own papers... If they say, 'we're not going to get engaged in the exchange of information; we're going to keep out of it and just try to read other people's papers, but not do any research of our own, not make any advances of our own, not have any conversations with anyone,' within two or three years they are obsolescent and redundant, and they can no longer read the papers, because they're not doing the science themselves, which gives them the tacit knowledge -- all the subtle stuff that's never actually published -- that enables them actually to access the information of their competitors.
He then goes on to discuss the Royal Society of London, which encouraged scientists to publish their own research, and points out that while initially, people might think that it was better to not be a member, not publish your information and just scoop up what others had done, in practice that wasn't the case. Why? Because the members of the society beyond publishing themselves, also had much greater access to all the other members as well, allowing them to continually further their own knowledge. In other words, the argument that researchers or competitors will prefer to keep their inventions secret via trade secrets goes out the window when companies realize that by sharing more freely their own inventions, they also get greater access to the inventions of others.
What's interesting here is that this story of the Royal Society and the benefits of membership actually fit -- almost exactly -- the research on why Silicon Valley became such a huge success when compared to other, similar arenas. What that research showed was that due to a lack of noncompete agreements in Silicon Valley (where they are outlawed), the rate of job shifting was much higher. And, partly because of that, information flowed much more quickly between competitors. While one might normally think this is a bad thing, what actually happened was it allowed all the companies in that space to grow much faster, because the knowledge sharing led to faster and faster advancements for all. Rather than being limited to just what one group could figure out, they could all effectively build on each other's knowledge as well -- and the end result was much greater growth for all.
But, still, as with the situation that Dr. Kealey describes, there had to be a level of expertise from everyone involved. It wasn't as if some other party, with no knowledge of the space at all could just copy it. So too, it appears to be, with scientists:
You can't access the science of others unless you're part of the game. It is only the molecular biologist who is publishing his own papers, getting invited to the conferences, having the discrete conversations with other fellow molecular biologists, who can capture the work of others. And so you don't get the information for free. You pay a very high price to access the information of your fellows. Science is not a public good.... It costs as much to access information as it does to make it. It's just that the cost of accessing is the subtle parallel cost of the work you have to do before you're ready to read it. And, as a part of that, you're contributing to the common pool of knowledge.From there, he discusses the famous story of how the Wright Brothers and their patents effectively killed the aviation industry in the US until the government stepped in to force them to open up. And from there, he makes the point that I was discussing above about the research on Silicon Valley:
What is really interesting about the exchange of knowledge, is the work of von Hippel and others at MIT Sloan Management School: industrial scientists collude -- or I don't know what word you want to use -- exchange information all of the time. Even competitors. It's a straight quid pro quo. Just like academic scientists. von Hippel showed, for example, the 12 leading steel makers in America... 11 of them routinely met discretely, and exchanged information as quid pro quos. It's a very nice model, economically. There is actually shared knowledge amongst scientists. One of the leading economists of science -- I'm not going to name all the names because it's boring -- but he's showed that there are no industrial secrets in America or in Britain or in the West. Scientists at the level of research, in companies, exchange so much information, that no secrets exist more than about a year, a year and a half....It's great to see that there's even more research on this particular subject than I had been aware of before, but which confirms many of the points that I've been making for years.
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Scientists discovered a very long time ago that their own self-interest is assured if they share knowledge with competitors. Because the ones that don't share knowledge, whether they're academic scientists looking for their Nobels or business scientists looking for money, that if they don't share, they will absolutely get left behind.
Filed Under: innovation, intellectual property, openness, science, sharing, terence kealey, trade secrets
