Re: Re: summary of calculation debate

[JKSCHW@xxxxxxx]

I agree with everything here. --jks

In a message dated Fri, 21 Jul 2000  1:27:42 PM Eastern Daylight Time, Jim Devine <jdevine@xxxxxxxxxxxxxxx> writes:

<< Rob wrote:
>In Oz, what R&D there is (and there is precious little), is mostly done in
>the public sector - Oz business won't touch it unless they get whopping
>tax breaks, and then it's mostly market research anyway.  So R&D costs are
>pretty directly socialised, and risk diminished by market research ...
>itself done at public expense.  All I'd be adding to that would be
>socialising the profits a little.

This is basic economics that needs to be emphasized. The more that there
are net social benefits (relative to the net individual benefits to the
innovator), the more that government subsidies are needed to get
self-interested "entrepreneurs" to do innovation, since the entrepreneurs
only want those benefits which they can "capture." (The military-industrial
complex has been the major way that innovation is subsidized in the US.
Without it, we wouldn't have transistors or the Internet -- or these would
have come later.)

It's also important to bring in the "Austrian" distinction between
invention and innovation. Methinks that the really great part of good
innovations has been the hard work by scientists and tinkerers _inventing_
new stuff (often done in not-for-profit government or university labs).
Innovation refers only to the filtering out of which inventions are
_profitable_ to the individual "innovator" (or packaging them to make them
profitable). IMHO, there's no reason why the individual _profit motive_
should be the only method to decide which inventions are tried as
innovations and which not, as the Austrians would have it. Why not use a
democratic method for filtering inventions instead?

(Democracy, it should be noted, does not simply mean "majority rule." It
also means "minority rights," which would be determined on the
constitutional level as with the US "Bill of Rights." Thus a democratic
filtering of inventions does not have to be always deciding whether or not
to veto an innovation. It might involve allowing whole classes of
innovations to automatically be attempted (on a trial basis) before being
judged. What these classes are  should depend on the general democratic
decision.)

Also, these days the inventors (the truly creative people, in my book)
often don't get the patent rights to their creations. They end up being
proletarians to the innovators' bourgeoisie, subject to the corporate
hierarchy.

>And the difference between public awareness and public manipulation would
>be stressed, too - an awful lot of what we call advertising and marketing
>just has to go (as those WorldCom stats show, telecom network access would
>cost nary a penny but for Veblenesque marketer-opportunists coming in to
>take advantage of useless competition and duplication).

If Justin may excuse my giving reading advice, I think for every reading of
Hayek, people should also read Veblen on "industrial sabotage" by
entrepreneurs. (See, for example, his 1904 _The Theory of Business
Enterprise_.) Innovation often means simply ripping others off. It also
often involves "cream-skimming," privatizing of those activities that the
government is involved in that might be profitable, leaving the government
with the money-losers.

Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine

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