Beyond R&D: What makes innovation policy?

Knowledge lies at the heart of the political rhetoric of Western economic policy. From Barack Obama to Jean-Claude Juncker, politicians regularly confirm the importance of knowledge output – or of fostering “innovation”, to use the more popular buzzword. But despite all the rhetoric around innovation policies, policymakers often remain scant on details. If it is talked about, innovation policy is mostly linked to financial expenditure. During the financial crisis, when national budgets came under pressure and austerity programmes abound, many states, such as the UK, refrained from cutting their R&D expenses. The newest national budget even pledges an additional £240 million to innovation. In a similar vein, programmes such as EU Horizon 2020 committed to foster innovation by investing €80 billion in science and innovation programmes.

Where does this belief in a purely financial investment approach to innovation policy come from? In general, it is founded on the persistent popularity of the linear model of innovation among policymakers. The linear model prescribes a simple flowchart diagram, where basic research leads to applied research, which sparks technology development and finally results in production and diffusion of a new technology or invention. In this way, the linear model is often likened to a closed pipeline, where investment in basic research leads to innovation in form of new technologies and products. Its persistent popularity can be explained by the stakes held in it by various shareholders, such as scientists, businesspeople, but also politicians. Certain industries, for example the pharmaceutical one, have long supported this model in order to justify additional public investment in basic research, which directly benefits their business. Politicians have an interest in a model that is easy to explain to their voters and yet compelling, at least superficially. Unsurprisingly, this simplistic approach to innovation has long been questioned by the academic world, for example by Nathan Rosenburg, who proclaimed the linear model “dead” as early as 1994. And once such an opinion becomes the topic of (admittedly brilliant) TED talks, it has indeed reached the mainstream of popular science.

Since others have already done such a great job in disassembling the myth of the linear model of innovation, I will focus on the implications on policy recommendations in practice. Even though most of the academic world seems to agree that the linear model of innovation is dead, it is much less clear what the consequences of its funeral should be. In recent years, and especially with the rising popularity of the buzzword “innovation” among policymakers, a range of alternative policy approaches have been proposed. This has to do with the vagueness of the term “innovation” itself, which includes the Schumpeterian “carrying out of new combinations” by entrepreneurs as well as John Kay’s conclusion that innovation is about finding new ways to meet customer needs. Innovation, in a broad sense, is about products, processes and organisation both in radical and incremental ways. American taxi startup Uber, for example, is an incremental addition to the cab industry and relies almost exclusively on a rearrangement of pre-existing technology, yet it is considered innovative. This vagueness of the term “innovation” itself translates in differing views on its purpose. Should innovation policy be mainly seen as a tool to increase productivity and stimulate economic growth? Or should it be focused on its beneficiaries, i.e. society, and aim at improving individual quality of life?

One of the most popular papers on innovation policy in recent years has been “The Entrepreneurial State”, a pamphlet written for UK think tank Demos by Mariana Mazzucato, who is RM Phillips Chair in Science and Technology Policy at the University of Sussex. Mazzucato suggests that the most successful innovation policies are those where the state goes beyond merely providing a free market framework. Rather, she claims that the state should actively engage in the creation of new markets as an “entrepreneurial state”. This is necessary because private investors are rarely willing to take on uncertainties, i.e. incalculable risks in the sense of Frank H Knight, but only accepts those risks with a measurable probability for success. Examples for such government-funded success stories are genetic modification and artificial intelligence programmes. Throughout her pamphlet, she emphasises productivity as the main goal of a successful innovation policy, and rejects the notion that support of small businesses will yield the highest productivity. Very clearly, for Mazzucato innovation policy goes beyond setting a national R&D budget, but includes the active participation of the state to foster innovation. At the same time, this approach is centred on increasing productivity as a measure of success. Other factors, such as increased quality of life appear to be more of a by-product. Another result of this focus is Mazzucato’s rejection of specific funding for small businesses on grounds of lack in productivity ­– an argument which is entirely ignoring the fact that a wide range of small businesses in different economic sectors can contribute to shielding a national economy from market volatilities by reducing reliance on single sectors. Nonetheless, this productivity-focused argument has proven to be persistent and has recently been reiterated by other contributors to Demos.

DARPA Vector Logo.eps
The American DARPA is one of the more prominent examples cited by Mazzucato to illustrate the success of agency-driven innovation success. By DARPA (DARPA.mil) [Public domain], via Wikimedia Commons.

Patrick Cunningham, scientific adviser to the Irish government and professor at Trinity College Dublin, advances a different approach to innovation policy. In a similar vein to Demos, Patrick Cunningham goes beyond “innovation policy” as a synonym for an increased R&D budget. But instead of focusing on productivity in terms of GDP and therefore pure economic growth, Cunningham suggests a measurement of innovation policy in terms of “progress”, as through the Human Development Index (HDI) by the United Nations Development Programme (UNDP). The Human Development Index and others such as the Gini Coefficient or Gross National Happiness, include factors such as individual satisfaction, sustainability and environmental footprint in their measurement and thus create an image of progress that differs decisively from productivity measured in raw economic growth as through the GDP. This focus on human well-being entails an innovation policy with investment and frameworks focused on those technologies which are most likely to increase human development, rather than productivity or GDP. A company like Uber, although productive and innovative, in this logic might be less worthy of government support than a start-up endeavouring to increase life expectancy or to combat climate change.

So what makes a good innovation policy? Clearly, academic opinions on this matter diverge. But in any case, there is a consensus that it goes beyond mindless investment in R&D. The very vagueness entailed in our understanding of innovation enables both academics and policymakers to branch out and reach beyond R&D. How ever this “beyond” may look like in the end, almost everyone seems to suggest that innovation policy contains some form of governmental guidance through stimulation and regulation. It is now up to political parties and their think tanks to seize the matter, and give the voter an actual choice. Whether our innovation policies should be merely focused on productivity, or embrace a broader notion of human progress should be for the people to decide, not a matter of backroom negotiations between bureaucrats and government experts.

An evitable clash: Politics and Tech

An evitable clash: Politics and Tech

“Tech nerds are smart. But they can’t seem to get their heads around politics.”

This is David Roberts’ bold claim in a recent article for Vox. According to Roberts, the tech elite’s distaste for the traditional political system is expressed by “cherry-picking” policy preferences across party lines. Invoking and interpreting statements of tech world icons such as Elon Musk and Tim Urban, a popular technology and science blogger, Roberts furthermore arrives at the conclusion that the people he calls “tech nerds” stand for “quasi-libertarian anti-politics”. Regardless of personal opinion on the matter, Roberts hit a soft spot here. Testament to the relevance of its topic, the article was widely circulated and discussed in news outlets and social media, where it received heaps of praise but also faced intense backlash. Roberts is not the only one to criticise the relationship between the tech world and politics. In his book “To Save Everything, Click Here”, journalist Evgeny Morozov condemns what he calls Technological Solutionism, part of which is the belief that technology can provide us with more elegant, simple solutions to public policy issues than traditional policymaking. Anti-politics, in this sense, can be understood as the favouring of technological solutions over traditional policymaking. For example, instead of issuing new food regulations the state would rely on individuals self-tracking their consumption with technological devices. Even though the terms “tech nerds”, “tech demographic” and “tech world” are a rather diffuse terms to describe the social group formed by people involved with the digital industry, both Morozov and Roberts arrive at the conclusion that this group as a whole tends to favour this brand of anti-politics.

But is this tech demographic necessarily anti-political? Scouring the depths of Twitter, I stumbled upon the following comment:

Marc Andreessen, cofounder of pioneering internet browser Netscape, points to an important dynamic: if “tech nerds” do get engaged in politics, their frustration with the system mounts quickly. And this is the point where my inner political scientist started ringing the alarm bells. Alienating whole social groups from participative politics surely facilitates anti-political behaviour. Indeed, there are good reasons for the tech nerd’s frustration with politics. Too often do world leaders lag behind current developments in the world of science and technology and thus fail to understand its needs. As recently as 2013, German chancellor Angela Merkel called the Internet “new ground for us all” at a press conference with US President Barack Obama. At this point, the Internet was about 20 years old.

Nonetheless, the tech demographic increasingly impacts our everyday life and reshapes our societies in the most fundamental ways. Facebook and Whatsapp dominate our social communication; Google and Twitter have transformed our approach to information. New technologies emerge out of Silicon Valley every day, yet interaction with the political sphere remains scarce. And what happens when the two worlds collide? They meet in court. The most recent examples are the case of Uber or the proceedings against Google’s search engine monopoly in Europe. Long-lasting and fiercely fought trials are hardly the sign of a healthy, sustainable relationship. Perhaps even more worrying is the intense clash between the tech world and local communities. Activists in Silicon Valley accuse tech companies not only of driving housing prices and living costs higher and higher, but also of exploiting their economic importance to dictate their agenda without respect for the municipal administration. Last year’s Google bus row is one example, but London’s tech city has recently experienced similar clashes with an “’amoral’ tech elite”. These examples show that a lack of integration in existing political processes only encourages the tech demographic to create its own, anti-political solutions. Some Silicon Valley figures, such as venture capitalist Peter Thiel, have taken this quest for anti-politics so far as to suggest the creation of a habitable platform on international waters to escape government regulation. Although advocates of this solution recently had to admit their vision is not feasible, this example underlines how little room the tech elite sees for reconciliation with established politics.

Protesters blocking the street in a protest against Google's discounted use of public bus stops. By Chris Martin (Flickr user cjmartin) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
Protesters blocking the street in a protest against Google’s discounted use of public bus stops. By Chris Martin (Flickr user cjmartin) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)%5D, via Wikimedia Commons
Let us take a closer look at the characteristics of this tech elite on the run from establishment politics. A quick glance at the numbers (published by CB Insights) is already quite revealing. 92% of founders are male, 87% white, 77% are between 26-44 years old, and only 3% of teams lack a college education. In other words: the elite of the tech demographic is an astonishingly homogenous group of white college-educated males. What does this tell us? Most notably, a lack of diversity suggests limited exchange with other groups. The tech elite lives in a bubble where it is constantly confronted with the same beliefs, and therefore reinforces them. As has been argued before, such as in this brilliant piece by C.Z. Nnaemeka, this setup leads to a focus on the self, i.e. Silicon Valley entrepreneurs will develop apps, found companies and invent technologies primarily to cater to the needs of their own demographic – their only frame of reference.

Of course this is not to say that the tech elite will only act out of self-interest. Initiatives such as the Effective Altruism movement have demonstrated that there is a broad consensus in the tech world: the common good and human welfare are goals worth pursuing. At the same time, Effective Altruism also illustrates the negative effects of the homogenous tech demographic. Effective Altruism is a movement spearheaded by tech elites and endorsed by popular figures like Elon Musk. Its purpose is to take classic altruism to the next level and maximise its efficiency by crunching the numbers. What started off as an admirable initiative, however, has spiralled into an obsession with the doomsday scenarios such as advent of Artificial Intelligence. Apparently, the number suggest that preventing AI from taking over the world and eradicating humanity may save billions of future human lives, making efforts to improve current life on Earth seem rather inefficient. Despite the shortcomings of this effort it nonetheless shows that the tech elite is not gearing up to become a new class of vile and despotic Internet age overlords. Rather, the tech demographic has to be seen as what it is: An emerging social group in our modern society, looking for its place and pace.

What happens when the tech demographic does find its place and collaborates with other parts of society becomes apparent in the example of the anti-ACTA movement. In 2012, a coalition of civil rights organisations and tech companies joined forces against what they viewed as an attack on freedom of expression and the right to privacy. After real-life protests across the world, as well as virtual protest by internet giants like Google, ratification of the agreement was eventually stopped. In the resounding success of the movement some even saw the beginnings of a digital demos.

“The Big Bang of Internet Politics”. Expectations were high after the successful campaign against ACTA. By Matthias Spielkamp, Alexander Wragge, iRights.info, Wikimedia Deutschland (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)%5D, via Wikimedia Commons
Three years later, this success seems all but forgotten. As clashes between local communities and the tech world intensify, we should indeed be worried about its future role in politics. One way to improve the current situation would be a conciliatory effort by both sides. Through initiatives such as Effective Altruism and their participation in the anti-ACTA protest, the tech demographic has shown that it is willing to complement, and indeed to integrate into existing social structures. The recent setback for Peter Thiel’s lofty anti-political island utopia has come amid concessions that government regulation might not always be negative. Now it is the responsibility of existing political actors to make a move and embrace the tech demographic as a new, yet vital part of their societies, not only as a net contributor to their economies. Conflict is avoidable if both sides meet each other on an equal footing.