How Did we Actually Develop our Technology?
While the standard economic
paradigm concerning innovation is based on the Schumpeterian view that technological
advances are brought on by entrepreneurs and that this is best maximized by relying
on the private sector for innovation as much as possible. Another aspect of the
Austrian view on this issue is that the state is simply incapable of efficiently
developing new technology.
The fact is, despite what
established theories about technological innovation predict and recommend,
several of the world's most technologically advanced countries attained their
current technological level there by relying on taxpayer-funded R&D. While
the role of private industry cannot be denied concerning bringing to market recently-
developed technological leaps forward, nor in the micro-innovations which make
said technology more flexible and user-friendly, the underlying macro-innovations,
such as computers, mobile phones and the internet are based on state-discovered
innovations, funded at taxpayer expense.
As for the Austrian school's
views on the state, remember that Schumpeter, von Hayek, and von Mises came of
age during the Austro-Hungarian monarchy. In those times the state was a
bureaucratic instrument of the monarchy.
Autocratic, Arbitrary, Un-Democratic, and not a Meritocracy. It was only
natural not to want to have (that particular) state involved in anyone's lives.
Today however, most states have governments elected by the people on the
promise to improve people's lives in a number of ways. Most of today’s leading contemporary
states have a least some interest in pursuing policy which would improve
R&D and technology levels.
In the US
While the role of the US government
in developing the largest macro-innovations of our time, the computer and the internet
are widely understood, the role of the US intelligence community in the
development of Silicon Valley has just recently come to light. The support came in the form of a public
venture capital fund aimed at improving the survivability of technological start-ups.
Google Earth was among the clients. NPR covered the story last month.
In Israel
http://web.mit.edu/ipc/publications/pdf/02-004.pdf
https://ipc.mit.edu/sites/default/files/documents/04-006.pdf
The story of Israel’s role in the development of Israel’s technological level – particularly concerning the country’s booming IT sector – has been more widely reported and is more openly understood. The IDF’s role in particular has been documented as being a vitally important source of innovations for Israel’s IT startups. In particular, a disproportionately large share of Israel’s IT and communications technology industries owe their heritage to the IDF’s School for Computer Related Professions and MAMRAM, the IDF’s central computer unit.
https://ipc.mit.edu/sites/default/files/documents/04-006.pdf
The story of Israel’s role in the development of Israel’s technological level – particularly concerning the country’s booming IT sector – has been more widely reported and is more openly understood. The IDF’s role in particular has been documented as being a vitally important source of innovations for Israel’s IT startups. In particular, a disproportionately large share of Israel’s IT and communications technology industries owe their heritage to the IDF’s School for Computer Related Professions and MAMRAM, the IDF’s central computer unit.
According to the 2002 MIT study,
these results have been achieved by the Israeli state primarily by providing a
semi-public good in the form of a mechanism for collective learning and diffusion
of IT knowledge, high-skilled training, fostering technological startups, providing
a tangible link between the IT sector, policy circles, and academia, in much the
same way as results achieved by the US state.
Israel’s story has nevertheless been
almost wholly ignored by the economics profession in its quest to try to
understand what sort of policy is needed to maximize a country’s potential for
technological innovation. It’s an unfortunate case of ignoring whoever does not
fit the ideological narrative.
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Max Berre is an economist at the EDHEC-Risk Institute (Ecole Des Hautes Etudes Commerciales du Nord) who has worked as a sovereign debt expert at the Inter-American Development Bank in Washington and has taught financial economics at Maastricht University in the Netherlands.
