Knowing and Making

[ I intended my next post to be a followup to yesterday's, but I need a bit more time to work on that. So you can have this one instead - it's quite good too ] Only someone with Nathan Myhrvold's Microsoft money - and reputation as a mad genius - could get away with starting Intellectual Ventures and still being taken seriously. But since he can, it makes it an interesting concept. This article by Ryan McClafferty  raises some tricky questions about whether the company's attempts to create a marketplace in ideas will encourage, or instead stifle, innovation. Normally if we deepen the market for a commodity, more of it will be produced. It gives producers more chances to sell, consumers more places to buy and lets price discovery be more accurate. As a side-effect it will usually improve the quality of the good - imagine that instead of a competitive dealer network for buying and selling cars, the government simply issued one to every family. It's very unlikely...

The launch document for Big Potatoes , a "manifesto for innovation", starts with some worthy goals: We believe innovation is an indispensable premise for improving the quality of life. It is...a means to a better life...For innovators, today's challenges can inspire new gymnastics in the mind and new ingenuity in the lab. Great - innovation is an amazing and important thing, and I'd never argue against it. But this pro-one-thing document strays into the anti-something-else area soon enough. We distinguish innovation from fiscal, regulatory, legal and cap-and-trade responses to today's challenges. Unlike these technocratic measures, innovation has the potential, at least, to increase wealth and opportunity for everyone: it is not a zero-sum game. The tragedy here is the failure to understand the promise and potential of economics. The whole point of the field is that economic transactions are not  a zero-sum game. Whether an action is fiscal, regulatory, lega...

One of my long-term themes on this blog is knowledge work - how we measure the productivity or capital value of knowledge, and how it is converted into valuable outputs. And a recurring recent point has been investment, what it is and how we encourage it. Combining these two is a posting from VoxEU from a few months ago: " Efficiency in the 'market for innovation' " by Alberto Galasso and Mark Schankerman. They claim that "The 'market for innovation' - the licensing and sale of patents - is, for example, one of the principal incentives for firms to invest in R&D." My instinct is that this is not true at all. Lots of companies that I work with invest in R&D, and virtually none have any patents. Admittedly I do not work with any large biotech or electronics manufacturers, so my anecdotal evidence is not necessarily representative. But I do believe that a lot of innovation goes on in the marketplace which is not captured in patent statistics. Ec...