Trust the markets to fund science

Public money can put on a show about the Industrial Revolution, but it can’t start one. Jon Smith

There are times when only clichés work. There is a 400-year-old elephant in the science lab and the emperor, frankly, has no clothes.

It was in 1605 that Francis Bacon, a British politician and lawyer, wrote his book The Advancement of Learning to argue that economic growth depended on government funding of science. Bacon noted that the greatest technological advances of his age had been Henry the Navigator’s voyages of discovery which, Bacon claimed, had succeeded because Henry had established a research laboratory to develop the science and technology by which his ships could navigate the globe. Henry’s voyages of discovery were indeed great advances but, as Sir Peter Russell showed in his 2001 biography Henry the Navigator, it was simply a myth that Henry had done science: Henry had only exploited the established technologies of the day. Henry’s “research lab” was a publicity stunt designed to represent Henry, falsely, as an intellectual.

Nonetheless, Bacon’s argument that economic growth depends on government funding of science remains dogma that is still universally believed. First, he wrote that applied science grows out of pure science, and second he wrote that - because pure science has no immediate application - only governments would fund it. Bacon’s claims, now known as the linear model, state that government funding leads to pure science, which in turn leads to applied science, and eventually from that comes economic growth.

Unfortunately for the credibility of this model, there is no empirical evidence that it is true. As long ago as 1972, it has been reported in the book Wealth from Knowledge that in practice “although scientific discoveries occasionally lead to new technology, this is rare. [Generally] technology builds on technology.”

Equally Britain became the richest country in the world by pioneering the agricultural and industrial revolutions in an era of laissez faire - when transactions between private parties were free from government restrictions, tariffs and subsidies - and when British governments did not fund science. Around 1890 Britain was eventually overtaken economically – by the US which was equally laissez faire (the American government did not fund science significantly until 1940).

Meanwhile, countries such as France and the German states enjoyed considerable government funding for science during the 18th and 19th centuries, but they failed to converge economically on the two anglophone leaders. As economic historian Angus Maddison showed in his 2003 book The World Economy, France and Germany entered the 20th century as poor, relative to the UK and USA, as they entered the 19th century. It was only after 1945, by when - ironically - the UK and USA governments were themselves funding science generously, that Germany and France finally caught up. They did so by adopting free markets on the UK and US models. It needs to be emphasised that 19th-century Germany under Rhenish capitalism did not do unusually well economically.

Not everyone believes that economic history provides arguments that are relevant to today. But take this 2003 study where a group of economists at the Organisation for Economic Cooperation and Development (OECD), an economic think tank for the world’s richest countries, published The Sources of Economic Growth in OECD Countries. This study, which was a comprehensive survey of the rich countries’ economies and of their patterns of research funding over more than two decades, found that only privately-funded research contributed to economic growth. Not only did publicly-funded research not stimulate economic growth but - by displacing private funding - it might even have inhibited it.

Bacon believed that no private entity would fund pure science because, essential though pure science was to the development of technology, he or she could not monopolise the pure discoveries they had funded. Developments in pure science, Bacon said, were so unpredictable that, inevitably, competitors - sometimes decades later - could exploit a scientist’s work without those competitors contributing to that original research. So no private entity would fund pure science because such funding was essentially subsidising the research of competitors.

But Bacon was wrong. To use another cliché, there are no free lunches in science. The only people who can exploit the science of principals are their fellow scientists (can you exploit papers published in fields outside your own?) and competitive scientists pay their way by publishing their own work. So although no single pure scientist can monopolise their own discoveries, the competitors who are copying a scientist’s research are making their own contributions to the collective enterprise - contributions that others will in their turn exploit.

Every scientist, however great, is as much a free loader as a contributor. He or she stands on the shoulders of giants as much as he or she bears others on their shoulders and the net effect is collectively beneficial. Which is why companies and foundations fund as much science as they do - they cannot access the research of others without doing their own - and which is why they would fund even more if governments’ funding had not displaced their own.

There are many good reasons why governments should fund science, but those reasons should be rooted in a democracy’s need for science the market would not fund. Big Science projects such as the International Space Station and the Large Hadron Collider will attract funding from the public for non-economic reasons. But empirical evidence shows that markets can be entrusted to fund all the science - including pure science - that economic growth requires.


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Infographic: How much does the world spend on science?

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