Despite the dominant role of market fundamentalist ideas in U.S. politics over the last thirty years, the Federal government has dramatically expanded its capacity to finance and support efforts of the private sector to commercialize new technologies. But the partisan logic of U.S. politics has worked to make these efforts invisible to mainstream public debate. The consequence is that while this “hidden developmental state” has had a major impact on the structure of the U.S. national innovation system, its ability to be effective in the future is very much in doubt. The article ends by arguing that the importance of these developmental initiatives to the U.S. economy could present a significant opening for new progressive initiatives.
Fred Block, "Understanding the Diverging Trajectories of Europe and the United States: A Neo-Polanyian Analysis," Politics & Society35, no. 1 ( 2007): 1-31.
2.
Evelyne Huber and John Stephens, Development and Crises of the Welfare State (Chicago : University of Chicago Press, 2001); Jonas Pontusson, Inequality and Prosperity: Social Europe vs. Liberal America (Ithaca, NY: Cornell University Press, 2005 ). On rising insecurity in the United States, see Jacob Hacker, The Great Risk Shift ( New York: Oxford2006).
3.
On developmental policies in Europe see Sean O' Riain's important study of Ireland-The Politics of High-Tech Growth: Developmental Network States in the Global Economy (Cambridge: Cambridge University Press, 2004). European efforts are also understudied, but see Thomas Lawton, ed., European Industrial Policy and Competitiveness: Concepts and Instruments (New York: St. Martin's, 1999); Jakob Edler, Stefan Kuhlmann, and Maria Behrens, eds., Changing Governance of Research and Technology Policy: The European Research Area (Cheltenham, UK: Edward Elgar, 2003). On the United States, the evidence will be provided in the body of the paper.
4.
The argument here is an extension of Daniel Bell's pioneering work, The Coming of Post-Industrial Society (New York: Basic Books, 1973). See also Fred Block, Postindustrial Possibilities: A Critique of Economic Discourse ( Berkeley : University of California Press, 1990). For an overview of the debate, see Howard Brick, Transcending Capitalism: Visions of a New Society in Modern American Thought ( Ithaca, NY: Cornell University Press, 2006).
5.
For example, the European Community speaks openly about engaging in industrial policy, see http://ec.europa.eu/enterprise/enterprise_policy/industry/index_en.htm .
6.
The best account is Kent Hughes, Building the Next American Century: The Past and Future of Economic Competitiveness (Washington, DC: Woodrow Wilson Center Press, 2005). The most recent piece of legislation passed with little press coverage was the America COMPETES Act of 2007 that reconfigured some of the programs described below.
7.
New York: Harcourt Brace and Jovanovic, 1980.
8.
For the persistence of these legacies in Europe, see Stefan Berger and Hugh Compston , eds., Policy Concertation and Social Partnership in Western Europe: Lessons for the 21st Century (New York: Bergahn Books, 2002). A comparison of the strengths and weaknesses of the United States and European developmental efforts is well beyond the scope of this paper, but I am arguing that the European efforts are more durably institutionalized.
9.
The classic studies are Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy 1925-1975 (Stanford, CA : Stanford University Press, 1982 ); Robert Wade , Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton, NJ: Princeton University Press, 1990).
10.
The key distinction between a Developmental Bureaucratic State and a Developmental Network State is elaborated in O'Riain, Politics of High-Tech Growth.
11.
The use of the DNS is hardly exclusive to the United States and Europe as O'Riain argues, but the global diffusion of the DNS is beyond the scope of this paper.
12.
Product and process innovations are closely intertwined, since finding markets for new products requires figuring out how to produce the new product at much lower cost. In the discussion that follows, "product innovation" should be read as shorthand for "product and process innovations."
13.
The resources on which a DNS based are addressed in the literature on "national systems of innovation." See Richard Nelson, ed., National Innovation Systems: A Comparative Analysis ( New York: Oxford University Press, 1993); and Philippe Laredo and Philippe Mustar, eds., Research and Innovation Policies in the New Global Economy (Northampton, MA: Edward Elgar, 2001).
14.
The early development of Silicon Valley provided the paradigm for this approach. Scientists and engineers both at Stanford and at large firms set out on their own to create a series of new firms to pursue promising technological ideas. Ever since, replicating Silicon Valley's success has become central to economic development strategies. On the history, see Annalee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge, MA: Harvard University Press , 1996); Martin Kenney, ed., Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region (Stanford, CA: Stanford University Press, 2000).
15.
The concept of technological brokering is elaborated by Andrew Hargadon, How Breakthroughs Happen: The Surprising Truth About How Companies Innovate ( Boston: Harvard Business School Press, 2003). See also Richard Lester and Michael Piore, Innovation-The Missing Dimension (Cambridge, MA: Harvard University Press, 2004). Hargadon's emphasis on the incremental sources of "breakthroughs" is also elaborated in John Alic, David Mowery, and Edwards Rubin, U.S. Technology and Innovation Policies: Lessons for Climate Change (Arlington, VA: Pew Center for Global Climate Change, 2003).
16.
Peter Evans , Embedded Autonomy: States and Industrial Transformation ( Princeton, NJ: Princeton University Press, 1995).
17.
Richard Bingham , Industrial Policy American Style: From Hamilton to HDTV (Armonk, NY: M. E. Sharpe , 1998); Hughes, Building the Next American Century.
18.
The tension is an important theme in Frank Dobbin, Forging Industrial Policy: The United States, Britain, and France in the Railway Age (New York: Cambridge University Press, 1994).
19.
John Alic, Trillions for Military Technology: How the Pentagon Innovates and Why It Costs So Much (New York: Palgrave Macmillan , 2007). The importance of the military in biotechnology is elaborated by Shelley Hurt, "Patent Law, Biodefense, and the National Security State, 1945-1972,"paper presented at the International Studies Association Conference, March 2006.
20.
The agency's name shifts a number of times between ARPA and DARPA (Defense Advanced Research Projects Agency) as later administrations sought to emphasize the defense mission. For simplicity, it will be referred to consistently as ARPA here.
21.
On ARPA, I have relied heavily on Alex Roland with Philip Shiman, Strategic Computing: DARPA and the Quest for Machine Intelligence 1983-1993 ( Cambridge, MA: MIT Press, 2002). See also National Research Council, Committee on Innovations in Computing and Communications, Funding a Revolution: Government Support for Computing Research (Washington, DC: National Research Council, 1999); Glenn Fong, "ARPA Does Windows: The Defense Underpinnings of the PC Revolution ," Business and Politics3, no. 3: 213-237; and Nathan Newman, Net Loss: Internet Prophets, Private Profits, and the Costs to Community ( University Park, PA: Pennsylvania University Press , 2002).
22.
The now classic discussion of the limitations of the basic/applied science distinction is Donald Stokes, Pasteur's Quadrant: Basic Science and Technological Innovation (Washington DC: Brookings Institute Press, 1997).
23.
For a similar mapping of the agency's procedures, see William Bonvillian, "Power Play: The DARPA Model and U.S. Energy Policy," The American InterestII, no. 2 (November-December, 2006): 39-48.
24.
Sheldon Krimsky , Genetic Alchemy: The Social History of the Recombinant DNA Controversy (Cambridge, MA: MIT Press, 1982); and Susan Wright, Molecular Politics: Developing American and British Regulatory Policy for Genetic Engineering, 1972-1982 (Chicago: University of Chicago Press, 1994).
25.
Steven Collins , The Race to Commercialize Biotechnology: Molecules, Markets and the State in the United States and Japan ( New York: RoutledgeCurzon, 2004). The NIH Guide for Grants and Contracts is available at http://grants.nih.gov/grants/guide/historical/index.html#1976.
26.
Krimsky, Genetic Alchemy; and Wright, Molecular Politics.
27.
Collins, Race to Commercialize , 100.
28.
Walter W.Powell, DouglasR. White, Kenneth W. Koput, and Jason Owen-Smith , "Network Dynamics and Field Evolution: The Growth of Interorganizational Collaboration in the Life Sciences," American Journal of Sociology110 ( 2005): 1132-1205.
29.
Hughes, Building the Next American Century.
30.
Otis Graham , Jr., Losing Time: The Industrial Policy Debate ( Cambridge, MA: Harvard University Press, 1992). Graham makes clear that since Japan was the model, industrial policy advocates were generally calling for a DBS-a centralized effort to jump start new industries.
31.
Hughes, Building the Next American Century.
32.
Some of these initiatives grew out of a Domestic Policy Review that the Carter Administration completed in October 1979. James Turner, "The Next Innovation Revolution: Laying the Groundwork for the United States," Innovations (Spring 2006): 123-144.
33.
For a similar list, see Sheila Slaughter and Gary Rhoades, "The Emergence of a Competitiveness Research and Development Policy Coalition and the Commercialization of Academic Science and Technology," in Science Bought and Sold, eds. Mirowski and Sent, 69-108. Slaughter and Rhoades point out that most of the relevant pieces of legislation passed with large bipartisan majorities.
34.
Robert A. Lowe , David C. Mowery, and Bhaven N. Sampat, Ivory Tower and Industrial Innovation: University-Industry Technology Transfer before and after the Bayh-Dole Act in the United States (Stanford, CA: Stanford Business Books, 2004 ).
35.
Josh Lerner , "The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program," The Journal of Business72, no. 3 (July 1999 ): 285-318.
36.
Ernest Steinberg, Photonic Technology and Industrial Policy: U.S. Responses to Technological Change (Albany: SUNY Press, 1992).
37.
On both ATP and MEP, see Paul Hallacher, Why Policy Issue Networks Matter: The Advanced Technology Program and the Manufacturing Extension Program (Lanham, MD: Rowman and Littlefield , 2005).
38.
Erik Pages, Responding to Defense Dependence: Policy Ideas and the American Industrial Base (Westport, CT: Praeger, 1996). See also Hallacher, Policy Issue Networks.
39.
Glenn Fong, "Breaking New Ground or Breaking the Rules: Strategic Reorientation in U.S. Industrial Policy," International Security25, no. 2 (August 2000 ): 152-186.
40.
Roland, Strategic Computing .
41.
Pages, Responding to Defense Dependence; Corey, E. Raymond, Technology Fountainheads: The Management Challenge of R&D Consortia (Boston, Harvard Business School Press, 1997); Fong, "Breaking New Ground "; and Andrew P. Cortell, Mediating Globalization: Domestic Institutions and Industrial Policies in the United States and Britain ( Albany: SUNY Press, 2006).
42.
The mission statement is cited in Fong, "Breaking New Ground," 175-176.
43.
Daniel Kevles , "Out of Eugenics: The Historical Politics of the Human Genome," in The Code of Codes: Scientific and Social Issues in the Human Genome Project, eds. Daniel Kevles and Leroy Hood (Cambridge, MA: Harvard University Press , 1992), 3-36. To be sure, NIH is still criticized for not engaging in enough targeted research. See, for example, Robert Cook-Deegan, "Does NIH Need a DARPA?" Issues in Science and Technology13, no. 2 (Winter 1996 ): 25-29.
44.
Among the most important early studies have been Martin Kenney, Biotechnology: the University-Industrial Complex (New Haven: Yale University Press, 1986); National Research Council, Committee on Science, Engineering, and Public Policy , The Government Role in Civilian Technology: Building a New Alliance (Washington: National Academy Press, 1992); John Alic, Lewis Branscomb, Harvey Brooks, Ashton Carter, and Gerald Epstein, Beyond Spinoff: Military and Commercial Technologies in a Changing World ( Boston, MA: Harvard Business School Press, 1992). More recently, Glenn Fong has made important contributions that have already been cited here. See also, the work of Henry Etzkowitz, particularly, " Innovation in Innovation: The Triple Helix of University-Industry-Government Relations," Social Science Information42, no. 3 (2003): 293-337.
45.
Block, "Diverging Trajectories ."
46.
Fields went on to be the chief executive at SEMATECH, so he continued to play a critical role in diffusing the ARPA approach to technology commercialization.
47.
John Markoff , "Pentagon's Technology Chief is Out," New York Times, April 21, 1990.
48.
For an amusing account of Democratic efforts to build support among Silicon Valley businesses in the 1990s, see Sara Miles, How to Hack a Party Line: The Democrats and Silicon Valley (Berkeley : University of California Press, 2001).
49.
See, for example, Robert Pear, "Applying Breaks to Benefits Gets Wide GOP Backing," New York Times, January 9, 2005.
50.
For more information and funding levels, see http://www.nano.gov .
51.
Clyde W. Crews Jr., "Washington's Big Little Pork Barrel: Nanotechnology," Cato Institute Web page, May 29, 2003, at http://www.cato.org/pub_display.php?pub_id=3110 .
52.
For an account of the Clinton plan, its fate in Congress, and the eventual retreat from the public investment agenda, see James Shoch, "Bringing Public Opinion and Electoral Politics Back In: Explaining the Fate of `Clintonomics' and Its Contemporary Relevance," Politics & Society36: 1(2008): 89-130.
53.
These conflicts are described in Hughes, Next American Century, and Hallacher , Networks Matter.
54.
Hughes, Next American Century . In the absence of OTA, the work of evaluating these governmental initiatives has been taken up by the National Academies of Sciences that has produced a valuable stream of reports about the various programs described here.
55.
On venture capital firms, see Paul Gompers and Josh Lerner, The Venture Capital Cycle, 2nd ed. (Cambridge, MA : MIT Press, 2004). On the reluctance of venture capital to support firms at the early stage, see Philip Auerswald and Lewis Branscomb , "Valleys of Death and Darwinian Seas: Financing the Invention to Innovation Transition in the United States," Journal of Technology Transfer28 ( 2003): 227-239.
56.
On the shift to "networked" firms, see Walter Powell, "The Capitalist Firm in the Twenty-First Century: Emerging Patterns in Western Enterprise ," in The Twenty-First Century Firm: Changing Economic Organization in International Perspective, ed. Paul DiMaggio (Princeton, NJ: Princeton University Press, 2001), 35-68; Raymond Miles, Grant Miles, and Charles Snow, Collaborative Entrepreneurship: How Communities of Networked Firms Use Continuous Innovation to Create Economic Wealth (Stanford, CA: Stanford University Press, 2005).
57.
Results of an analysis of the R&D Awards over the last four decades are presented in Fred Block and Matt Keller, "Where Do Innovations Come From? " unpublished paper.
58.
Auerswald and Branscomb, "Valleys of Death."
59.
While some of its programs are top secret, others are discussed with some detail on its Web site, http://www.darpa.mil.
60.
On the advanced turbine project, see Vicki Norberg Bohm and Robert M. Margolis, "Reaching Environmental Goals Through R&D Collaboration: Lessons from the U.S. Department of Energy Programs for Gas Turbines and Photovoltaics ," Industrial Transformation: Environmental Policy Innovation in the U.S. and Europe, eds. Theo de Bruijn and Vicki Norberg Bohm ( Cambridge, MA: MIT Press, 2005), 147-173; and Mike Curtis, "United States: Advanced Turbine System," Innovation in Energy Technology: Comparing National Innovation Systems at the Sectoral Level, OECD (Paris: OECD, 2006), 295-317.
61.
Information is available at http://www.atp.nist.gov . See also, Hallacher, Policy Networks Matter.
62.
http://www.nsf.gov/eng/iip/iucrc. See also, Etzkowitz, "Innovation in Innovation," and Steinberg, Photonics.
63.
This is reported by Roland, Strategic Computing.
64.
For a listing of the university-based centers funded under the National Nanotechnology Initiative, go to http://www.nano.gov/html/centers/nnicenters.html .
65.
For example, the National Cancer Institute has a program called Rapid Access to NCI Discovery Resources, see http://dtp.nci.nih.gov/docs/rand/rand_index.html .
66.
The scale of this support activity by government funded laboratories is impressive. In 2006, the Department of Energy laboratories alone accounted for 2,416 Work-for-Others Agreements, in which they did research for other agencies and private firms. In addition, they also had 3,474 active user facility agreements in which outsiders were permitted to use laboratory resources. See Report on Technology Transfer, Office of Policy and International Affairs, U.S. Department of Energy, March 2007. http://www.llnl.gov/IPandC/news/specialreports/FY2006AnnualReportonTTfinal.pdf .
67.
While the SBIR program was passed by Congress in 1982, the program began as a pilot program of NSF during the Carter Administration, see Turner, "Next Innovation Revolution."
68.
Data are from http://www.sba.gov/SBIR/indexsbir-sttr.html#sbirstats .
69.
On SBIR and STTR, see Scott Wallsten, "Rethinking the Small Business Innovation Research Program," Investing in Innovation: Creating a Research and Innovation Policy that Works, eds. Lewis Branscomb and James Keller ( Cambridge, MA: MIT Press, 1998), 194-220; Josh Lerner, "The Government as Venture Capitalist: The Long Run Impact of the SBIR Program," The Journal of Business 72, no. 3 (July 1999): 285-318; Charles Wessner, ed., SBIR and the Phase III Challenge of Commercialization: Report of a Symposium ( Washington: National Research Council, 2007).
70.
Wallsten, "Rethinking."
71.
However, it has been a persistent problem that 40 percent of all SBIR grants go to California and Massachusetts-the nation's leading technology centers, Lerner, "Government as Venture Capitalist."
72.
Christopher Coburn and Duncan Brown, "State Governments: Partners in Innovation ," in Investing in Innovation, eds. Branscomb and Keller, ( Cambridge, MA: MIT Press, 1999), 422-437; and Maryann P. Feldman and Maryellen R. Kelley , "How States Augment the Capabilities of Technology-Pioneering Firms," Growth and Change33, no. 2 (2002): 173-195.
73.
See http://www.nasvf.org.
74.
Wessner, ed., SBIR and the Phase III Challenge.
75.
See http://www.inqtel.org.
76.
For OnPoint, go to http//www.onpoint.us. On NASA, see Liz Moyer, "Venture Capital's Space Shot," Forbes, February 21, 2006, at http//www.forbes.com/2006/02/21/nasa-venture-capital-cx_Im_0221redplanet.html . Battelle Ventures is described at http://www.battelleventures.com
77.
On MEP, see Hallacher, Policy Networks Matter; and Josh Whitford, The New Old Economy: Networks, Institutions and the Organizational Transformation of American Manufacturing (Oxford, UK: Oxford University Press, 2005).
78.
Wessner, ed., SBIR and the Phase III Challenge.
79.
The key sources are periodic evaluations by the National Academies . See, for example, National Research Council , An Assessment of the National Institute of Standards and Technology Measurement and Standards Laboratories: Fiscal Years 2004-2005 (Washington, DC: National Academies Press, 2006).
80.
Even larger are the problems with the U.S. health care system. The failure to turn medical advances into improved health outcomes is another case of failed facilitation. See John Alic, "Postindustrial Technology Policy ," Research Policy30 (2001): 873-889.
81.
S. Derek Turner, "Shooting the Messenger-Myth vs. Reality: U.S. Broadband Policy and International Broadbank Rankings," Freepress, July 2007 at http://www.freepress.net/docs/shooting_the_messenger.pdf .
82.
Hernan Galperin , New Television: Old Politics: The Transition to Digital TV in the United States and Britain (Cambridge : Cambridge University Press, 2004 ).
83.
Daniel Sperling , "Public-Private Technology R&D Partnerships: Lesson from U.S. Partnership for a New Generation of Vehicles," Technology Policy8 (2001): 247-256.
84.
Arguably, the major exception is the funding priority that Congress and the White House have given to biomedical research. But even in that case, business interests and university-based bioscientists tilt spending toward finding magic bullets rather than improving the delivery of health care.
85.
Chris Mooney, The Republican War on Science (New York: Basic Books, 2005).
86.
One of the most notorious cases is the cancer drug Taxol. See Vivien Walsh and Jordan Goodman, "Cancer Chemotherapy, Biodiversity, Public and Private Property: The Case of the Anti-cancer Drug Taxol," Social Science and Medicine49 (1999): 1215-1225. The General Accounting Office reported in 2003 that NIH received $35 million in royalty payments for Taxol, but Medicare alone had paid $500 million for Taxol treatments. U.S. General Accounting Office, Technology Transfer: NIH-Private Sector Partnership in the Development of Taxol, June 2003.
87.
John Battelle , The Search (New York: Penguin Books, 2005). The idea of a "share levy" has been advocated by Robin Blackburn as a means to restore progressivity to the tax system, "How to Tax the Rich and Live Happily Ever After ," Dissent (Summer 2007): 63-67. The idea makes even more sense in the framework of a DNS.
88.
For the argument that knowledge is a "fictitious commodity," see Fred Block, "Towards a New Understanding of Economic Modernity," The Economy as Polity: The Political Constitution of Contemporary Capitalism (London: UCL Press), 3-16; and Sean O'Riain, "Time-Space Intensification: Karl Polanyi, the Double Movement, and Global Informational Capitalism," Theory and Society35: 5-6 (December 2006): 507-528. For a powerful critique of the commoditizing of knowledge, see Yochai Benkler, The Wealth of Networks ( New Haven, CT: Yale University Press, 2006).
89.
Hargadon, How Breakthroughs Happen.
90.
For example, the antitrust suit against Microsoft in the 1990s arose out of fears that the firm would be able to control future technological development in the entire industry. David Bank, Breaking Windows: How Bill Gates Fumbled the Future of Microsoft (New York: Free Press, 2001).
91.
Eileen Appelbaum , Thomas Bailey, Peter Berg, and Arne Kalleberg, Manufacturing Advantage: Why High-Performance Systems Pay Off (Ithaca, NY: ILR Press, 2000).
92.
This argument is speculative. For a careful account of the movement of flat panel production to Asia, see Thomas Murtha, Stephanie Lenway, and Jeffrey Hart, Managing New Industry Creation: Global Knowledge Formation and Entrepreneurship in High Technology (Stanford, CA: Stanford University Press, 2001). While they stress the centrality of learning by doing in the competition to produce flat panel displays, they do not explore the government's role in work force training in Korea and Taiwan.
93.
Elements of this strategy are described in Andrew Schrank and Marcus Kurtz, "Credit Where Credit is Due: Open Economy Industrial policy and Export Diversification in Latin America and the Caribbean," Politics & Society33:4 (2005): 671-702.
94.
See Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (London: Anthem, 2002); and Linda Weiss and Elizabeth Thurbon, "The Business of Buying American: Public Procurement as Trade Strategy in the USA," Review of International Political Economy13:5 (2006): 701-724.
95.
For a strategy to end poverty, see Fred Block and Jeff Manza, "Could We End Poverty in a Postindustrial Society?: The Case for a Progressive Negative Income Tax," Politics & Society25:4 (1997): 473-511.
