Discovery, Invention and Innovation


This book proposes major changes in the United States’ government. Because these changes would require a long gestation period to gain public acceptance, they are proposed for a forecast of the United States’ political economy in the middle of the 21st century. During this period, the United States and other advanced societies will complete the transition from industrial to informational societies. Consequently, the goal of the new governmental design will be to promote the political economy of informational society.


Political Economy Intellectual Property Economic Incentive Trade Secret Unknown Objective 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Notes and References 1

  1. 1.
    Smith, Adam, 1776, An inquiry into the nature and causes of the wealth of nations (Printed for W. Straham; and T Cadell, London)Google Scholar
  2. 2.
    One of the first to recognize this fact and propose a new role for government was V. Bush in: Bush, V., 1945, Science, the Endless Frontier, A report to the President on a Program for Postwar Scientific Research, US Office of Scientific Research and Development. Bush’s views have become the accepted wisdom, for example see: Spiegel-Rosing and D. de Solla Price(eds), 1977, Science, Technology and Society, (Sage Publications: London)Google Scholar
  3. 3.
    A considerable number of intellectuals believe the application of science to produce greater and greater threats is misdirected. For one such view compare Boulding’s article with the others in: Teich, A. H. and R. Thornton (eds), 1982, Science, Technology, and the Issues of the Eighties: Policy Outlook, (Westview Press, Boulder) Also see the Bulletin of the Atomic Scientists for numerous articles challenging the wisdom of a technological race for ever more sophisticated weapons.Google Scholar
  4. 4.
    There is a growing literature on this point. To some extent discussions of this point are a call for more funding for a particular type of research. For example see: Feigenbaum, E. A. and P. McCorduck, 1983, The Fifth Generation: Artificial Intelligence and Japan’s Computer Challenge to the world, (Signet: New York). Amusingly enough, the Japanese achieved only a fraction of the goals set out in the Fifth Generation Computer Project. See: Gross, N, 1992, A Japanese ‘Flop’ that became a launching pad, Business Week, Jun 8, pp 103Google Scholar
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    For just one of the growing literature on this subject. For a book which should become a classic see: Dertouzos, M., R Lester and R. Solow, 1989, Made in America: Regaining the Productive Edge, (The MIT Press: Cambridge)Google Scholar
  6. 6.
    Economists generally define economic efficiency as allocative efficiency which means a Pareto optimal resource allocation. In this book we shall define economic efficiency as production efficiency which means there is no way to produce more output with the same inputs. In a political economy with a rapid rate of technological advance the potential for producing more output with the same inputs constantly advances. Entrepreneurs innovate to achieve the advancing potential. Mrs. Shirly created F-International to create software using women telecommuters. As this firm provides its workers with opportunities they would not otherwise have had, F-International promotes economic efficiency as defined. See: Shirly, Mrs. “Steve”, 1985, F International: A unique approach to computer consulting, Telematics and Informatics Vol 2No. 2, pp 165–168CrossRefGoogle Scholar
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    For example, see Varian, Hal R., 1984, Microeconomic Analysis, Second Edition, (W. W. Norton & Co.: New York)Google Scholar
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    The purpose of a narrow definition is to keep the discussion focused not to denigrate other types of knowledge such as the humanities. For a discussion of alternative forms of knowledge see: Machlup, F, 1962, The Production and Distribution of Knowledge in the United States, (Princeton University Press: Princeton)Google Scholar
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    Toch, Nicholas, 1987, The First Technology, Scientific American, Apr, pp112–121Google Scholar
  10. 10.
    This definition is a generalization of Schumpeter’s definition of innovation. Schumpeter J. A., 1934, The Theory of Economic Development, Trans Redvers Opie. (Harvard University Press: Cambridge)Google Scholar
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    For an interesting and controversial discussion of the dynamics of scientific advance see: Kuhn T. S., 1962, The structure of Scientific Revolutions, (University of Chicago Press: Chicago)Google Scholar
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    Scherer, F.M., 1984, Innovation & Growth: Schumpeterian Perspectives, (The MIT Press: Cambridge)Google Scholar
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    For a recent survey of the issues, see: Benko, Robert P., 1987, Protecting Intellectual Property Rights, (American Enterprise Institute: Washington) For a theoretical analysis of this problem, see: Nordhaus W. D., 1969, Invention, Growth, and Welfare: A Theoretical Treatment of Technological Change, (The MIT Press: Cambridge)Google Scholar
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    U.S. Congress, Office of Technology Assessment, 1986, Research Funding as an Investment: Can we measure the returns?, Science Policy Study Background Report No. 12, (US Government Printing Office: Washington)Google Scholar
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    One of the first expositions of behavioral man in economics is: Simon, H. A., 1945, Administrative Behavior, (The Macmillan Company: New York) For a survey of the economic application of behavior man see H. Simon’s Nobel laureate address: Simon, H., 1979, Rational Decision Making in Business Organizations, The American Economic Review, Vol 69 No. 4, pp 493–513. 11. Psychologists have made numerous empirical studies concerning the decision capabilities of man. Their work is surveyed in the Annual Review of Psychology series, for example see: Slovic, P., B. Fishhoff, and S. Lichtenstein, 1977, Behavioral Decision Theory, Annual Review of Psychology, 28:1–39 and Pitz, G. and N. Sachs, 1984, Judgment and Decision: Theory and Application, Annual Review of Psychology, 35:139–163.Google Scholar
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    For a survey see Hogarth, R., 1987, Judgement and Choice, 2nd Edition, (John Wiley & Sons: New York)Google Scholar
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    The social welfare theory approach is to construct a social welfare function based on rational individuals with well defined preference orderings. The fundamental reference in this area is: Arrow, K., 1963, Social Choice and Individual Values, Second Edition, (John Wiley & Sons, Inc: New York) In this classic Arrow demonstrates the impossibility of constructing a social welfare function from individual preference orderings where the construction of the welfare function must satisfy small set of restrictions. In this book the problem of the common weal is approached from a very different perspective. First what individuals want, may not be good for them. If an entire society were addicted to heroin, then a social welfare function based on preferences would favor heroin even though such an addition would be fatal in international economic and military competition. In society there is frequently a conflict between desire and knowledge. In this book we shall address the problem of how to obtain an estimate of the common weal given vast differentials in knowledge among individuals in society. It is assumed that the foundations of the common weal rest not in preference orderings or philosophy but in sociobiology. See: Wilson, E. O., 1975, Sociobiology: The new synthesis, (Harvard University Press: Cambridge)Google Scholar
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    Hampton, W.J. and J.R. Norman, 1987, General Motors: What went wrong, Business Week, March 16, pp 102–110Google Scholar
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    Conservatives usually consider the concept of checks and balances a major innovation. See Buchanan, James M. and Tullock Gordon, 1962, The Calculus of Consent: Logical Foundation of Constitutional Democracy, (University of Michigan Press: Ann Arbor). While the move to a more representative government is best expressed in Lincoln’s phrase, “Government of the people, by the people and for the people”Google Scholar
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    Chandler, Alfred D., Jr, 1962, Structure and Strategy, (The MIT Press, Cambridge, MA)Google Scholar
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    Indeed, imitation in business has now been given the colorful buzzword, benchmarking, which means searching the world to find the best practice to implement in the firm. To facilitate benchmarking clearing houses such as American Productivity and Quality Center have been established. For example, see: Altany, D., 1992, Benchmarkers Unite: Clearing house provides needed networking opportunities, Industry Week, Feb 3, pp 25Google Scholar
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    Poe, Robert, 1988, American Automobile Makers Bet on CIM to defend against Japanese Inroads, Datamation, March 1, pp 43–51Google Scholar
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    Hogarth, R., 1987, Judgement and Choice, 2nd Edition, (John Wiley & Sons: New York)Google Scholar
  30. 31.
    The problem in providing empirical support for this statement is finding a learning situation where technology changes slowly. Studies of tradition agriculture have indicated that traditional farmer’s decisions are approximately optimal. For example, see: Hopper, W. D., 1954 Allocation Efficiency in a Traditional Indian Agriculture, Journal of Farm Economics, 47 pp 611–24CrossRefGoogle Scholar
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    Einhorn H. J., 1980, Learning from Experience and Suboptimal Rules in Decision Making in Wallsten, T. S. (ed), Cognitive Processes in Choice and Decision Behavior (Lawrence Erlbaum Associates, Publishers: Hillsdade NJ)Google Scholar
  32. 33.
    Innovation in the context of a single entrepreneur is mathematically a problem in estimation and control. Such problems are intractable, see: Aoki, M., 1967, Optimization of Stochastic Systems (Academic Press: New York). For an economic interpretation of this fact see: Norman, A. and D Shimer, 1993, Risk, Uncertainty and Complexity, Journal of Economic Dynamics and Control, forthcomingGoogle Scholar

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© Kluwer Academic Publishers 1993

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