The Politics of Innnovation

The Mixing of Realism and Idealism

With the ongoing discussions about the functionality of different IP systems and designs for emerging ones, I am thinking that before launching into any global framework, nations ought to address their self-interests first if innovation is really going to benefit human society. Edward Mortimer, the Salzburg Global Seminar's executive director, opined that the modus operandi of innovation was always meant to further human development and create good for society. Martin Wolf of the Financial Times elaborated on this very point today during his treatise on innovation and developing countries. In his presentation, he mentioned that "the creation and dissemination of knowledge is a fundamental attribute – I would argue the fundamental attribute – of the human species." He added that intellectual property regimes tradeoff "a bad – the creation of a temporary monopoly – for a good – innovation, invention and creation." He went on to challenge whether developing countries, as a matter of economic development, are being compromised by formal knowledge protection (i.e. pharmaceuticals) or whether they need to join the IPR party to effectively play economic catch-up.

Joseph Schumpeter and other Austrian economists agreed in the power of innovative entrepreneurs. The Schumpeter economic thinking was guided by the belief that entrepreneurs are required to truly advance society. Entrepreneurs would positively disrupt economic systems for the good of society and economic development.

It appears as though innovation has been snatched from its natural home: the entrepreneur's eureka moment. With the increased salience of intellectual property, individuals involved in the innovation process may be looking to better society but first and foremost, they usually are hoping to better their company’s balance sheets and/or further some nationalistic goal.

On the issue of technology transfer between the United States and China , the United States, considered an advanced IP system, is concerned with protecting the technical know-how of American corporations from countries with less developed IPR systems such as China. The company’s profits are better served by allocating its scarce resources to diligently working on its next generation of products, not litigating in the courts. 'Illegal' technology transfers can, in effect, speed up the innovation timeline by motivating the C-suites to expedite the company’s product cycle.

However, governments are often times working against this natural momentum. In the name of fairness, public officials often use innovation policy to manage their country’s economic power. For example, the U.S. does not want to transfer wealth at its expense while China is leveraging its status as an emerging power. As the governments are argue, unlocked innovative capacities are idled. Innovation and intellectual property rights is just one other forum where governments can project power.

Traditionally, innovation has been practiced by entrepreneurs. Schumpeter hypothesized in the early 1900s that having risk takers to disrupt the economic system could be tremendously beneficial. Otherwise, the economy and society would remain static. While laws can be necessary to maintain order, they are often too conservative. Once we're in Salzburg for this seminar, let's all remember innovation's Austrian roots.

-Doug Horn

Session 460 Rapporteur