Science doesn’t necessarily mean progress until it moves out of the lab and into the market.
Consider graphene: This major scientific breakthrough was discovered by Andre Geim and Konstantin Novoselov. They were awarded the Nobel Prize in Physics in 2010 for their work on the substance. Graphene is a layer of pure carbon just one atom in diameter, making it the thinnest existing material — essentially two-dimensional. And it’s remarkable in other ways, as well: it’s the lightest known substance, the strongest compound, the best conductor of heat at room temperature, and the best conductor of electricity.
Because of these special properties, graphene, along with similar materials, is being touted as the Next Big Thing in science — and maybe in business too.Since the initial results were produced, research to commercialize graphene has taken off in a big way; for instance, the University of Manchester announced it will be devoting £60 million to develop applications of the technology, and other universities and firms are following suit with similar ventures.
The story of graphene is a useful heuristic for scientific achievements in general, because when it comes to human progress, people tend to overlook one enormously important point: scientific discoveries and technological advances do not in and of themselves improve the welfare of humankind.
For science to improve our lives, it has to be part of them first. A scientific breakthrough in a laboratory, however technologically revolutionary, does not immediately benefit most people. In fact, the majority of scientific results are simply consumption goods for researchers and the institutions they work for. Universities and other publicly funded organizations, operating outside of most market forces, don’t usually produce lasting value in the marketplace. It’s only when entrepreneurs spread breakthroughs through the market that they begin to change lives for the better.
The role of markets can’t be emphasized enough, because it’s the profit-and-loss system that reveals the ultimate worth of an invention. It’s unlikely that the average consumer will see any real benefit from the vast majority of publicly funded research — and that’s one reason to be suspicious of the incessant calls from the scientific community for more subsidies. Still, is more research really a bad thing? Don’t public organizations get it right sometimes?
The Internet is usually held up as a classic case of government research that greatly benefitted humanity, proving that public organizations can produce path-breaking innovations just as market innovators do. But economists point out that the Internet wasn’t actually very useful until the market brought it to consumers. GPS navigation was another government science project that’s now a part of everyday life only because it was eventually commercialized. And so it goes with all manner of inventions and innovations: until entrepreneurs find ways to bring them into our daily lives, even the best ideas languish in obscurity.
Yes, public science sometimes turns out to be valuable to consumers — even a stopped clock is right twice a day. But science outside the sphere of entrepreneurial calculation lacks any direction in its search for lasting value, whereas inside the nexus of calculation, profit and loss push ceaselessly toward consumer satisfaction. Without the threat of loss, there is little reason for researchers to produce results with serious practical value. Entrepreneurs, on the other hand, don’t just have an incentive to spread useful science throughout society; in many ways, their livelihoods depend on it.
Government interference in the market, however, puts hard limits on what science can do for humanity. Take medical research as an example: if the regulatory cost of drug development is so high that some valuable research becomes impossible (it is), or if intellectual property laws prevent drugs from going to market at realistic prices (they do), then science as such can do little to help anyone. But entrepreneurial competition can increase the quality and quantity of drugs, lower the price, and ensure they get to the consumers who need them most urgently.
In other words, if we are going to be serious about scientific progress, we have to realize it goes hand in hand with entrepreneurial progress. When barriers to entry are eliminated and individual sovereignty rules the market, entrepreneurs can increase welfare using whatever scientific means are at hand. What’s more, their success in turn encourages the production of more and better research.
Our task is to do what we can to help entrepreneurs work with the top minds of science for the benefit of all. A good start would be to eliminate regulatory requirements that drive up the cost of R&D, along with the intellectual property laws that prevent competition in ideas. Once the barriers between research and enterprise have been broken down, we can use markets to get the best of both worlds.
The AEC’s fundamental goal is to promote a free, responsible and prosperous society. Through education and improving public understanding of key economic questions, the AEC promotes the idea of a free market economy and the ideal of a free society.