Tall stories: Research, innovation and the private sector.

The theory that the private sector is uniquely suited to innovation is something I hear repeatedly from the right, particularly the (US) Libertarians. During any dialogue, one is often hastily directed towards examples of perceived success, such as; Amazon, Facebook, Microsoft, Google and so on. But, what do these corporate behemoths have in common? Go on, you can do it! Yep, you’ve guessed it, the internet. All of these companies rely heavily on this medium. But it turns out, the first incarnation of the internet was developed by the Advance Research Project Agency Network. ARPNET was originally funded by the US Department of Defence in the late 1960’s. Do I detect the smell of hypocrisy in the air.

Now, I am totally aware of how science works, it learns and builds on what has been before, so there is never really one source of credit for a particular invention. The goal of this piece is not to condemn private research, but to merely temper the spin surrounding corporate innovation and to highlight the importance of public funding. Especially in light of Libertarian’s, who are constantly espousing the merits of smaller government. Rather than a reduced government for the sake of it, maybe we should focus on smarter government. What is crucial to recognise as exemplified by the internet is that, it is often during the early ‘hard yards’ when projects are reliant on public money. At the very time when there is more risk and a greater potential loss of large sums of cash. When it appears likely something will make a profit, however, private backers and corporations suddenly start crawling out of the woodwork.

The private sector innovation tale is based upon the supposed efficiency of this sector. Which proclaims that leaving it to the government, research and innovation is commonly viewed as bureaucratic and sluggish. Yet, this ideology is not confirmed by any evidence, but is falsely perpetuated by, yes you’ve guessed it, the private sector. The unpredictability regarding the success of an innovation often provokes uncertainty from traditional banks and venture capitalists. Financial support for big picture research and development such as, tackling climate change or putting a man on the moon, is primarily secured via public channels. Research aside, many governments often provide ‘early stage’ funding too, from which Apple was a grateful recipient, to the tune of $500,000.


Furthermore, every bit of technology found on a smart phone owes a great debt of gratitude to state funding. These features include, GPS (developed by the CIA), touchscreen displays, the voice activated assistant ‘Siri’ and of course the internet. Evidently public funding extends way beyond the military. To demonstrate this, the US government funds approximately 75% of the most innovative drugs annually. Even Google’s algorithm was gained from US National Science Foundation funding. Brazil, China, the US, Singapore and Denmark are all examples of nations who have invested heavily in research and innovation, in arenas such as ‘green technology’.

The myth of the public sector being less innovative than the private sector, is promoted as mentioned by the private sector, in the form of powerful lobbyist and the mainstream propaganda machine. We are encouraged to believe that innovation is led by entrepreneurs and venture capitalists. While the leverage gained from this narrative has been used politically, such as, to lower capital gains and income tax, which in turn hampers the public sector to continue funding projects at a similar rate. The biggest ‘kick in the balls’ despite all this financial backing for varying tech corporations, such as Apple and Google, is they hardly pay any tax in relation to their profits.

It is important to recognise that the state is a primary risk taker and needs to be fairly rewarded for this role. This will in turn make the area of innovation and research stronger, while helping to spread profits more equally. These funds can simply be syphoned back into regions such as education, health and transport. Rather than continuing to swell the bank balances of a small posse of dubious characters who see themselves as the world’s wealth creators. This line of thinking isn’t difficult, remarkable or particularly ground-breaking. Finland chose this path when funding Nokia early on, retaining equity when investing. Another option could be, keeping a share of intellectual rights, which invariably is given away in this current neoliberal era.

Anyway, to finish here’s a varied list of items invented by NASA.

  • Memory foam
  • House insulation
  • Portable cordless vacuum cleaner
  • Water filters
  • Scratch resistant lenses
  • Freeze drying
  • Insulin pumps
  • Cat-scans
  • Cochlear implants
  • Solar energy
  • Smoke detectors
  • Artificial limbs

Solar Panel with green grass and beautiful blue sky

These are just a few examples from one organisation, provided purely to drive my point home. We need to remember, private companies are only about profit, nothing more nothing less. If we solely rely on corporations for innovation, in fields that may provide no obvious or discernible benefits or display too much potential risk, certain future developments will simply not occur. Can both private and public sectors work together in this area? Probably. But the private sector has to be honest regarding the significant contribution that is provided by government entities. Meanwhile, the state needs to recognise that they provide vital assistance for research and development on a multitude of levels. I would strongly suggest that they bargain accordingly with the corporate sector, which would inevitably enrich society as a whole.


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