The Mises Institute just published in book form a 1959 monograph by Murray Rothbard, "Science, Technology and Government." The manuscript was discovered among the Rothbard papers and first published on Mises.org in 2004. Alas, I didn't read it back then --and I am very sorry I did not. This is Rothbard at his best: radical and logical. As David Gordon points out in his introduction, the book "contains an astonishing wealth of insights."
The circumstances in which Rothbard wrote this piece may seem radically different than ours. As Gordon puts it,
When Murray Rothbard wrote "Science, Technology, and Government" in 1959, supporters of the free market needed to confront a challenge that remains relevant today. In 1957, the Soviet Union launched its "Sputnik" satellite, thereby defeating the United States in the race between the two countries to be first into space. Did this victory show, or at least suggest, the superiority of Soviet centrally-planned science to the American market economy? Critics of the free enterprise system like John Kenneth Galbraith (one of Rothbard's least favorite economists) claimed that scientific research and development required government planning and control.
The idea that the market's decentralised decision making cannot make up for "greatness" (in this case, "greatness" in scientific research) is not new--and it is extremely resilient. Marianna Mazzucato, the author of "The Entrepreneurial State," made herself famous by arguing that markets have "no vision" (whatever that means) and that government R&D is the true source of ALL innovation, while private companies are just riding its coattails. See here her "Lunch with the FT" for a quick summary of her views. Note that the word "consumer" doesn't come up in the article, not even once.
Rothbard's text is a sobering read . It begins from a definition of the "economic problem":
The crucial economic question, and one of the most important social questions, is the allocation of resources: where should the various and numerous productive factors: land, labor, or capital, be allocated, and how much of each type to each use? This is the "economic problem," and all social questions must deal with it.
This is the proper setting to discuss investments in R&D. How can we make sure resources are properly allocated? This is a question worth asking both for applied and basic research. In the Soviet Union, Rothbard explains, "government planning of science, is bound to result in the politicisation of science." The politicisation of science means the substitution "of political goals and political criteria for scientific ones." Think about it in the quest to allocate resources to produce innovation. The consumer gets completely evicted from the picture: it is other goals that government investments are serving (which doesn't mean, of course, that they cannot yield byproducts or have unintended consequences).
Rothbard also deals with "military research by government" and he basically suggests to "buy" instead of "make" it. "The exact circumstances under which it was written have not yet come to light", writes Gordon, but in two instances Rothbard seems to be advising the Republican Party. Eisenhower was to give his "Military-Industrial Complex" speech the next year. He warned against the danger that "public policy could itself become the captive of a scientific technological elite," too. Eisenhower seemed nostalgic for "the solitary inventor, tinkering in his shop" who "has been overshadowed by task forces of scientists in laboratories and testing fields".
Building on research by John Jewkes and others, Rothbard wrote that "The worthy individual inventor is far from helpless in the modern world. He may, in a free enterprise system, become a free-lance consultant to industry, may work on inventions on outside grants, may sell his ideas to corporations, may form or be backed by a research association (both profit and non-profit), or may obtain aid from special private organisations that invest risk capital in small speculative inventions."
Was Rothbard too optimistic? Are innovations today coming mainly from big organisations? On the other hand, I wonder if the "user entrepreneurs," that is "individuals who create an innovative product or service because they need it for their own use and subsequently found a firm to commercialize their innovation" (see this) aren't but the grandsons of the inventors Rothbard had in mind.