What Happened to Science and Research Funding?

science funding

I’ll never forget the reaction of a scientist I once met, a chemist who had transitioned into corporate management, when I told her that I was an economist. “Oh,” she said, “so you’d know something about corporations and how they structure scientific research then, right?” I was somewhat surprised at the question as it’s one that I’ve literally never been asked before. I said that I knew a little bit about it and asked her why she was so curious.

“Well,” she said, “one of the reasons I went from being a researcher to being a corporate manager was because I wanted to know what on earth was going on with scientific research in these places.” I asked her if she had any success. She replied in the negative, she just couldn’t get her head around it, but she said to me that her impression was that Western countries were having serious problems while China seemed to be developing in a positive direction at a rapid pace.

As I spoke to her about it the problems became obvious; and they were exactly what I expected them to be. China had massive amounts of state-intervention in the way they allowed corporations to pursue R & D, while Western countries had a far more laissez-fairre attitude. In China knowledge was seen as a public good and the government took the attitude that corporations had a certain amount of responsibility in producing knowledge for the public at large; if you were a corporation and wanted to benefit from what China had to offer you had to make a contribution to society at large. In the West however, where the ideology of the market reigned, the corporations called the shots.

In what follows I will lay out a brief periodisation of the regimes of science that dominated in the US over the course of the 20th century. In doing so I draw on the third chapter of Philip Mirowski’s excellent book Science-Mart. Finally, I will consider what role economists play in our current regime and try to answer the question as to why my chemist friend was so befuddled.

Regime I (1890-1939)

The first regime of science dominated between around 1890 and the beginning of the Second World War (1939). Mirowski calls it, using a phrase borrowed from Thorstein Veblen, the ‘Captains of Erudition’ regime. The backdrop of this regime was the emergence of the great corporate merger movement that came at the end of the Long Depression and the deflation that came after it (1873-1896). During this period of deflation firms tended to gobble each other up, presumably as the excesses of the prior boom, which was based mainly on railroad speculation, unwound.

As the corporations formed into ever more concentrated units their legal status began to become more solidified in the laws of the time with access to patents being an extremely important prerequisite for this regime of science. This, combined with their increased size and access to financial capital, led to the proliferation of in-house R & D labs. But these labs were less interested in producing novel gadgetry. Rather they were geared toward market control.

In the wake of the deflation US lawmakers knew well the dangers of cartels and trusts as it was these that had led to the “robber baron” boom era that precipitated the depression. Thus even though this was the time in which the US corporation began its first steps to maturity it was also a time of strongly enforced anti-trust laws. The corporations turned instead to patents in particular and intellectual property rights in general to try to control their market share and ensure that competition was adequately suppressed.

The academy, on the other hand, was not so concerned with the new in-house R & D departments. This was the era when American universities favoured mainly a liberal arts education regime. Although in the later period of this era corporate funding would begin to leak into the university it was more or less a philanthropic exercise and was not so interested in gaining control over what went on in universities per se.

Regime II (1939-1980)

The second regime of science arose during and after the Second World War. Mirowski refers to it as the ‘Cold War’ regime. During the war it was quickly recognised that science could play a significant role in giving the US a tactical advantage over its military enemies — the Manhattan Project and the production of the atomic bomb being the most obvious manifestation of this. Thus the military became the main agent funding R & D in the sciences.

This was not exactly a state-controlled regime of science, at least not in the centralised manner that emerged in the Soviet Union. Rather it was decentalised in that purpose-built corporate research institutions came into being that were plugged directly in Federal government funding and worked closely with the military — think, in this regard, of the infamous RAND Corporation or Bell Laboratories. Some universities, most notably MIT, also became closely tied up with the military in these years.

In this period military funding became a sort of de facto industrial policy in the US and intellectual property rights were weakened so that technology could flow more freely through the economic system. This latter point may seem surprising but it actually made a good deal of sense at the time. Only a small amount of research carried out created material that was required to be classified and the military strategists wanted to ensure that they did not come to rely on a single contractor because in the case of nuclear war this could prove massively problematic for the mobilisation of the US war machine.

In addition to this research was less commercialised. The military in its contracts were more inclined to leave the scientists to their own devices and this encouraged them to follow paths of research with no immediate purpose but which might pay off in a big way down the line in some unanticipated way. Again, the promotion of this by the military must be interpreted in the context that they thought it would eventually give them an edge over their enemies.

Notably also in this period, peer review was a somewhat secondary manner of controlling scientific output. The primary control mechanism was direct intervention by the military who effectively rubber-stamped projects or rejected them. This system gave rise, somewhat paradoxically, to a good deal of openness as scientists felt at ease proposing grandiose visions to their managers while universities felt no immediate pressure to put the squeeze on their professors and researchers.

Regime III (1980-Present)

The third regime seems to many to have come into being with the fall of the Berlin wall. In actual fact, however, it is less tied up with the end of the Cold War as it is with the new age of globalisation. For this reason Mirowski calls it the ‘Globalised Privatisation’ regime.

This regime is characterised by corporations outsourcing their R & D to external micro-labs and university departments. The funding that flows therefrom is then used to control what the researchers do. This is a carrot and stick approach. Where the military contractors dumped vast amounts of Federal money on research institutions with more long-term goals in mind, corporations are far more interested in immediate results. Thus research should be tightly controlled and monitored.

A key component of this regime is the weakening of anti-trust legislation and the enforcement of intellectual property rights. But according to Mirowski this is not the actual cause of the privatisation of the university and the commodification of knowledge; these are more so to be seen as catalysts speeding up the process. Rather the cause is to be found in the fact that corporations were given ample scope to offshore and outsource. This removed their previous ties to their domestic nation-state in a way that fundamentally undermined the existing structure of the university. Mirowski writes,

It is access to lower-wage labor in the context of an academic infrastructure, disengaged from any corporate obligations to provide ongoing structural support for local educational infrastructure, that explains the shift in research funding to countries like China, India, Brazil, and the Czech Republic. (p127)

The university then tries desperately to counteract this exodus by engaging in various cost-cutting exercises — which typically end up being simply an expansion of a redundant and intrusive management bureaucracy — and attempting to line up their research agendas with what corporations desire. It is thus that outsourcing and globalisation lead to the privatisation of the environment of the university; one that is so obvious to anyone working in or around these institutions today that it need barely even be mentioned as more than fundamental truth of everyday life.

The High Priests of the New Regime

The ideology used to justify this shift — provided, of course, by the economics profession — is one that we are all familiar with. What has supposedly been created is a sort of global ‘market for knowledge’. What some interpret as a rigid system of control stifling creativity and enforcing short-sightedness is glorified as being the most ‘efficient’ use of resources. Queue some dim marginalist argument by some brainwashed functionary wherein something called a ‘market’ distributes knowledge in some ‘Pareto optimal’ fashion.

Yes that’s right, the economists serve as the handmaidens of the new regime with their silly models and their nonsense being peddled to corporate managers in training who, once they leave the classroom and provided they do not completely lack critical faculties, become deeply confused about what on earth is going on.

“Why is China doing so well when their approaches seem so at odds with the diagrams they showed me in business school?” the curious corporate manager will ask themselves. But they will not receive an answer as the vast majority of people who are being paid to inform them as to what is going on are playing with stupid models completely detached from the real world.

Even those social scientists who try to extricate themselves from the regime find it difficult because universities and other institutions that provide funding try to push for more ‘scientific’ methodology in order to ensure (supposedly) that they are getting adequate bang for their buck. What this means in practice is usually rather straightforward: more maths, less critical reasoning. And what this leads to is a whole host of unreadable garbage studies with no real relevance but whose so-called ‘results’ can be dropped on the media outlets to give punters some immediate gratification. (“Did you know that sex is 78.6% better for people who recycle fruit skins and manage their budgets in an optimal manner?”… and so forth).

Welcome to the new Dark Age folks, where researchers’ scopes are narrowed to an altogether dangerous degree while those who acts as priests of the system busy themselves with constructions that can only be compared to the more unwieldy of the theological systems put together by the Scholastics in the Middle Ages. Welcome to the regime of globalised privatisation.

About pilkingtonphil

Philip Pilkington is a macroeconomist and investment professional. Writing about all things macro and investment. Views my own.You can follow him on Twitter at @philippilk.
This entry was posted in Economic Policy, Economics of Science and Technology. Bookmark the permalink.

9 Responses to What Happened to Science and Research Funding?

  1. Sérgio says:

    Great text. Clear as ice.

    Suddendly it makes sense to me why we don’t see any advancement in fields that could reduce corporate profits. It’s no conspiracy at all. Everything is done in the clear.

    Are you sure you are an economist? 🙂

  2. Pingback: Philip Pilkington: What Happened to Science and Research Funding? « naked capitalism

  3. Pingback: Philip Pilkington: What Happened to Science and Research Funding? – The News Doctors

  4. Samir Katti says:

    Well, the world has moved from an economy which produces things to an economy driven by credit expansion.

    Let’s consider a hypothetical economy with only 10$ and produces milk of 10 gallons. The price of milk is roughly 1$ a gallon and GDP = 10$. Now magically we create another 10$ and provide this to the economy. So the economy now has 20$, cost per gallon of milk is 2$,and GDP =20$. But we do not have any underlying economic growth that pushes the GDP by another 10$. All that has been done is a credit expansion and inflating the assets.

    The only path to growth is creating products beneficial for a society and scientific research is critical for this.

  5. Mike Roach says:

    … I told her that I was an economist.

    So, you lied to her. tsk tsk naughty

    • I can see your email, Magpie. I’m not stupid. I also know your real name because we had an email exchange back in 2011. You’ve made enough of a clown out of yourself on here so far and everyone knows that it’s you under the troll pseudonyms. You want to keep it up… M.A?

      • Mike Roach says:

        Oh, no! Woe is me. Why, oh why, did I ever thought I could laugh at your pompous, pseudo-intellectual bullshit? Curse the thought!

        sniff :o(

        For the record: you’re cold, colder’an a well-digger’s backside. Nice try, though. 😀

      • Just so that everyone knows, this is Magpie. He comments on lots of Post-Keynesian blogs. He has a blog on his own that is rubbish and says that he is in his mid-40s. When he’s not making fake handles to troll other blogs and generally biting the heads off of chickens this middle-aged man claims to be a Marxist. He trolls my blogs because I engaged in heresy and said that the Labour Theory of Value makes no sense. We could block his IP — which I have — but we like to keep him around as he provides light relief, like a monkey in a tutu.

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