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Economic Sources of Inventive Activity*

Published online by Cambridge University Press:  03 February 2011

Jacob Schmookler
Jacob Schmookler
Affiliation:
University of Minnesota
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Extract

The fundamental conclusion of this paper is that technological progress is intimately dependent on economic phenomena. The evidence suggests that society may indeed affect the allocation of inventive resources through the market mechanism somewhat as it affects the allocation of economic resources generally. If this is true, then technological progress is not an independent cause of socio-economic change, and an interpretation of history as largely the attempt of mankind to catch up to new technology is a distorted one. Cultural lags undoubtedly exist in social history. The automobile—to use an obvious example—rendered obsolete many pre-existing social arrangements and behavior patterns. But the reverse is also true. New goods and new techniques are unlikely to appear, and to enter the life of society without a pre-existing,—albeit possibly only latent—demand. Even a longstanding demand may have been intensified shortly before a technique to satisfy it is invented. In addition to cultural lag, there exists technological lag—a chronic tendency of technology to lag behind demand.

Type
Articles
Information
The Journal of Economic History , Volume 22 , Issue 1 , March 1962 , pp. 1 - 20
Copyright
Copyright © The Economic History Association 1962

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References

1 Cf. Gilfillan, S. C., The Sociology of Invention (Chicago: Follet Publishing Co., 1935), esp. ch. 1Google Scholar.

2 Cf. Johnson, Gordon K.Turner, Inez M., “Use of Transfer Functions for Company Planning,” Operations Research, 5 (12 1956), 705–10CrossRefGoogle Scholar.

3 The statistics used in this paper were compiled by taking all the patents in those Patent Office subclasses in which two thirds or more of the patents included in the subclass pertained to the industry. For the fields discussed in this paper, at least 95 per cent of the patents pertain to the industries to which they have been assigned. However, patents pertaining to the industry assigned to other subclasses are not included. The data will be published and discussed more fully in a forthcoming book.

4 Cf. my “Changes in Industry and in the State of Knowledge as Determinants of Industrial Invention,” in the forthcoming publication of the proceedings of the Conference on the Economic and Social Factors Determining the Rate and Direction of Inventive Activity, held at the University of Minnesota, May 1960, under the sponsorship of the Universities-National Bureau Committee of Economic Research and the Committee on Economic Growth of the Social Science Research Council.

5 Cf. Kuznets, Simon, Secular Movements in Production and Prices (Boston: Houghton Miffin, 1930), ch. 1, esp. pp. 30–32Google Scholar ; Burns, Arthus F., Production Trends in the United States Since 1870 (New York: National Bureau of Economic Research, 1934), ch. 4, esp. pp. 141–45Google Scholar ; Merton, Robert K., “Fluctuations in the Rate of Industrial Invention,” Quarterly Journal of Economics, XXXIX (1935), 454–74CrossRefGoogle Scholar ; and Salter, W. E. G., Productivity and Technical Change (Cambridge: The University Press, 1960), ch. X, esp. pp. 133–34Google Scholar.

6 The substantial lead of building activity over patents at the start of the series may reflect deficiencies in the economic data. This portion of the Riggleman series is regarded as particularly unrealistic. Cf. Historical Statistics 0f the United States: Colonial Times to 1951 (Washington: U. S. Census Bureau, 1960), p. 376Google Scholar , discussion of series N64. The frequency with which patents lead building activity (four times out of twelve) may be an illusion induced by aggregation. The long swings in building activity have somewhat different timing in different sections of the country. Since inventive activity may be more heavily concentrated in the leading sections, if the inventions from each section were compared with the building activity in that section, patents might be found to lead even less often than appears to be the case.

7 Schumpeter, Joseph A., Business Cycles (New York: McGraw-Hill, 1939), Vols. I and IIGoogle Scholar.

8 This general theoretical premise finds support, not surprisingly, in a comparison of the long swing turning points in railroad investment and building activity. The interested reader who compares the turning points given in Table i for railroad investment with those in Table 4 for building activity will find that out of eleven occasions, the two variables turn in the same year three times, within a year of each odier four times, within two years of each other twice, and within three years twice. Since the trough-to-trough length of a long swing in each industry is about nineteen years, the presence of common external influences on both industries is strongly indicated. (For a fascinating suggestion as to the possible nature of the causal mechanism at work, cf. Kuznets, Simon, “Long Swings in the Growth of Population and Related Economic Variables,” Proceedings of the American Philosophical Society, 02 1958.)Google Scholar It is perhaps also pertinent to direct attention to the substantial, but again not surprising, similarity in the timing of major peaks and troughs in the output of major varieties of railroad equipment (Tables 2 and 3).

9 The obvious possibility that variations in the proportion of inventions patented occur in response to variations in economic prospects will be ignored in what follows. This is justified by the fact that while such variations may explain minor year-to-year variations in patents, the economic incentives to invent are the same as the incentives to patent. Hence, the major movements in patenting, which have been the focus of our discussion, can be reasonably construed as reflecting movements of invention in the same direction, though not necessarily of the same magnitude.

10 Cf. Harrel, C. G., “Selecting Projects for Research,” in Furnas, C. C. (ed.), Research in Industry: Its Organization and Management (New York: D. Van Nostrand Co., 1948), p. 116Google Scholar.

11 Ibid., p. 117.

12 This consideration may explain the frequency with which railroad patents declined cyclically before output.

13 This may explain why invention in some branches of agriculture has declined with the number of farmers, rather than with the sales of farm implements.

14 It is essential that the meaning of this statement should be clear. Of course, as noted earlier, inventions affect production. It is only asserted here that their effect does not take the-form of inducing fluctuations in production which are synchronized with fluctuations in invention.