AT A time when university researchers complain about the lack of public
funds
for their work, it鈥檚 a heresy to suggest that this money should be cut off. Yet
a few weeks ago, Terence Kealey of the University of Cambridge argued that
countries would be better off if they left the funding of science to private
companies, entrepreneurs and philanthropists (鈥淵ou鈥檝e all got it wrong鈥�, New
杏吧原创, 29 June, p 22). So should governments fund academic
science? The
answer is a resounding 鈥測es鈥�. Without large-scale state support for research in
universities, the flow of technological advances needed to maintain our living
standards鈥攍et alone improve them鈥攚ould be severely damaged.
碍别补濒别测鈥檚
analysis is flawed, and if any country decided to follow his suggestions, life
there would soon become nasty, brutish and short.
Kealey gives great importance to entrepreneurs and philanthropists as the
main supporters of science in previous centuries. He implies that these breeds
are dying off because they are so highly taxed. Here and elsewhere, Kealey
relies heavily on Adam Smith, the 18th-century radical who advocated the free
market. Yet he ignores Smith鈥檚 fundamental insight into the engine that drives
economic growth, namely, the division of labour. He argued that efficiency
improves when production is broken down into specialised tasks and performed
with specialist machinery.
Most of his analysis focused on the division of labour in production, but
Smith was already aware of the growing power of scientific research. When
applied to discovery, invention and innovation, his insights explain why
scientific specialisms emerged, why private companies began to build their own
research and development laboratories, and why complementary research and
training took off in universities鈥攊n order to provide companies with the
skills and knowledge they needed. It is the rise of company and university
researchers that has displaced the entrepreneurs and philanthropists as
the main
source of invention, innovation and of the skills and knowledge that underpin
them.
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So how do business and academia interact? Kealey dismisses the 鈥渓inear
model鈥�, in which basic scientific discoveries made in universities drive the
pace of technological development in industry. He is wrong to do so. The
chemicals and pharmaceuticals industries have always benefitted directly from
basic research in organic chemistry, clinical medicine and molecular
biology.
The close links between basic science and biotechnology were documented in
1985 by Francis Narin of Computer Horizons, New Jersey. In a pioneering study,
he and his colleagues showed that biotechnology patents granted in the US made
extensive references to the results of contemporary basic research. Indeed, the
present American lead in biotechnology owes more to high-quality, publicly
funded basic research, than to any superiority in technology-based
entrepreneurship and risk-taking. If the latter was true, the US would not
be so
weak in other areas, such as consumer electronics.
The linear model also represents only one of academia鈥檚 contributions to
industry. In fact there are many and some are indirect and difficult to
measure.
Last year, for example, economist Al Klevorick and his colleagues at Yale
University showed that American car and aerospace companies depend a great deal
on maths and computer science. These firms certainly do not expect the
discoveries of academic researchers in these fields to contribute directly to
making cars and planes. But they do recognise the importance of computer
simulation, which can dramatically reduce the cost and time needed to develop
expensive prototypes. And university maths and computer departments are full of
people trained to use computer simulation, or who have helped to devise the
techniques on which it relies.
Strong links
Another of those hard-to-measure contributions that academia makes to
industry is informal contact between people. Recent studies by Adam Jaffe at
Harvard University, and by Wendy Faulkner at the University of Edinburgh and
Jacky Senker at the University of Sussex show that companies which carry out
R&D cultivate particularly strong links to national sources of academic
research. They do this because universities are full of knowledge that the
companies find useful. This is not published information, however, but
鈥渒now-how鈥� that cannot be written down.
碍别补濒别测鈥檚 main argument against the linear model is that academic research
makes only a small contribution to the new technology used by companies, and to
their sales. But this is actually not at all surprising. The top Graph on the
next page shows that academic research accounts for only between 15 and 30 per
cent of all the R&D done in the advanced OECD countries. So it should
not be
expected to make such a major contribution to technological progress as
the work
done in private companies, which accounts for between 50 and 70 per cent of all
R&D.
The lower Graph shows the overwhelming importance of government money to the
funding of academic research. In 10 out of 14 countries, public money accounts
for more than 80 per cent of all the funds going into university
departments for
research. Industry鈥檚 contribution is marginal. Only in Canada and Belgium does
it pay more than 10 per cent of the national bill for academic research. Notice
that even in Japan, industry鈥檚 contribution is negligible. Tokyo鈥檚 relatively
small contribution probably reflects low state funding for academic research
compared with general university funding. It is also likely that the relatively
high proportion of funds that comes from universities actually includes some
government money.
Reading the evidence
This pattern inevitably leads to two questions. First, is government-funded
academic research economically and socially useful? Kealey says it is not.
State
funding of science grew out of military needs, he says, and is now a form of
conspicuous intellectual consumption rather than a useful investment. Secondly,
if public money for academic research were to be withdrawn, would private money
increase to make up the shortfall? Kealey argues that it would. But my reading
of the evidence from recent studies is that he is wrong on both counts.
Is government-funded academic research useful? To answer this, take a
look at
two studies. The first is by economist Edwin Mansfield of the University of
Pennsylvania, who followed up more than 200 academic researchers cited by 66
American companies as performing 鈥渦seful鈥� research. The second is by Narin, who
traced the authors of scientific papers that were cited in American patents in
1993 and 1994. Both studies found that most of the useful basic research came
from university departments that were highly rated by the US Academy of
Sciences. In other words, useful science is good science.
Narin also shows that the authors of most of the papers cited in the
American
patents were supported by federal funds, principally from the National
Institutes of Health and the National Science Foundation. The American Cancer
Society and the American Heart Association are the only private sources of
money
among the top 20 funders.
Mansfield also looked at the funding sources of the academics cited by his
group of industrialists. As is shown in the left-hand Graph on the next page,
Mansfield found that most of the academics received funds from both public and
private sources. But, as the right-hand Graph shows, in all sectors except
metals, the federal government was overwhelmingly the more important
source.
He also discovered that collaboration between academic researchers and
industry emerged from research funded by the federal government, that the
academics were influenced by corporate concerns, and that collaboration
involved
the training and recruitment of researchers. In other words, publicly-funded
academic research provides knowledge and skills on which privately funded
R&D builds.
What of the military roots of science? Going back to the Graphs (
above), the
Swiss invest a higher percentage of GDP in academic research than any
other OECD
country, and the vast majority of that money comes from the government. It is
unlikely that the Swiss鈥攚ho were neutral in both world wars鈥� devote
such huge sums to satisfy military needs. A more plausible reason is the
exacting demands for skills and knowledge coming from Swiss industry, which is
one of the most research-intensive in the world.FIG-20414401.gif
Answering the second question鈥攃ould private funding replace public
funding鈥攊s more difficult. No OECD government has undertaken the drastic
reduction in its expenditure on academic research that would enable us to test
碍别补濒别测鈥檚 hypothesis that increasing private funds would more than
compensate for
decreasing public funds. In fact, there is evidence to the contrary.
John Mulvey of Save British Science has shown that the governments of the
wealthy G7 countries all increased their real expenditure on academic research
in the 1980s, and that this was accompanied in all cases by an increase in the
amount of university research funded by business鈥攏ot a decrease, as
Kealey
would predict.
The fact that governments still dominate the funding of academic research in
all OECD countries is in itself important evidence. In spite of the trend
towards 鈥減rivatisation鈥�, not one country has tried to privatise academic
research, nor鈥攁s far as I know鈥攊ntends to do so. A convincing
explanation for this unwillingness to leave it all to the market comes from
mainstream economics in the shape of 鈥渕arket failure鈥�.
Essentially, this means that left to themselves in a pure market economy,
companies would invest less than is economically and socially desirable in
basic
research because a large proportion of the benefits of their investment would
leak away. This would happen because researchers have two essential and
economically efficient freedoms: they can publish their findings and change
jobs.
All this shows that publicly-funded academic research is an indispensable
source of useful knowledge and skills for business. If Britain decided to
eliminate government support for university science, all the evidence is that
the quantity, quality and scope of the nation鈥檚 research would be severely
damaged. Scientific endeavour would be dominated by the short-term demands of
industry and become constrained by privatisation and secrecy. Britain
would also
progressively withdraw from the global arena of public science because it would
have less to offer鈥攁nd it would have a reduced capacity to monitor or
assimilate foreign research.
And the bad news does not stop there. British skills would deteriorate as the
capacity to teach and diffuse new knowledge slowly ground to a halt. Companies
would start to relocate their high-tech activities in countries where the
public
support for academic research better met their needs for high-quality research
and for people trained to use the latest equipment. Thus the downward path from
declining science would extend to declining technology, and then to declining
economic and social progress.
Central importance
There are two fields of research in which public funding is of central
importance. And both areas are ignored by Kealey. The first is agriculture,
where publicly-funded research and extension services, pioneered in the US in
the 19th century, have since been established in most other advanced countries,
and have helped revolutionise agriculture.
Kealey criticises the governments of Australia and New Zealand for ploughing
large sums into civil R&D, but these governments in fact are strongly
committed to publicly-funded R&D in order to develop and sustain some
of the
most productive and competitive agriculture in the world.
The second important field of publicly-funded research is the protection of
workers, consumers and the environment. In a complex world, people are
increasingly unable to protect themselves against the unintended and harmful
side effects of technical change. As a result, democratically-elected
governments finance R&D to protect people against powerful private and
public interests. If publicly-funded science was abolished, it is hard to
imagine such R&D being taken up satisfactorily by 碍别补濒别测鈥檚 philanthropists
and entrepreneurs.
Obviously, while some far-sighted firms certainly do support R&D devoted
to the public good, it is unrealistic to expect private companies to support
research that could harm their interests. Can we expect BAT to support a
balanced programme of research on the effects of smoking on cancer? British
abattoir operators on BSE? The Southern Baptist Alliance on evolution? The mind
boggles.
In this time of global competition and rapid change, countries such as
Britain need more private investment in technological change in the business
sector, more public investment in basic research of international
excellence and
more public investment in independent research in fields such as health, safety
and the environment to safeguard the public.
What Britain does not need is a series of irresponsible experiments with the
national science and engineering base, designed to prove propositions based on
an analysis that is clearly flawed, and heavily influenced by political
dogma.
