Are We Reaching the Limits of Innovation? - Page 39

C2 Proficiency · Multiple Matching · Ready for C2 Proficiency Student's Book, Macmillan

You are going to read an article about innovation. For questions 1–10, choose from the sections (A–F). The sections may be chosen more than once.

Were there far fewer undiscovered ideas out there than in our more primitive past, how would people know? This is not an idle question; decoding the mysteries of nature, from atmospheric pressure to electricity to DNA, allowed people to bend the natural world to their will, and to grow richer in the process. A dwindling stock of discoverable insights in the pipeline would mean correspondingly less scope for progress in the future – a dismal prospect. And some signs suggest that the well of our imagination is about to run dry. Though ever more researchers are digging for insights, according to new research, the flow of new ideas is flagging.

But is it? A recent paper by Nicholas Bloom, Charles Jones and Michael Webb of Stanford University, and John Van Reenen of the Massachusetts Institute of Technology provides relevant evidence. Though striking an agnostic position as to whether humanity has used up all its eureka moments, they nonetheless conclude that new ideas are getting more expensive to find. The authors consider four different case studies, within which they compare research 'inputs' (such as the money spent on researchers and lab equipment) and outputs. For instance, the number of transistors that can be squeezed onto a microchip has doubled with reassuring regularity for half a century, every two years or so – a phenomenon known as Moore's Law (after Gordon Moore, a founder of Intel). But companies have run up against a vexing problem: to continue achieving this success, they have to pour more and more resources into the effort over time. The research productivity of each scientist participating in the battle to cram in transistors has correspondingly tumbled.

Analysing the supply side of the innovation equation in isolation can also be misleading. The demand for new ideas, and, correspondingly, the incentive to tackle difficult questions, also matters. In his analysis of the Industrial Revolution, Robert Allen, then an economic historian at Oxford, sought to explain why it started in Britain rather than anywhere else. Supply-side factors, such as improved literacy and stronger property rights, certainly played a part. But it was the demand for labour-saving innovation, prompted by Britain's relatively high wages at the time, which gave tinkerers a strong incentive to develop and hone the steam engine and its applications.

Researchers are often like the man searching for his keys under the streetlight, because that is where the light is. Until some pressure is applied to encourage him to look elsewhere, the search will often prove fruitless. It is easy to see why firms might take a lackadaisical approach to some research questions. Disappointing wage growth across advanced economies is a deterrent to the invention and use of labour-saving innovations. Persistently high rates of profit give big firms plenty of money to plough into fancy research labs, but also suggest that the competitive pressures which might prompt them to exploit the resulting discoveries are weak.

Despair is premature, however. The effort to find new, growth-boosting ideas is not necessarily hopeless, just complicated. Whether herding more researchers into the laboratory raises growth might depend on how intensively the resulting brainstorms are used. Across the global economy, many countries have yet fully to exploit ideas already in use by firms at the cutting edge of scientific knowledge. The problem, in other words, is not that oranges are in short supply or are already squeezed dry, but rather that of the ten workers at the juice bar, only one has learned to do the squeezing. Investments in education and training, to expand the share of workers that can use new ideas, or in the quality of management, to improve how effectively ideas are applied within firms, would do wonders for growth, even if the world's scientists are idly scratching their heads.

In some ways, the accumulation of knowledge can hold back progress. The more that is known, the more researchers must absorb before they can add to the stock of human knowledge – or the more they must collaborate with other researchers to combine their areas of expertise. But the incomplete exploitation of currently available knowledge is in some way reassuring. It suggests that people are underperforming relative to their potential: both in how they use available ideas and in how they uncover new ones.

an unwillingness on the part of certain researchers to commit to an opinion

the beneficial effects of improved administration at companies

the desire to reduce the number of workers needed to do certain jobs

a falling benefit–cost ratio

the growing need for experts to work together

a narrow perspective leading to an incorrect assumption

the potential downsides of strong economic performance

economic gains resulting from humans altering their environment

the failure to take full advantage of innovations that already exist

a lack of enthusiasm for innovation at some companies

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