Capitalism Bad for Economic Growth

Government funding of research, development, demonstration and initial deployment (RDD&D) needs to increase dramatically. We need real breakthroughs in a raft of areas. Energy, agriculture, medicine and new materials come immediately to mind.

The following post is from David McMullen* :

* * * *

The slowness of technological progress is an issue that a genuine left can grab and run with. This interview with Peter Thiel co-founder of PayPal in the MIT Technology Review entitled ‘Technology Stalled in 1970’ highlights some of capitalism’s failures in this regard. He believes that technological progress has been stagnant for decades, that we need technologies that take us to the next level. We need flying cars not just Twitter or Facebook.

He says that large successful companies benefit from things not changing:

“You have to think of companies like Microsoft or Oracle or Hewlett-Packard as fundamentally bets against technology. They keep throwing off profits as long as nothing changes. Microsoft was a technology company in the ’80s and ’90s; in this decade you invest because you’re betting on the world not changing. Pharma companies are bets against innovation because they’re mostly just figuring out ways to extend the lifetime of patents and block small companies. All these companies that start as technological companies become antitechnological in character. Whether the world changes or not might vary from company to company, but if it turns out that these antitechnology companies are going to be good investments, that’s quite bad for our society.”

Ted Nordhaus and Michael Shellenberger from the Breakthrough Institute in this article point to the overwhelming role that government has played when it comes to developing general purpose breakthrough technologies.

Examples include computers, the Internet, jet engines, satellite communications, fracking technology, nuclear power and gas turbines. Indeed, all the important feature of the Apple iPhone were the result of Department of Defense funded research. They also make the point that 80 per cent of economic growth comes from innovation.

They say that capitalists generally do research and development on the less important stuff:

“Firms still spend a lot on research and development in the aggregate, but it is mostly spent on incremental product or process innovations, not long-term research to develop new disruptive technologies with the potential to radically transform existing markets and create entirely new ones.”

Government funding of research, development, demonstration and initial deployment (RDD&D) needs to increase dramatically. We need real breakthroughs in a raft of areas. Energy, agriculture, medicine and new materials come immediately to mind.

Hammering this point should allow us to hit out at both the free-market utopian-capitalists who think that the market can deliver everything and the pseudo left who simply hate technology.

We can also point out how this extremely critical aspect of economic development and human progress is often undertaken wastefully in the current social order. There is always gaming and corruption among researchers as they scramble to get their slice of the funding cake and further their careers. Such important activity would be better performed in a society where people are sufficiently at one with the world to simply do the right thing.

* David’s blog is The Economics of Social Ownership.

9 thoughts on “Capitalism Bad for Economic Growth

  1. ‘Hammering this point should allow us to hit out at both the free-market utopian-capitalists who think that the market can deliver everything and the pseudo left who simply hate technology.’

    The pseudo left is a creature of climate change and its survival depends on global warming, the pseudo leftoid apparatus should quickly crumble in the face of global cooling signals. In the face of natural adversity they could then eagerly adopt a more progressive outlook on technological change.


      • Its the Green faith and I agree that it will be hard to convince them that there has been a change in the weather, but green armies marching to the sound of bullet trains is not inconceivable. For the sake of their grandchildren they should eventually see reason.


  2. Please show us the elusive great leaps in original technological breakthroughs that have arisen from the orthodox left/Marxist world. Tech breakthroughs are hard. And the ones our best and brightest came up with in the amazing 1950’s – early 1980’s are still being digested.
    Please don’t forget that demontration steam engines were built in the classical Greek period. Society has to be capable of comprehending and communicating about tech developments before they can b y widely utilized.


  3. Hi Hunter, regarding steam engines in classical Greece: who needs steam engines for mass production when you have slaves to do the work? It required the emergence of a bourgeoisie centuries later for steam power to be unleashed in production. And now, in the C21st, some of us on the left are asking not just which dormant energy sources are being underexploited because of wage-slavery but also which ones might be unleashed through the next overthrow of existing social relations of production.


    • And in a dictatorship of the Proletariat you have plenty of slaves as well, I think.
      An interesting question for me is how to reconcile your well presented arguments about who is an isn’t truly left, with the reality that most greens came from the left, not the right, of the spectrum.
      This is not as off topic as you might think: Both this post and the one on watermelons are discussing facets of the same issue: social context for technological advancement or suppression.


      • Hunter, for my generation (born 1951), many of the people with whom I was active in the 1960s/early 1970s who ended up with the Greens did so because they moved away from what they originally believed in. Essentially, that was progress, society moving forward. Then there was another new younger generation who embraced the Green outlook, and among them are leaders who see the green movement as being neither left nor right-wing but a third alternative based on saving the planet no less. With my background influenced by Marxism, I cannot accept that people who oppose progress can be left-wing. It makes no sense: that is what the left has always been about. And I do mean “Abundance for all!” rather than ultra-conservative notions like Sustainability. A key pillar of the green outlook is the belief that humanity has already progressed too much and that the delicate ‘balance’ in Nature is threatened. By contrast, my understanding of the left means that mastery of Nature is the key to progress; we cannot speak of finite resources when human ingenuity has not exhausted its capacity for new tehcnologies, new ways to master Nature in our own interests.


  4. C21styork,
    You have just a few years on me. I happen to agree with your take on where greens are. I see them as incredibly regressive. But the hardcore greens do not come from Ayn Rand study groups. In the US they are coming out of left leaning schools and organizations….. or so it seems at least.
    The greens are certainly not listening to the (in)famous Rush Limbaugh as a role model. Greens seem to seek community/communalism and subordination of self to the whole, including to Gaia. Lefties in the US are the source pool for this stuff. Now your insights that perhaps they have turned sort of crypto-fascist is interesting and disturbing, but again these people came out of secular leftist backgrounds.
    I lost my first true love over this topic, so many years ago. I kept pointing out that humans are a part of nature and that nature is not kind or gentle.
    The idea that we are seeing a some sort of great fascistic swelling does not bode well. Your marxism, while pure does not seem to offer much that would be acceptable or not immediately hijacked into a neo Stalinst or neo Cultural Revolution nightmare. Balanced free markets and free people- balanced by ethics and laws- is what is losing to the green blob as it is called in the UK. At least that is my opinion.


  5. Historically there has been a tendency for revolutionary and reactionary opposition to capitalism to get muddled together in people’s minds. The utopian socialists of the 19th century are an example.

    And I think not seeing the way forward with a revolutionary opposition to capitalism led a lot of the radicals of the 1960s into a reactionary opposition. Going green was a big part of this.


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