RE: [OPE] Invention, Inventors, and the Productivity of Labor

From: GERALD LEVY <gerald_a_levy@msn.com>
Date: Sun Nov 02 2008 - 08:23:44 EST

> Why these salaried workers donít produce these inventions by their own?
> The lack of capital is not enough, since it is possible to borrow this capital.
 
 
Hi Alejandro:
 
I think you seriously underestimate the _costs_ associated with invention
(and the difficulties for small businesses in borrowing the quantity of money
required for invention).
 
While this can't be discerned if one only looks at the quantity of patents issued
and who they are issued to, most of the important inventions in late capitalism
have occurred in one of three ways:
 
1. They were a consequence of state expenditures.
 
2. They were developed within large corporations by R&D staffs. The
money for R&D by these corporations tend to come from internally
generated funds rather than relying on borrowing.
 
3. A frequent pattern is that you have inventions which become innovations
by small ('innovating') in _new markets_. However, the experience is
frequently that when the small firms show that a market is profitable
that large corporations then enter the market and either drive the small,
innovating firms out of business or gobble them up through merger.
 
In some markets (e.g. the pharmaceutical industry, which is very heavily
concentrated), the costs associated with R&D may be so large so
as to effectively constitute barriers to entry.
 
Banks are going to be very hesitant to lend large sums of money to
small firms for the purpose of invention: it's simply too risky. This is
inherent in the process of invention: even if the firm succeeds in
discovering a new product or process (invention) there is no reason
to assume that it will lead to innovation (the practical application of
the invention). Note that I am using the terms 'invention' and
'innovation' in a different way than that used by Dave Z.
 
In solidarity, Jerry

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Received on Sun Nov 2 08:29:26 2008

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