Private Industry Doesn’t Do Research

“Industrial research” is an oxymoron. Private industry doesn’t do research. They say that they do. The government says that they do. But the truth is that they don’t; and for a good reason. Research – real research – doesn’t turn a profit and the raison d-etre of industry is to generate a profit.

The explanation lies in the phrase, real research. What industry does in their so-called “research labs” is not real research, it is product development. Product development pays. In fact, it is the lifeblood of industry. A corporation must have new products to entice consumers away from their competitors. Corporations that don’t develop new products are weeded out by economic darwinism.

So what is real research? It is the discovery of basic knowledge, as opposed to the design of a specific product.

Is research important? Hell, yes! We have to understand organic chemistry and physiology to cure diseases; understand biology and demography to feed our growing population; understand ecology and meteorology to keep the earth habitable; understand astrophysics and  astronomy to find new worlds; and so forth.

Science has rescued us from living in caves, surviving on what we can hunt with clubs, and dying before we reach the age of thirty. Science has let the earth sustain more than a few million people. Science keeps our lives from being short, nasty, and brutish.

If physics and chemistry and math are needed to build a refrigerator, and more advanced physics, chemistry, and math are needed to build a more advanced refrigerator, why doesn’t a company which builds refrigerators have laboratories to conduct research in physics, chemistry, and math?

Because it wouldn’t pay them to do it.

First, the payoff for basic knowledge is too long delayed.

For example, almost any modern technological development requires a branch of mathematics called calculus. Calculus has been used to develop countless trillions of dollars of profitable products for the modern world. But calculus was developed in the 1600s. If a private company in Renaissance England had funded the development of calculus, they would never have reaped the profit from it and would have gone bankrupt long ago.

Second, and more important, there is not a one-to-one relationship between research results and products.

Any single product requires knowledge from many different scientific theories. Producing the bottle of Coca-Cola sitting on my desk required organic chemistry, biology, and botany. The machines that were necessary to bottle it in large quantities required physics, metallurgy, chemistry, and mathematics. If the Coca-Cola company had to pay for all the research results that they used to produce that bottle of pop, they would have been bankrupt before they started.

But they didn’t have to. We, and our fore-bearers, paid for it, both directly and indirectly by paying for a government, society, and culture that supported legions of scientists.

The public pays for science because, every time scientific knowledge improves, life improves. A new scientific theory developed today will be used to develop hundreds of thousands of new products in the future. We will use some of these products in our lifetime; some of them will be developed for our great-great-grandchildren.

The mistake that people often make is that they think that one scientific advance is used to produce one product. There are countless myths and legends about the lone inventor – Thomas Edison, Edwin Land, Bill Lear, or Bill Gates – getting a single new idea and making a product worth millions. Those romantic stories ignore all the rest of the science that was necessary to make the lightbulb, Polaroid camera, Learjet, or personal computer. None of those products would have been possible without a millenium of scientific development first.

No product will ever make enough money to pay for all the research that was required to develop it.

But the myth that one scientific result is all that is required for one product is dangerously attractive to people who don’t want to pay for scientific research any more, because it  implies that corporations will fund all the research necessary to develop new products. And it implies that if corporations don’t want to pay for research, then that research is esoteric and unnecessary.

This simple model is a prescription for the stagnation of corporations and a failed economy.

There is a reason why those countries which have a strong culture of scientific research are good places to live today and those countries which do not, are not.

We all have to support science so that corporations can do what they are supposed to do: not conduct research, but develop new products for our use.

Anyone who claims that we can have the benefits of a modern economy without funding basic research is blowing smoke at you. Either they are genuinely ignorant of the fundamental role of science in our lives or they have a secret agenda that will benefit themselves at a devastating cost to you.


About Ashley Zacharias

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4 Responses to Private Industry Doesn’t Do Research

  1. I’d go a little further, even, and say that the non-disclosure agreements which corporations have their ‘researchers’ sign are against the spirit of research entirely. There are so many examples of the profit motive interfering with ‘real research’ that it could reasonably be called a clash of cultures. I think of Richard Stallman, of the Free Software movement, talking about how in the 1970’s, when his printer wasn’t working properly, he went in and made some tweeks to the printer driver that made it work better. Then he passed his improved driver around to some friends who were having the same problem. But at some point the printer manufacturer made their driver so the code couldn’t be changed by users, and it became illegal to do what he’d done.

    Jeff Schmidt’s book Disciplined Minds has some stuff on this culture clash. Noam Chomsky says the research that funds most industry is payed for by the US government through either the Pentagon, or the university systems. (Boeing gets a contract to design a new fighter jet, but the things they learn designing it get applied in passenger jets as well. Then they complain that the EU unfairly subsidized research for Airbus.) I think it’s much better that government fund research, since a private company would try and patent anything it discovered ASAP, and since the profit motive is at core unscientific.

    • Curtis says:

      Ah, but the private companies also patent the discoveries made with the use of federal dollars. Worse, they can even claim as proprietary information discoveries made by government entities.

      A current case in point is the refusal of oil and gas drilling companies to reveal their ‘proprietary’ formulae for the goop they inject into the ground to enhance the effectiveness of fracking. These formulae were developed by agencies of the United States government, but once they fell into the hands of the corporations, the government lost all control over them.

      My question is, why can’t the government charge industries and individuals for the use of discoveries made on the government dime? On a similar note, why must royalty and usage fees pair to the government be so much lower than the market rates? As two additional examples, the U.S. government charges hundreds of dollars to mining companies that set up shop on federal land and produce millions of dollars of metals (often gold and uranium) per year; and ranchers are charged about one fifth as much to graze their cattle on government land as they would have been charged by their neighbors to pursue the same activity.

      No wonder the government is going bankrupt.

      • Having been a research scientist in the Canadian government for many years, I can speak to these points from the Canadian perspective. When I developed and licensed new technologies, I always offered them at a low royalty rate because my objective was to stimulate Canadian industry, not to enrich the government. But I did enrich the government indirectly. At least one company was founded and became successful based on a product that I developed. The taxes generated (corporate taxes and income tax for the new jobs that were created by this company) were larger than the cost of my entire career and my pension. It wasn’t the few hundred thousand in royalties, but the taxes that generated the profit for the government. If I’d demanded a higher royalty rate, the company would not have been able to undercut its American competitors on price and might have failed within the first few years (as do 95% of startups) and wouldn’t have generated much tax revenue for Canada.

      • There was a time when the intellectual property rights resulting from a Canadian government contract remained with the government. The logic was that the government owned what the government paid for. Then, sometime in the ’90s, the policy changed. It was decided that, unless the public servant made a special case for retaining the intellectual property, government contracts would specify that the intellectual property would be given to the contractor. The new logic was that industry, not government, was in the best position to exploit the intellectual property for the benefit of the economy. It was believed that the government tended to put its intellectual property on a back shelf and never make use of it. As a public servant, I found this logic rather insulting. My colleagues and I were always looking for ways to exploit the government’s intellectual property. And, if industry asked for access to unused government IP, we never hesitated to give them access to it.

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