Myth-Buster or Meme Maker? Reflections Upon Reading How Innovation Works (and Why it Flourishes in Freedom)

Some people believe that breakthrough products like the light bulb, steam engine and mobile phone were not so much invented as stumbled upon.

Fostering innovation and the circumstances in which it thrives today has never been more relevant or mysterious. COVID-19 has provided a compelling reason to revisit how innovation occurs and who are the responsible parties. Understanding the inventive process is not much clearer today than it was when the framers drafted the United States Constitution more than two centuries ago.

A new and provocative book by a National Academy of Sciences award-winning writer, entrepreneur and member of the House of Lords, Matt Ridley, suggests that innovation is an iterative process of trial-and-error that should be attributed to groups of inventors, not individuals, and that patents impede. Ridley believes that policy and investment can do little to influence innovation and that “Innovators need to be freed from the shackles that hold them back.”

How Innovation Works, subtitled, ‘Why it Flourishes in Freedom,’ explores the people and conditions under which a range of iconic innovations were born. Among the book’s main premises is the distinction between specific inventions and marketable innovations, which are typically comprised of many inventions. In every case, argues Ridley, it was not the individual or the government which provided the impact, but the march of history. His book examines under what circumstances, historical, economic, and technological, innovation takes place. It is informed by a suspicion of individual achievement, government interference and “rent-seeking” intellectual property rights and holders.

What How Innovation Works does best is provide a context for dozens of iconic developments, from the steam engine to CRISPR gene editing. It endeavors to convey an understanding of the unique conditions that impact innovation. Among the many figures considered in the book are Watt Newton, Edison, Bell, Whitney, Wright, Jobs and Bezos.

No Great Men

While Ridley respects most of these people, he believes that the “great man” theory of invention is a myth that must be dispelled. If progress requires creative destruction in the manner suggested by Austrian economist Joseph Schumpeter, governments and the rights they bestow upon creators need to get out of the way. Often, says the author, several inventors are thinking simultaneously about a similar solution, and it is a mistake to attribute credit to one or two because of their good timing, funding or ability to win patent office approvals.

Ridley reminds readers that the automobile was not invented by a single individual but was innovated by a range of contributors over time. A short list of significant participants includes Daimler, Maybach, Benz, Levassor, Lenoir, Peugeot, Rudolf Diesel and Henry Ford.

The electric light bulb? The smartphone? Many inventors are responsible, often too numerous to mention, and for some dubious businesses, too costly to pay. If it is not the entrepreneurial visionaries (e.g. Jobs, Gates) who are the true inventors, as Ridley argues, then who should receive the spoils if not the credit? Surely the individuals and businesses along the way deserve some recognition? Is it the failure of the patent system or marketplace not to identify them, or, as Ridley suggests, are these inventors simply receiving too much credit for products they played a relatively modest role in advancing and would have come to fruition without them?

‘Inescapably Inevitable’

“The truth is,” writes Ridley, “that the story of the light bulb, far from illustrating the importance of the heroic inventor, turns out to tell the opposite story: of innovation as a gradual, incremental, collective yet inescapably inevitable process. The light bulb emerged inexorably from the combined technologies of the day. It was bound to appear when it did, given the progress of other technologies.” (p.28)

Ridley rails against technology and pharmaceutical company giants for their efforts to maintain bloated, conservative monopolies, bent on maintaining their status and share price. Still, he would deny fundamental rights like patents that help to achieve a leveler playing field for small business and individuals. The most innovation occurs, he argues, where the sharing is most abundant, like in the software industry. It is also is where the most dominant monopolies exist and the most significant IP and data abuses.

“Patents have hurt and retarded human flourishing more than they ever assisted it,” writes Joakim Book about How Innovation Works for the American Institute for Economic Research. Book calls Ridley’s work a “masterpiece.” IP rights, Book continues, “are not a necessary boon to innovation that modern economists and legal scholars would have you believe: there is simply no sign of a ‘market failure’ in innovation waiting to be rectified by intellectual property, while there is ample evidence that patents and copyrights are actively hindering innovation.”

In a section entitled “When the Law Stifles Innovation: The Case of Intellectual Property” (p.342) Ridley makes the case that IP merely supports incumbents. Researchers will explore and inventors experiment without patents or other incentives. There are many investors who would disagree with this premise, including some Silicon Valley venture capitalists. Patents are among the few assets that enable entrepreneurs to raise capital and secure licensing deals with companies that dwarf them in size and capital. Patents work, even if their effectiveness has been muted over the past decade by corrosive lobbying, unnecessary legislation and misguided courts.

“Just how much Watt’s litigiousness delayed the expansion of steam as a source of power in factories is a hotly contested issue,” muses Ridley, “but the ending of the main patent in 1800 certainly coincided with a rapid expansion of experiments and applications of steam… My point is simple: Watt, brilliant inventor though he undoubtedly was, gets too much credit, and the collaborative efforts of many different people too little.” (p.25)

Ridley tips his cap to Edison for his dedication to experimentation but makes it clear that he did not invent much, and nor did Bezos, Jobs and many others. The history of invention is replete with hero-worship, “misleading procreators of vanity.” Ridley believes that the visionary inventor existed only in the eye of the media, the antithesis of Men of Progress, a masterful 19^th century group portrait which hangs in the National Portrait Gallery in Washington, DC, which was built in 1837 as the United States Patent and Trademark Office. The book suggests that, because it is difficult to attribute credit precisely, there should be no credit at all. This must be music to the ears of technology and pharmaceutical giants.

Dubious Sources

Ridley’s background is worth perusing for clues to his perspective.  A Ph.D. zoologist and researcher by training and a libertarian, for him innovation is governed by shared information communities and fortuitous accidents. In addition to serving as a member of the house of Lords, stints as an editor of The Economist in the U.S. and UK, Ridley has served as Visiting Professor at Cold Spring Harbor. How Innovation Works is his ninth book and first in five years. His The Rational Optimist was a bestseller.

Friends of the Earth has connected Ridley’s opposition to climate science to his ties to the coal industry. He is the owner of land in the northeast of England on which the Shotton Surface coal mine operates and receives payments for the mine. In 2016 he was accused of lobbying for the coal industry, an allegation that was dismissed by the Parliamentary Commissioner for Standards. Ridley was one of the earliest commentators to spot the economic significance of shale gas. He is a proponent of fracking. Ridley was also director of the Northern Rock, the first major UK bank failure of the 2007-2008 financial crisis and was reprimanded by a parliamentary committee for not bringing the financial weakness forward sooner. Ridley’s father was Chairman of Northern Rock from 1987-1992.

Further undermining Ridley’s conclusions about intellectual property are his sources. For support he turns to three of the most questionable and debunked pre-America Invents Act anti-patent sources: James Bessen and Michael Meurer’s now infamous and deeply flawed study of NPEs, The Direct Cost of NPE Disputes, which attributes “$29 billion in direct costs in 2011” to patent assertions. Even patents’ most ardent critics are embarrassed to cite this article of suspicious nature and intent.

Also questionable are Adam Jaffee and Josh Lerner’s Innovation and Its Discontents – How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, which makes an ill-informed case for denying many patents because there are too many of them and they are poorly examined. Finally, Michael Heller’s heinous Gridlock Economy – How Too Much Ownership Wrecks Markets, Stops Innovation and Costs Lives is offered as evidence of IP’s epic failure.

Heller’s 2009 book blames patent filers and licensors for undermining progress and refuses to recognize the value of IP rights because, unlike real property, they are infinite and inexhaustible. Heller suggests something akin to eminent domain is needed to save society from patents. (I reviewed the Jaffee/Lerner and Heller books for Nature Biotechnology.)

Ridley may be right about the absence of an “ah-ha!” moment for most inventions. However, he leaves readers (this one, at least) uneasy and confused when he suggests that discovery is inevitable, and inventing should be left to history to sort out. He would have us believe that innovation simply needs a wider berth to succeed—give it “freedom” (alluded to in the subtitle) from licensors and the vanity of credit-takers and innovation will be fine.

Myth-Buster or Meme Creator?

It is concerning that How Innovation Works will be seen and read by people susceptible to the anti-IP narrative. Ridley’s strategy is reminiscent of climate deniers who instill just enough doubt about who or what is the source for global warming, and whether anything can be done to address it. Similarly, this book questions the originality, source and relevance of particular inventions, and their role, as to make attribution difficult and licensing unnecessary. Is Ridley merely a suave propagandist for businesses wary of competition or an historian looking to set the record straight? In Ridley’s world every patent holder seeking a license is a “troll” and all litigation is an unnecessary waste of time and money.

How Innovation Works makes it easy for some audiences – especially researchers in the scientific and technology communities ­who are susceptible to anti-business biases and wary of legal entanglements – to dismiss the positive role patents play in shaping innovation and encouraging participation. There are many compelling reasons to read and discuss How Innovation Works (sample here). Separating history from agenda is one of them.