Terence Corcoran: Bring back the freedom to innovate – Financial Post

The prattle from bureaucrats, politicians, business leaders and growth gurus about innovation incentives and programs continues, including this from the government of Canadas national innovation strategy: The innovation race is on! A bright future for Canadian businesses, creators, entrepreneurs and innovators starts with access to programs, services and tools that push ideas forward, create jobs and grow the Canadian economy.

If you have had enough of all these calls to harness the power of innovation through government action, there is now an antidote. A new and brilliant book by British author Matt Ridley offers a fresh world of understanding about a concept that has been bowdlerized into economic policy slush.

In How Innovation Works: And Why It Flourishes in Freedom, Ridley delivers a highly readable history of human creation, from the adoption of fire to the founding of Facebook, from sliced bread to biotechnology, from steam power to mobile phones and the polio vaccine with little or no government programs, and often despite state meddling.

Above all, How Innovation Works is a powerful exploration of why human innovation happens, how it happens and the political and economic environments that have allowed innovators to deliver centuries of miraculous improvements in the human condition.

Ridley is a confident proponent of the idea of human progress. The themes of his 2010 bestseller, The Rational Optimist, are carried over into How Innovation Works with even greater flare. Ridleys technique is to entertainingly and informatively explore, via authoritative references and research, centuries of human innovation in search of the common elements that helped foster and obstruct the progress of innovation.

Innovation happens when people are free to think, experiment and speculate

Matt Ridley

The book is packed with fascinating illustrative anecdotes and revelations about the individual geniuses behind innovations and the myriad obstacles that are often thrown in their path.

Theres the longshoremens battle against the compulsive entrepreneur from inland Maxton, N.C., who created the ocean-going shipping container. Theres government resistance to mobile telephone development. And theres Indias regulatory stubbornness against the import of a wheat innovation from Mexico. The 50-year story of how dwarfing genes were first found in Japan, cross-bred in Washington, adapted in Mexico and then introduced against fierce opposition in India and Pakistan is one of the most miraculous in the history of humankind. The idea likely saved the Indian continent from famine.

In the context of our current obsession with the media power of Facebook, Google and Twitter to shape the world, Ridley has a few parallels from innovation history.

After Gutenberg invented the printing press in the 15th century, the technology was transformed into a mass media of Facebook-like power by Martin Luther. Luther, writes Ridley, was the true innovator as he used the printing press to distribute versions of the bible and other materials that challenged Catholicism and led to the creation of Protestantism. By contrast, printing was banned in Islamic states for 200 years. Like Jeff Bezos at Amazon or Mark Zuckerberg at Facebook, writes Ridley of Martin Luthers printing-press media revolution,he had realized the potential of a new technology on a huge scale.

Governments had little or no role in the massive explosion of innovation over the past three centuries

None of this is new. Ridleys achievement is to take the 10,000-year history of innovation from potato farming to artificial intelligence and turn it into a lively narrative that opens new perspectives on the underlying structures and forces that are most likely to lead to continued technological change.

As the books subtitle makes clear, the key element is economic freedom. What is the best way to encourage innovation? asks Ridley in his introduction. Should governments aim to set targets, direct research, subsidize science, write rules and standards; or to back off from all this, deregulate, set people free; or to create property rights in ideas, offer patents and hand out prizes, issue medals; to fear the future; or to be full of hope?

By the end of How Innovation Works, innovation seems less of a mystery as one aspect becomes clear: innovation is not the product of the machinations of politicians, bureaucrats and rent-seekers trying to manipulate economic activity. Ridley takes on such state innovation theorists as Mariana Mazzucato, the British economist whose book, The Entrepreneurial State, was a Financial Times Best Book of 2015.

Ridley essentially says the entrepreneurial state is a myth. Governments had little or no role in the massive explosion of innovation over the past three centuries. In an excerpt from his book also on this page, Ridley notes that America became the most advanced and innovative country in the world in the early decades of the 20th century without significant public subsidy for research and development of any kind before 1940.

On the contrary, Ridley in effect argues that the world today suffers from an innovation famine brought on by excessive government meddling. Innovation happens when people are free to think, experiment and speculate, he writes.

As an advocate for innovation freedom, Ridley holds views that will startle some. He opposes patents, dumps on big companies and he sees China as the home of an innovation engine that is leapfrogging into the future over the heads of Western policy leaders who wrongly see China as a techno copycat that is stealing patents and other intellectual property.

Chinas authoritarianism, he adds, will surely stifle the countrys innovation momentum. If Chinas political regime does not expand economic and political freedom, the driving work ethic behind recent innovation could easily be crushed by bureaucratic strangulation.

Its a risk that faces innovation around the world. Ridleys insightful and revealing book has the potential to liberate innovation from those who claim innovation starts with a government program. On the contrary, thats often where innovation ends.

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Terence Corcoran: Bring back the freedom to innovate - Financial Post