Industrial Progress Under Capitalism and Socialism

Stages of Innovation

Scientific innovation can be broken down into four stages: Invention, Development, Production and Diffusion. Invention is the process of actually coming up with something. Development is being able to figure out how to bring the idea into the real world. Production is the costly step that involves risk by turning the idea into its tangible form. Diffusion is having the means to distribute this tangible object across society (Kotz).

It is a common belief that the incentive of profit under capitalism engages the invention process, and that people are driven to innovate by the motive of profit. This is contrary to evidence in a study that followed 70 of the most influential and important inventions since the 1900s, 24 of which were conceived under private research laboratories, and the majority from independent inventors and academic scientists (Jewls et al, 1967). The evidence shows that incentive has no effect in the cognitive ability to invent concepts. It shows that inventions are conceived in any research condition, private or public. Since research is a common scientific pursuit in any society capitalist or socialist, the invention process does not favor any economic system. To ensure that invention is possible, the society must fund the means of research. In the case of the Space Race, both superpowers amply funded the research and development of the necessary scientific fields. Capitalism and its incentive of profit, therefore, does not hold any supremacy in the Invention and Development stages. Money and privatization itself do not magically produce ideas, putting money in the tools that make ideas, makes ideas. Putting money in research and development makes ideas.

The problem of capitalism can be seen by the third stage of its innovation. The Invention and Development stages in a capitalist system are skewed towards the demand of higher income consumers due to the totally awesome existence of privatization and oh-so amazing incentive of profit itself. This example can be seen in the medical industry of the United States, which gives no weight to Malaria and Tuberculosis, diseases that take tens of millions of lives, and instead focus their research on profitable and petty first world problems of Acne. By the third stage of innovation, the Production stage, resources are aggregated towards these petty problems that could instead be used for social benefit, but instead are wasted.

Another problem arises in the innovation process of Capitalism. The general monopoly of an idea through patenting, in hopes of it being profitable of course, constrains development and social welfare. Pfizer is a company that patented a cure to Cryptococcal Meningitis, a very deadly side effect to AIDS, and sells it for $18 a pill, placing it beyond the reach of AIDS victims in poor socioeconomic condition of Africa and around the globe. Finally the drug was produced in Thailand for 60 cents a pill, when it was considered outside the grasps of the patent (New York Times, July 9, 2000, 8). Another example is the intense effort of creating congeners, minor molecular variation of the same drugs all in the effort to surpass patents, and mimic pre-existing formulas that create profit (Kotz). Capitalism is argued to make individuals compete against each other, in hopes that they would seek outwards to find other methods of success that precipitates into innovation, but instead the flowery attraction of profit keeps them inwards and does the opposite.

The end result of innovation in the capitalism is a flawed process that introduces a monopoly of conceptions, and entry barriers that hinder progress. The innovation process becomes skewed and severely distorted that the end subtracts more from human welfare as much as it may contribute. However the capitalist system is not the only one with problem of innovation. The Soviet interpretation of socialism also had its fair share of problems as well.