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The Economics of Science: Interview with Terence Kealey




STEVE PROUSE Buckingham Advertiser
After months of delay and uncertainty, the U.S. Congress finished work on the 2003 budget in February, approving large spending increases for the National Institutes of Health and the National Science Foundation. Science advocates worry that 2004 could still see a dramatically smaller boost. But would science necessarily suffer if government spending stopped rising? No, says Terence Kealey, a clinical biochemist and vice-chancellor of the University of Buckingham in England. His 1996 book, The Economic Laws of Scientific Research, claimed that government science funding is unnecessary for economic growth, because science flourishes under the free market. Kealey is currently at work on a new book, Sex, Science and Profits, due out later this year.


SA: How did you come to your view that government funding of science doesn't stimulate economic growth?

TK: When I was a scientist in Britain during the 1980s, [former British prime minister] Margaret Thatcher was cutting funds for British university science to some extent. Everyone was saying that this would destroy British economic growth, while in fact this coincided with Britain's recovery. That made me look for the first time really critically at the common assumption that the government funding of science is essential for economic growth.

I very rapidly discovered that, of all the lead industrial countries, Japan--the country investing least in science--was growing fastest. Japanese science grew spectacularly under laissez-faire. Its science was actually purer than that of the U.K. or the U.S. The countries with the next least investment were France and Germany, and were growing next fastest. And the countries with the maximum investment were the U.S., Canada and U.K., all of which were doing very badly at the time.

SA: What historical evidence supports your idea?

TK: Two key pieces, one British, one American. The British one is very simple. The British agricultural and industrial revolutions took place in the 18th and 19th centuries in the complete absence of the government funding of science. It simply wasn't government policy. The British government only started to fund science because of the Great War [World War I]. The funding has increased heavily ever since, and there has been absolutely no improvement in our underlying rate of economic growth.

But the really fascinating example is the States, because it's so stunningly abrupt. Until 1940 it was American government policy not to fund science. Then, bang, the American government goes from funding something like $20 million of basic science to $3,000 million, over the space of 10 or 15 years. I mean, it's an unbelievable increase, which continues all the way to the present day. And underlying rates of economic growth in the States simply do not change. So these two historical bits of evidence are very, very powerful.

SA: Who would fund science if the government didn't?

TK: Research and development, which is a wider category, is largely funded by the private sector [for industrial purposes]. There's no doubt in my mind that if government didn't fund science, there would be significantly more private funding even for academic science. By "academic science" I mean pure or basic science as opposed to university science; the latter would dwindle, but the former would grow within industry. My belief--and it's based on historical evidence of how good American science was before 1940--is that you have significant foundations [that would fund pure science]. Indeed, in my book I pointed out that quite a lot of the big foundations of science preceded 1940, and then after the huge influx of American government funding, people said, "Well, the government's doing that," and they started turning their attention to other things. More recently we've had people like [Bill] Hewlett and [Dave] Packard and others leaving billions to endow research, as the government started to withdraw slightly from that activity.

SA: Some economists didn't buy the arguments in your book. What was their criticism?

TK: Richard Nelson [of Columbia University] made the most damning criticism. He said, "Kealey simply does not ask the question, Why should anyone fund science in Kealey's world? Because transparently, if you fund a piece of science, others will be able to take advantage of it, so you're subsidizing your competitors." Science is a public good, [the theory goes,] which is to say that there's no advantage to any individual to do science because all the benefits are shared publicly, and there's every advantage for individuals to sit there and try to copy other people's science without doing any themselves. Therefore, you underinvest in it, and the government must produce it as a public service. That is the one question I did not address directly in my first book. I'm writing another book, and I address it very directly.

SA: What's your reply?

TK: It's a myth that science is a public good. Science is constructed in "invisible colleges"--small groups of people who understand each individual discipline. So the number of people who can really understand the scientific papers is few. To become a member of this club, you have to pay a very high entrance fee. [The late] Ed Mansfield, an economist at the University of Pennsylvania, showed empirically that the average cost to one company of copying the science of another company is 70 percent. But it's worse than that because you've also got to pay for the costs of information. The company has got to have enough scientists out there to read the papers, to read the patents, to go to the conferences, so that you actually know what people are discovering, so you know how to copy it. Add that to the 70 percent, and add the premium you pay in the scientist's salary for all the training he's gone into, and the costs of copying and the costs of doing things originally come out exactly equal. That's in Mansfield, and others have shown this as well.

SA: Is there any justification for government funding of science?

TK: The one justification for the government funding of science that you can't gainsay--I hope I'm not sounding too eager--is it gives a democratic element to science. I have no problems with democratic societies funding science knowing it would do absolutely nothing for economic growth. You could argue that if tobacco companies had a monopoly on lung health research, it's possible that the damaging effects of tobacco smoke would not have come out as quickly. So having the NIH funded by the government [and likewise the FDA and EPA] could produce a countervailing pressure against the tobacco companies. (I actually believe the independent foundations would provide it anyway.) The trouble, of course, with that argument is that people like George Bush or [British Prime Minister] Tony Blair are so wedded to big corporations that they generally use government-funded science to support big corporations. My great problems come when the government acts too precipitously. If the government creates huge funding and then stops it suddenly, it can leave a whole discipline high and dry, like the canceling of the Superconducting Super Collider project [in 1993, after spending $2 billion on it].

SA: What about defense research?

TK: Then there's no doubt. The government has a duty--not a right, a duty--to invest in military research as is appropriate. It also has a duty to invest in military research in ways that don't damage civil research.

SA: Would universities suffer under the free market?

TK: I have no doubt that there would be less university pure science taking place under the private sector than there is under the current system. But I do not see that as a loss, because I think that the government takeover of the universities with these vast structures of funding does not ultimately benefit academic freedom. I think that universities are places where plurality of thought should be optimized. For that, what you need is a plurality of funders. There's a danger that our universities will cease to be critical centers of independent thought and be much more likely to go along with government thinking because they would perceive that to be in their own interest.

SA: But wouldn't science become less open in the process?

TK: One of the big myths of research is it's essentially a public activity. It's not. Historically, research is performed by private funders for private ends. Once the results are published (which can come in the form of a product that others can then dissect), it is public--but only potentially so--and only other scientists can understand the scientists' work.

SA: Hasn't increased industrial funding of university science restricted academic freedom?

TK: I think society benefits from the more independent voices there are. If you believe that the government funding of universities is very damaging, the same must apply for industry. There have been one or two very bad examples of drug companies paying for academics to do bits of science and those academics not being free to publish that science. That's unfortunate and shouldn't be allowed. The universities should be able to work these things out, and indeed they are.

There will always be the private funding of science, and whether it comes out of companies or it comes out of universities, the reality is that all scientists select what they publish. And the reader doesn't know what the scientists have chosen not to publish. In the end you just have to have a marketplace of competing ideas. That's why pluralism of funding is so important. It is important to have government funding and foundation funding and industrial funding and endowment funding of universities. With a multiplicity of funders you are more likely, ultimately, to get the truth.


JR Minkel is a freelance writer based in New York City.


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