Humans are the master tool users of the animal kingdom. For a gawky, slow animal with no fangs, thick hide, or claws, tool usage has played a primary role in the success of our species by allowing us to continually adapt to new environments. We use tools ranging from simplistic screwdrivers to complex cultures. However, tools are not unlimited and all powerful. Tools come with an important condition. Tool effectiveness is limited to its corresponding job. That is, if you want to cut glass, you use a glass cutter not a hammer. This condition is particularly problematic with complex tools for complex tasks when the relationships are so volatile. Such is the contemporary dilemma we face in the metamorphosis from the cold war institutions of the past to competitive institutions of the future. Applying Cold War institutions to competitive problems is like using a hammer to cut glass. The call for competitiveness demands its own institutions which specifically address the needs of competitiveness.

Unfortunately, though the American system is flexible, it is only flexible in an incremental sense. We are much better at remodeling what we have then reformatting completely. Our institutions carry with them inertia-inertia in the form of tradition, inertia in the form of constituencies unwilling to give up what they have or learn something new, inertia in the form of institutional learning. However much an administration wishes to attack a problem in a new way (or with the appropriate tool), without a crisis on the level of the Great Depression or the Civil War, it is bound by this inertia...such are the cons of pluralism. In the case of competitiveness policy, the Clinton Administration is bound by a huge military-industrial-university complex which has its tentacles wrapped around every inch of the American body politic.

Since we cannot simply disregard existing inertia, if we are to successfully move into the competitive era, we must identify the sources of inertia and discover means to redirect those old energies for use in solving new problems. In the end, we cannot hope to have a glass cutter. But, on the other hand, we will have better than a hammer.


In order to manipulate the forces of institutional inertia, we must first identify them. In Empowering Technology, Branscomb explains that the driving force behind Cold War institutions was supply side policy. Supply side policy he explains, centers on creating "new technologies which can contribute both to government missions and to private sector innovation and productivity." (Page 4) Such investment was justified in that social returns were greater than the costs and that the government could protect against market failure. In the creation of new technologies, the Cold War administrations, in accordance with the Bush doctrine, invested heavily in the creation of a knowledge pool through basic research, and in the advancement of technology through agency (generally military) mission projects. Government investment was explained as a pipeline in which public funds would be invested in science which would provide industry with the necessary resources to make marketable products which, when sold, would increase the prosperity of the whole nation.

However well supply side policy worked in the Cold War world which lacked significant competition and centered on low-tech simple-process goods, in a complex system with many economic players and vast networks of feedback loops, supply side economy falters. Branscomb notes that supply side policy proves inadequate when faced with rapid incremental progress, complex technologies and competitive world markets which define the high tech industries now dominating world trade.

In order to deal with this problem, Clinton and Gore have attempted to balance supply side policy with demand side policy in which the government takes a more active role in directing the economy. Four policy directions exemplify this approach. Firstly, the administration supports industry/government and industry/industry collaboration. Second, the administration seeks to identify and sponsor critical technologies. Thirdly, the government adjusts economic policy to provide a tempting environment for businesses to invest in. Finally, the government has taken on the responsibility of updating and building the infrastructure (particularly the national information superhighway).

However, since cold war institutions were not set up to accommodate demand side policies, we get incompatibility problems. This is what makes the inertia so dangerous. Government agencies are simply not set up for civil innovation cultures and if they don't make the transition, the whole project will be futile. For instance, the government simply cannot pick winners. Firstly, the criteria for picking winners is prone to political corruption. Further, the govt does not have the system set up to get information quickly enough to make good market decisions. And when it does have the information, it will be too bound by constituency and political pressures to act appropriately. Finally, there is a conflict between the idea of picking winners with its related trickle down policy and democracy and its concern for the use of public funds. How will we determine which corporations get to be on the dole? Who will determine which industries are critical?

Another facet of government making it a fish out of water revolves around the fact that the cultures of government agencies are so different from those of industry that trying to piece the two together is a lesson in culture clash. As Bruce Berkowitz (Page 52) notes, "...defense reinvestment is unlikely to live up to expectations. The problem is not technology; its the management and organization." Government S&T agencies (ala defense industry) have developed their own unique system of doing business from bookwork to non-market oriented specs. Fifty years of institutional learning does not just simply disappear. Further, different agencies within the government's folds have different cultures of their own. Whereas some defense firms like GM Hughes Electronics have been able to make the conversion others may not.

Thirdly, S&T policies must be different for different industries be they high tech, low tech, or middle tech. The economy is complex and requires the flexibility to adjust policy immensely from one product to another. Whereas intellectual property may be a cornerstone of low tech/low complexity, it is at least very problematic for high tech/high complexity. Such flexibility is difficult for a government which is supposed to remain objective and solid enough to count on. Whereas governments set standards new technologies break them.


Branscomb and others paint a pretty bleak picture of US S&T policy in the future. However, all is not lost. If we can redirect the inertia we can solve many of the problems. For instance, it is clear that the US government must take a greater role in directing the economy. Hence the goal is to make government institutions better able to deal with the demands of the market. How do we get them in a position where they can pick winners though?

That the methods of transformation are not particularly clear yet is not necessarily cause for alarm. We seem open to learning, and that is the key. For instance, we can look to see what corporations like GM Hughes have learned. We must learn what tools are appropriate to the new environment and be willing to upgrade. We are, in Waldrop's sense, finally ready to move from one eddy to another. Only by exploring and remaining flexible can we oar ourselves to the best eddy.

The inertia will be hard to overcome but so long as everyone works together and development remains flexible, things look good. The key is to not solidify. That Clinton is trying new things suggests that the administration is freeing itself from paralysis. There is no way to predict the best direction for us of course. The best we can do is remain flexible and continue to learn. If so, we'll do the best we can given our historical/structural environment and chance.

It is a given that we will lose some of the positive features of the R&D system in the process of change. That shouldn't even be an issue though. Every evolutionary step leaves behind it a beautiful creation. What is important is that we evolve into a society better able to address the needs of its environment. If we find ourselves, somewhere down the line, once more in need of more focus on the knowledge pool and basic curiosity-driven research, we can evolve again. But right now, our focus must change.

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