Dan Traficonte: So, thanks so much for invit­ing us. I’m Dan Traficonte, I’m a PhD stu­dent in urban plan­ning at MIT. I’m cur­rent­ly study­ing his­to­ry of indus­tri­al pol­i­cy in the United States. This is Ian Wells. He is a lawyer based in New York and he works in com­mu­ni­ty devel­op­ment in Queens. 

So today, we’re gonna give a talk that real­ly comes out of a pol­i­cy brief that we wrote sev­er­al months ago for Matt Bruenig’s People’s Policy Project. We also pub­lished a com­pan­ion piece in Jacobin for this pol­i­cy brief. 

And what the brief deals with is how we could think about inno­va­tion pol­i­cy under a Green New Deal. By inno­va­tion pol­i­cy what we’re real­ly talk­ing about is fed­er­al R&D pro­grams. So despite the American econ­o­my’s rep­u­ta­tion for being this quin­tes­sen­tial free mar­ket sys­tem, much of the inno­va­tion and tech­no­log­i­cal devel­op­ment in the American econ­o­my can be linked to direct gov­ern­ment inter­ven­tion. And so since World War II when this kind of activ­i­ty real­ly got going, the fed­er­al gov­ern­ment has been a lead­ing if not the lead­ing dri­ver of inno­va­tion through­out much of the econ­o­my. And so you may rec­og­nize some of these pro­grams. Some of them are quite large and well-known like the National Science Foundation, NASA; oth­ers are small­er and more targeted. 

So in recent years, both schol­ars and pol­i­cy­mak­ers have begun to look at this col­lec­tive set of R&D projects and char­ac­ter­ize it as the American style of indus­tri­al pol­i­cy, mean­ing that it’s a form of state action that selec­tive­ly pro­motes cer­tain indus­tries over oth­ers, and in this case it’s high-tech industries. 

And I just want a flag for you at the onset here, sort of two key insti­tu­tion­al fea­tures of this sys­tem that are going to be com­ing up in this talk. One is the sys­tem is basi­cal­ly frag­ment­ed into a series of sep­a­rate pro­grams, none of which real­ly have much inter­a­gency col­lab­o­ra­tion, and there’s no cen­tral coor­di­na­tion mech­a­nism. So this is not a planned sys­tem. It’s been described by the Roosevelt Institute, for exam­ple, as indus­tri­al pol­i­cy but not indus­tri­al plan­ning. So that’s the first insti­tu­tion­al feature. 

The sec­ond is the sys­tem is char­ac­ter­ized by a fair­ly large give­away to the pri­vate con­trac­tors, in this case R&D‑heavy indus­tri­al firms that take part in R&D projects. And the give­away’s in the form of intel­lec­tu­al prop­er­ty. So when R&D projects from these pro­grams are suc­cess­ful, they result in prod­ucts or process­es that can be patent­ed. In this sys­tem as it cur­rent­ly exists, those are trans­ferred over to the pri­vate con­trac­tors. And we’re going to dis­cuss both of those fea­tures today. 

So just to sort of bring this a bit clos­er to home, you can track the suc­cess of this kind of state activ­i­ty by look­ing at many of the most influ­en­tial tech­nolo­gies in the American econ­o­my, many of which have gen­er­at­ed huge new mar­kets not just in the American econ­o­my but across the world. And you can sort of decom­pose these tech­nolo­gies into com­po­nent parts and then trace basi­cal­ly all of the com­po­nent parts back to these fed­er­al pro­grams. So the iPhone famous­ly derives entire­ly from fed­er­al R&D efforts from decades ear­li­er. And you can do this for a num­ber of tech­nolo­gies. So you know, these pro­grams make a huge dif­fer­ence in the long run. 

And so I think we’re at a real­ly inter­est­ing time with respect to fed­er­al R&D pol­i­cy, because what we’re see­ing is the emer­gence of a new debate on indus­tri­al pol­i­cy. Of course that’s been a cen­ter focus of the dis­cus­sion here today. But it’s also focused in par­tic­u­lar on inno­va­tion and inno­va­tion pol­i­cy. And this debate has actu­al­ly spanned across the polit­i­cal spec­trum. So on the left, the issue is cli­mate change. You may rec­og­nize this pic­ture of AOC. And the dri­ver is of course the need to cre­ate and deploy green and sustainable-oriented tech­nolo­gies as quick­ly as pos­si­ble. So for exam­ple both Warren and Sanders have issued cli­mate change plans that include recom­mit­ments of fed­er­al invest­ment to green inno­va­tion. And these ideas are gain­ing at the grass­roots level. 

But on the right, you also have new inter­est in inno­va­tion. And the dri­ver is basi­cal­ly China. So as China has moved up the lad­der of tech­no­log­i­cal devel­op­ment and entered into increas­ing­ly high-tech pro­duc­tion and now has begun to threat­en some of the sta­ple high-tech indus­tries of the United States like aerospace…so there’s a Chinese state-owned air­line man­u­fac­tur­er that may in a few years com­pete with Boeing, some Republican leg­is­la­tors are get­ting cold feet about small gov­ern­ment and free mar­kets and are push­ing a new kind of nation­al­ist com­pe­ti­tion ver­sion of inno­va­tion pol­i­cy. So Marco Rubio is an exam­ple of one of those Republican politicians. 

So giv­en the emer­gence of this debate, which again spans across the polit­i­cal spec­trum, I think it’s crit­i­cal for peo­ple who are think­ing about the Green New Deal to pay atten­tion to inno­va­tion pol­i­cy, because this debate is now…you know, we’re gonna have to deal with this issue either way, it seems. 

So I’ll talk a lit­tle bit about the his­to­ry, which I think is both real­ly fas­ci­nat­ing in itself and also informed how we thought about the poten­tial for inno­va­tion pol­i­cy under the Green New Deal and how we think it might be pro­duc­tive to think about it. 

So by the mid 40s—so as I men­tioned this activ­i­ty real­ly got going dur­ing World War II. By the mid 40s, a group of what you could call late New Dealers, so pro­gres­sive Democrats that were becom­ing increas­ing­ly mar­gin­al­ized, these late new Democrats like Senator Harley Kilgore from West Virginia on the left, and then Vice President Henry Wallace on the right, saw basi­cal­ly what was emerg­ing from World War II with the gov­ern­ment play­ing this new role in direct­ly pro­mot­ing inno­va­tion. And they saw R&D and the gov­ern­men­t’s role in R&D as a new form of plan­ning. And they sought to basi­cal­ly cre­ate a plan­ning appa­ra­tus which they called the Office of Technological Mobilization, built on New Deal plan­ning prin­ci­ples, prin­ci­ples that basi­cal­ly got going in what’s called the First New Deal. 

So these were the sort of cen­ter­piece pro­grams of 1933 and 1934. The Agricultural Adjustment Act, the National Recovery Act. So these late New Dealers in the mid 40s said, You know, we have to deal with R&D some­how, and we should build the fed­er­al gov­ern­men­t’s capac­i­ty based on New Deal plan­ning prin­ci­ples.” And they basi­cal­ly had two main commitments—or three rather. 

The first was R&D would have to be cen­tral­ized and planned in some way. If it was frag­ment­ed and spread out across the exec­u­tive, it could­n’t be mobi­lized toward socially-useful tech­nolo­gies and it would be more eas­i­ly coopt­ed by business. 

The sec­ond prin­ci­ple was that the fed­er­al gov­ern­ment should not be giv­ing away the fruits of this R&D activ­i­ty. So the intel­lec­tu­al prop­er­ty, the patents that result­ed from these pro­grams, would be retained either by the gov­ern­ment or would be stew­ard­ed by the gov­ern­ment in what we would rec­og­nize today as a kind of open source alter­na­tive to just sort of straight­for­ward gov­ern­ment ownership.

And then final­ly the third was pro­gres­sive Democrats were con­cerned that the geo­graph­i­cal ben­e­fits from these pro­grams would be hoard­ed and con­cen­trat­ed into already-thriving areas. Areas like Route 128, New York, etc. 

So those were the three com­mit­ments. That was if you like the New Deal vision for inno­va­tion pol­i­cy. But there was an alter­na­tive put for­ward by Dr. Vannevar Bush, who was a very famous and suc­cess­ful wartime sci­ence bureau­crat. And he put for­ward pret­ty much the oppo­site insti­tu­tion­al vision. So he want­ed a sort of frag­ment­ed series of government-industry part­ner­ships, and crit­i­cal­ly he want­ed pri­vate con­trac­tor own­er­ship of IP. And not sur­pris­ing­ly this was the vision endorsed by the major indus­tri­al busi­ness groups at the time, groups like the National Association of Manufacturers and the fed­er­al branch of the Chamber of Commerce. And the result of this was the cre­ation of a National Science Foundation rather than an Office of Technological Mobilization. So an NSF that was severe­ly weak­ened from what it had orig­i­nal­ly been con­ceived of, and the cre­ation of the kind of frag­ment­ed sys­tem that I discussed. 

So in light of that his­to­ry we think it’s use­ful to take inspi­ra­tion from this orig­i­nal New Deal vision for inno­va­tion pol­i­cy. And Ian will talk a lit­tle bit about what we came up with. 

Ian Wells: Great, thanks. And think­ing about design­ing an insti­tu­tion for inno­va­tion for the Green New Deal, Dan and I tried to form our think­ing around a few core ques­tions. So one is what is actu­al­ly pro­duced by this inno­va­tion state? Second, who ben­e­fits? And the third, who con­trols? So who con­trols the inno­va­tion state and who con­trols what’s ulti­mate­ly produced? 

In terms of what’s pro­duced, one what we think is key deficit of the cur­rent inno­va­tion state is that it’s over­whelm­ing­ly geared towards mil­i­tary tech­nol­o­gy. There are dif­fer­ent pro­grams up here. One is called DARPA, which devel­ops new mil­i­tary tech­nolo­gies. And one is called the ARPA‑E, which focus­es on new clean ener­gy tech­nolo­gies. And as you can see one is dra­mat­i­cal­ly overfund­ed, and one has by fed­er­al stan­dards a rel­a­tive­ly tiny bud­get. So a big rec­om­men­da­tion we have is to cre­ate the inverse. So to put more mon­ey towards research and devel­op­ment for clean ener­gy through pro­grams like an expand­ed ARPA‑E.

The mil­i­tary also has pub­lic ven­ture cap­i­tal. The CIA has In-Q-Tel, which gives ear­ly stage invest­ments to some com­pa­nies for defense pur­pos­es. We think that pub­lic ven­ture cap­i­tal could be geared towards clean ener­gy. And we also believe in the cre­ation of a green inno­va­tion fund. So that would be pub­lic invest­ment that would help green com­pa­nies grow and expand. 

Looking at one part of who ben­e­fits, the cur­rent inno­va­tion sys­tem helped the tech indus­try thrive. And one char­ac­ter­is­tic of the tech indus­try is that it is over­whelm­ing­ly con­cen­trat­ed in a few geo­graph­ic areas like San Francisco, New York, around Boston—even though I don’t like to give Dan that. So we thought we could cre­ate these Green New Deal Institutes” that could be locat­ed in more strate­gic areas, so-called lag­ging areas,” that haven’t ben­e­fit­ed from the cur­rent inno­va­tion system. 

This is some­what mod­eled on an Obama admin­is­tra­tion pol­i­cy called Manufacturing USA, which was geared towards for­ward­ing advanced man­u­fac­tur­ing by cre­at­ing these indus­try con­sor­tia in dif­fer­ent areas. So you can see there are some in places like San Francisco and New York, but also in Rochester, the Appalachian area of Tennessee, the Midwest. And each of these pro­grams is focused on a spe­cif­ic tech­nol­o­gy. You can see like recy­cled mate­ri­als, things like that. For a Green New Deal it’d be very pos­si­ble to form sim­i­lar con­sor­tia around things like advanced bat­ter­ies or alter­na­tive fuels, and to then place those in areas that might be strate­gic and might help spread the eco­nom­ic ben­e­fits of innovation. 

What we think is an impor­tant thing that under­lies all of this is the ques­tion of who ulti­mate­ly con­trols this tech­nol­o­gy. First, I think it’s impor­tant that the pub­lic actu­al­ly gets a return on invest­ment from the pub­lic spend­ing that it puts for­ward. And one way of doing that is to pos­si­bly retain pub­lic con­trol of intel­lec­tu­al prop­er­ty that’s gen­er­at­ed through pub­lic spending. 

In look­ing at pub­lic invest­ment, the fed­er­al gov­ern­ment could pos­si­bly require that any­one receiv­ing fed­er­al fund­ing would need to give the fed­er­al gov­ern­ment an equi­ty stake in the com­pa­ny. The fed­er­al gov­ern­ment could vote those shares. 

The gov­ern­ment could also put con­di­tions on pub­lic assis­tance for say, union sup­port or giv­ing work­ers board seats on their boards. 

And I think the third thing that we thought about and I think should be a con­sid­er­a­tion is full pub­lic own­er­ship. If the fed­er­al gov­ern­ment cre­ates new tech­nol­o­gy, it could just roll that tech­nol­o­gy out with­out any pri­vate sec­tor engage­ment at all in the commercialization.

So we real­ly see inno­va­tion pol­i­cy as a major oppor­tu­ni­ty for the left. We don’t think that we can invent our way out of the cli­mate cri­sis. I think that would be you know, fool­hardy. However we do believe that new tech­nol­o­gy will need to be cre­at­ed to have a speedy tran­si­tion to decar­boniza­tion, and hav­ing a com­pre­hen­sive state inno­va­tion plan is going to be a nec­es­sary part of that. Great. Thanks.

Further Reference

Climate Futures II event page