Chemistry, alchemy, economy

Uncaging Animal Spirits
January 26, 1996

John Maynard Keynes coined the expression "animal spirits" to describe what motivates people to invest time and money in an endeavour for which the return is uncertain. Ralph Landau certainly possesses this urge to action. When President Reagan presented him with the National Medal of Technology in 1985 he cited his "technical, leadership, and entrepreneurial roles in the development of commercially successful petrochemical processes which have I helped maintain US leadership in petrochemical processing".

Landau was awarded a degree in chemical engineering at the University of Pennsylvania and after carrying out research for his doctorate at the Massachusetts Institute of Technology joined Kellogg in 1941. Two years later he was assigned to work on the Manhattan District Project where he became responsible for the design of equipment to process fluorine used in the manufacture of uranium hexafluoride.

Harry Rehnberg was in charge of building the fluorine unit Landau designed and in 1946 they formed the Scientific Design Company to provide clients with everything from chemical process design to construction and start up of the plant. The company was very successful in developing processes, particularly vapour and liquid phase oxidations. Ultimately it built more than 300 plants throughout the world and held more than 1,400 patents worldwide.

In 1962 SDC developed a process for producing high yields of propylene oxide which provided Landau with the opportunity he had been waiting for to manufacture chemicals. In 1963 Halcon International was formed and joined the Atlantic Richfield Company (ARCO) to set up the Oxirane Corporation to manufacture propylene oxide and related products. By 1979 the corporation was operating eight plants with sales exceeding $1 billion a year.

A second opportunity for manufacturing presented itself in 1973 when a method for producing high yields of ethylene glycol directly from ethylene was discovered. Unfortunately the high cost of borrowing money and of energy led Landau to sell Halcon's share in Oxirane to ARCO and Halcon reverted to being a licensing company. Rehnberg died in 1975 and seven years later as a consequence of high inflation and interest rates Landau sold his company and embarked on a new career as an economist to try to understand why his company had run into financial difficulties at the height of its technological success.

The book illustrates the opportunities, obstacles and rewards of Landau's unique career by collecting extracts from about 30 of the 139 publications (listed at the end of the book) he wrote or contributed to over the past 40 years. These extracts are grouped to convey his scientific discoveries, his views on innovation and entrepreneurship, his reflections on his own field of chemical engineering, his research on the global marketplace, his examination of the interrelations of technology, innovation and the economy and his observations on life.

Engineers and scientists concerned with development and design of chemical processes will find the book of interest as will those who participate in formulating economic policy that may affect the national economy by virtue of its effect on technology.

The form of the book inevitably leads to a certain amount of repetition. Readers lacking a knowledge of chemistry will find the section on scientific discoveries, represented by extracts from four papers describing the most successful processes developed by SDC, is discussed later in lay terms. The section on innovation and entrepreneurship traces the development of the engineering design companies that served the petroleum refining industry in the United States before the outbreak of the second world war to their acceptance by the chemical industry.

At the end of the war most companies manufacturing chemicals from coal preferred to develop their own technology for the production of petrochemicals rather than buy it from engineering companies and SDC had to prove its worth before it could play an important role acquiring and transferring chemical and petrochemical technology within the US and abroad.

Today many chemical companies concentrate their research activity on product development and leave the introduction of new processes to research-orientated engineering companies. During a period when the education of chemical engineers was changing rapidly Landau helped define the systems approach used in chemical process design. He feels that if chemical engineers are not to lose their key role in chemical process design they must retain their ability to lead a diverse team of specialists while retaining an overall economic marketing and technical perspective.

Landau also advocates that the systems approach be employed in other fields including that of economics. In the late 1970s when he realised how little those forging economic policy in the US knew about technology he sold his company and devoted his energy to increasing his understanding of economics. Landau believes that technology and capital complement each other and are the major determinants of economic growth.

By virtue of his skills as engineer, manager and entrepreneur he has made a unique contribution to the subject. The book illustrates how he warned policymakers, economists and business colleagues that policies which discouraged investment and risk taking would erode technological innovation and economic growth in the US.

Kenneth E. Bett is emeritus reader in chemical engineering and chemical technology, Imperial College, London.

Uncaging Animal Spirits: Essays on Engineering Entrepreneurship and Economics

Author - Ralph Landau
Editor - Martha V. Gottron
ISBN - 0 262 12183 2
Publisher - MIT Press
Price - £35.95
Pages - 423

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