Why should a patent be the ticket to riches?

May 19, 2006

In falling over itself to fund science the Treasury ignores the value of humanities - a big mistake, says Paul Johnson

There has been a disturbing outbreak of science fetishism at the Treasury recently. With all the zealotry of converts come lately to the cause, the Chancellor (an historian) and his chief permanent secretary (an economist) have identified scientific research as the holy grail that will allow Britain's economy to remain competitive in an increasingly tough and fast-moving international market.

The Treasury's report on "next steps" for science and innovation investment makes no bones about the need to further strengthen the science base of the UK economy through more money, better and more co-ordinated management of research council resources, and improved knowledge transfer between laboratory and business. The related discussion of a possible move to a metrics-based research funding system after 2008 makes clear that there is scope for increasing support for the physical and biological sciences by moving resources away from the humanities and social sciences.

The Treasury's infatuation would be amusing were it not so misguided. A strong science base is a necessary element of any thriving economy, but in privileging the support of scientific research above all other areas of intellectual inquiry, the Government risks undermining the most dynamic and successful elements of the UK economy. The star performer over the past decade in terms of growth and overseas earnings has been the service sector, with education, creative industries and financial and professional services leading the pack. The bedrock for innovation and commercial success in this area is the production of new ideas in the arts, humanities and social sciences, and the training of personnel to carry these ideas forward. Yet the Treasury's plans give no indication that the Government has a key role in supporting the research infrastructure for anything beyond science.

This blind spot is nothing new. The Arts and Humanities Research Council and the Economic and Social Research Council, with a combined annual budget for 2007 of £247 million, receive less than one tenth of total research council funds. The UK's annual subscription to Cern, the particle physics laboratory in Geneva, is about the same size as the AHRC's total budget for research and for postgraduate training. There is no denying that particle physics is important, costly and an appropriate field for government intervention (except, it seems, in Iran), but it is far from clear that the relative scale of support makes economic sense or yields value for money. By contrast, sustaining the intellectual dynamism of creative industries through support of the humanities research infrastructure matters because this sector accounts for more than 5 per cent of total employment and gross domestic product, and a somewhat larger share of overseas earnings.

What accounts for the Treasury's narrow and exclusive view on the benefits of science and technology research? It is as if a form of neo-mercantilism has taken root in Whitehall, but the sign of economic success is taken as the number of spin-off companies created and patents registered (by which measure, incidentally, the UK lags behind the US, Japan and the European Union-15 average) rather than the accumulation of bullion. This perspective fails to take account of the fact that success in a modern knowledge economy depends on the creation and application of new ideas in all sectors, not just in science. In fact, scientific innovation is pretty small beer in economic terms. Deirdre McCloskey, the US economist, has estimated that "persuasion" - advocacy, advertising, argument, communication and education - accounts for a quarter of economic activity in advanced industrial societies. It is these activities that add value to the humdrum goods and services produced cheaply by low-cost producers around the world.

Any forward-looking policy needs to sustain a research base in the arts, humanities and social sciences - these act as incubators for the next generation of persuasive ideas. These ideas won't result in a surge in patenting activity, for the simple reason that most research in the arts, humanities and social sciences is not patentable. But they will sustain a huge amount of knowledge transfer, and that can have a substantial impact on economic activity and welfare. If the Government fails to increase support for research in the humanities and social sciences, the UK will become an importer of the ideas that sustain the majority of commercially relevant innovation. The country will become intellectually diminished and economically disadvantaged.

Paul Johnson is deputy director of the London School of Economics.

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