Scientific Research
Innovation and discovery in a free market
printIn order to make a profit, people offer goods and services in the marketplace. Profits bring in competitors who also like to take a share of the profit. In order to offer different, better or cheaper goods, single entrepreneurs and firms (groups working together in entrepreneurship) invest a portion of their time and profits into technological innovation to be able to make future profits. This can be for the near future but also for the future on a longer scale, depending on the profits that are anticipated from it (through sales and/or cost cutting), and the kind of risks they can afford to take financially. If firms perceive future profits that requires more capital than they can afford to allocate, then they can bundle their capital with other firms and share the profits.
Innovation and discovery is an automatic by-product of a free capitalistic market. It closely aligns itself with future consumer demand. Those entrepreneurs who anticipate future consumer demand well and succeed in doing the right things to fulfill those needs, succeed.
If consumers' imagination is captured by research findings in astronomy or fundamental physics, then this can also be supplied through donations or the sale of goods and services explaining the findings. A firm can also give a grant to a research institution as a sign of goodwill. In all these ways, it remains a reflection of what people actually desire.
The Myth of the Math and Science Shortage
By Lew Rockwell, Mises Daily: February 7th, 2006
[..] Professions are things chosen by individuals as they follow market signals. If there is a shortage, the wages of the people with these specializations would go up, thereby drawing more people into the profession. People would rush to study teeth cleaning and the like. This influx of new labor would push wages down again. When the wages get too low, people leave these professions and find others.
Thus does the market for labor specializations work rather well, here, there, and everywhere. Wages aren't the only consideration for why people go into some fields and not others, but it is a major factor. The market provides a helpful signaling mechanism to assist people in the development of certain skills. Shortages and surpluses resolve themselves.
No presidential speeches are necessary. No commission needs to be established. No taxpayer dollars need to be expended to make it all happen. We need only pay attention to the signals of the market and follow our own self-interest. The shortages and surpluses are systematically driven toward equilibrium, provided there is no government intervention to spoil the process.
Think of how jobs have changed. We have fewer people around today who know how to farm because fewer people are necessary to do the job. More kids than ever are going into computer sciences because of the perception that these fields will be lucrative in the future. In neither case was a government program necessary. People entering the job market find out quickly what is in demand and what isn't and compare that to their own capacity for doing the job.
[..]
And what pretense does government have for purporting to know better than the market what jobs are necessary in the future? Somehow it seems especially egregious for the political class to get into this act, for this group is probably the least well educated in technical fields. Their specializations are in duplicity, glad handing, and handing out other people's money to those who are willing to participate in the racket of the redistributivist state. What do they know about the market for mathematicians?
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