Bootleggers and coffee-haters.
By Calestous Juma
432 pp.; Oxford
University Press, 2016
Not many academic books could credibly be called good nightstand reading. Harvard professor Calestous Juma's Innovation and Its Enemies can, in part because of its use of entertaining stories and anecdotes to illustrate ideas concerning innovation. These stories will prompt many readers to reflect on what they think they know about how innovation occurs and how the resulting advances are accepted. I didn't know, for example, that there had been such strong resistance to the introduction of coffee in the Middle East, North Africa, and Europe, or that that resistance was spurred by rent seeking. The book will be a useful source for scholars, students, policymakers, business leaders, entrepreneurs, and those who wish to understand the political steps that need to be taken to reduce the obstacles to innovation.
This book is especially timely given the emergence of "sharing economy" apps and websites such as Uber, Lyft, Airbnb, Waitr, and others. These innovations have not been welcomed with open arms by incumbent businesses, but surprisingly some consumers have also given the innovations a cold welcome beyond the consumer right to say, "No, thanks."
The book is also timely in light of perpetual controversies over genetic engineering, vaccination, and conventional versus organic farming. People tend to embrace science in some areas and reject it in others. Of course, we see this most clearly in political activism, where there is a curiously large overlap between the embrace of heavy-handed policies to curtail climate change in the name of science and the rejection of genetically modified crops in spite of a scientific consensus that they are safe.
Opposing the new / Historically, innovations have often been killed in the crib by a combination of social and political forces. First, critics have subscribed to the notion that innovation is heretical; indeed, the term "innovation" originated to describe unorthodox interpretations of Scripture. Second, incumbents upset about the effect of innovative competitors on their bottom lines have taken to political machinations. Juma gives us a series of tightly scripted tales about technologies that ran into problems that slowed their adoption, and he closes each chapter with a summary of the main lessons policymakers should draw from his analysis.
Stylistically, Juma has fun with his writing and readers will have fun with their reading. Almost every chapter title and heading, it seems, is a clever pun. At times, that gets to be a bit much, but it adds a pleasant lightness to the exposition. Juma is dealing with deep and important topics in a serious way, but he's just irreverent enough to keep the narrative flowing. And he opens the book with a smart first line: "The quickest way to find out who your enemies are is to try doing something new."
Right from that start, he explicitly acknowledges that his analysis is Schumpeterian. He looks to go "under the hood" of the political economy and see how, exactly, the larger processes by which innovations are protested work, and the specific ways those protestations are overcome.
Many innovators who have tried something new have found they have a lot more enemies than they previously thought. Some innovations have been adopted with relatively little protest, e.g., cell phones, but others still have a long way to go before they are accepted widely, e.g., transgenic crops. This difference is central to our understanding of how technology changes over time. Different cultures and legal traditions have widely varying views about what constitutes an acceptable change and whether a new innovation is safe or risky. Navigating these differences is important to implement newly conceived technologies.
Bootleggers and coffee-haters / The book offers a series of case studies of the introductions of coffee, the printing press, margarine, farm mechanization, electricity, mechanical refrigeration, recorded music, transgenic crops, and transgenic salmon. It moves from areas where regulation seems most ridiculous to areas where it seems at first glance to have a semi-plausible rationale.
Some examples of regulation are understandable but off-putting. Others are more amusing. It is easy, from our 21st century vantage point, to chuckle at the protracted debates of early-modern Europe and the Middle East about the spiritual qualities of coffee. Naturally, the industries that sought government protection from the innovations did so in the name of protecting wholesome ways of life or advancing national security. The discussion of the dairy industry's response to margarine makes sense in light of the rents that were at stake, but the way the industry pressured the president of Iowa State College to suppress a pamphlet on margarine's safety written by future Nobel laureate Theodore Schultz and colleagues illustrates the lengths people will go to when their comfortable status quo is threatened.
I was reminded of the importance of the rule of law when Juma offered this quote from Alaska congressman Don Young (R) about a salmon company: "You keep those damn fish out of my waters.... If I can keep this up long enough, I can break that company.... I admit that's what I'm trying to do." That an elected official can work to ruin a particular company underscores the importance of having a nation be ruled by laws and not by men.
It is easy to read a book and play a game of "citation bingo" in which one looks for all the thinkers the reviewer thinks the author should have engaged but didn't. Forgive me for giving in to this temptation. I like Juma's explicitly Schumpeterian framework, but it could have benefited by engaging with work by Ronald Coase, Mancur Olson, and Elinor Ostrom, among others. Some of Juma's points about how regulators confront changing knowledge would have been stronger had they been expressed in the context of Hayek's work on the knowledge problem, and a lot of Juma's recommendations for policymakers could be better understood with reference to Douglass North, John Joseph Wallis, and Barry Weingast's work on the differences between limited- and open-access orders.
I would like to see Juma and others work out the implicit political theory in greater detail when discussing how people seek to protect the status quo. On what grounds are people asserting that their comfortable ways of life should be maintained at others' expense? Perhaps more particularly, why are observers and other members of the polity inclined to agree with them? The economic reasons why incumbents oppose innovation are clear enough: they stand to see the value of their physical and human capital fall if the status quo does change. Consider the plight of the steelworker who has a skillset that becomes worthless as a result of automation and international trade. But it would be useful to see why so many others--including those who benefit from the technological changes--also oppose innovation. Enthusiasts for innovation such as, I suspect, most of the readers of this journal should take more seriously objections that incumbents have to challenges to the status quo. Juma points out how incumbents and others resist novelty even in seemingly uncontroversial cases such as the adoption of coffee and movable type and the mechanization of agriculture.
Juma at least gets us part of the way to an answer. Scary "what-if" scenarios about innovations have a lot of emotional and cultural currency. As we have learned from psychology and behavioral economics, the way a proposal is framed is of supreme importance to how it is received. Near the end of the book, Juma upbraids the scientific community for a failure to communicate: "Members of the scientific and engineering community often communicate in ways that alienate the general public.... Learning how to communicate to the general public is an important aspect of reducing distrust." His point is implicitly McCloskeyan: Rhetoric matters. Persuasion is important. How we talk is essential to whether we adopt or reject innovation.
At the end of each chapter, the author offers a set of policy suggestions that should be of great value to those charged with making science and technology policy in the face of stiff opposition from beneficiaries of the status quo. Given that we don't yet live in an anarchist paradise, I suspect that many libertarian readers will see the book's proposals as steps in the right direction. Innovation and Its Enemies will be a valuable addition to the bookshelves of academics, students, policymakers, and entrepreneurs the world over.
ART CARDEN is associate professor of economics in the Brock School of Business at Samford University.