Economic stability and the flaws in conservative economics

This will most likely be a brief one, but I want to explore a pretty simple issue: Economic stability.

Conservatives and libertarians are very keen on the idea of just letting the free market get on with things and government should just get out. So things like cuts to the CSIRO or NASA are seen as a good thing, opening up the market for private enterprise to innovate and replace these costly publicly funded areas, but this seldom really happens, and the reason is so simple it’s profound: market stability.

The free market is by it’s very nature an insecure, fluctuating thing. For business in the generic sense, this is just money moving back and forth between big companies with lots of money (which happens anyway) however, when it comes to genuine innovation and avant gard research, this is a highly uncertain area, high risk with potentially massive losses and poor returns, or longer investment time and expense than anticipated.

What research truly needs is stability- the antithesis of the free market. Look at some of the most economically revolutionary technologies: satellites, wifi, the Internet. Massive boon to economics, business and free enterprise. All of these fundamental aspects of modern life were developed through public funding- stable, long term funding on areas completely unrelated to their current applications.

The free market may be good at taking such technologies that exist and turning them into something more efficient and marketable, but the market is a dismal failure at producing these revolutions- it’s a risk averse enterprise.

Libertarians would like to point out that the industrial revolution, with it’s great inventors were not publicly funded in quite this manner, that’s true, however that was still more similar to public funding than business investment. It was the landed gentry, the wealthy patron class, the philanthropists funding these things long term, not looking for an immediate return, working on long term cycles.

The greatest threat to innovation is a lack of long term investment and the emphasis on marketability. If you can not explore possibilities that you don’t know the answer to without justifying it with a profitable outcome, how can you truly innovate? If you can only get 3 years funding and a demand for something you can sell at the end of it, how can you be truly exploratory?

Research and innovation requires long term stability in resourcing, this is not provided by the free market and so the free market is not good for innovation and new technology, only for improving existing technology.

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