In this post, I will quote from ‘Paths of Fire: An Anthropologist’s Inquiry into Western Technology’ (1996) by Robert McCormick Adams. “Beyond this general sense of growing insecurity and uncertainty, what distinguishes the world context within which modern technology finds its primary applications? Perhaps most disturbing is the widening gap between the most and least-developed parts of the world. Major countries formerly in the middle of this range – China, Brazil, Mexico, India, and Indonesia are representative examples – have of course moved decisively toward the developed end of the contiuum. But similar progress is not in evidence in most of Africa and in other parts of Asia and Latin America. In effect substituting capital investment in automation for labor, hightech industries in developed countries are having some success in driving down the direct labor content of their costs to as little as 10 percent or less. With such reductions, the transfer of technology and manufacturing facilities to less-developed countries can be slowed or even brought to a halt in many but not all fields. But the result is a zero-sum game, raising prospects of irreconcilable political conflicts in the future. Residual rates of un and underemployment among less-than-highly-skilled workers in developed countries are resistant to significant reduction, while the poorest countries find great difficulties in attaining a position on even the lowermost rungs of an ascending industrial ladder. Remaining to be discussed as an unfolding competitive strategy is the use of patents and patenting. As a first-order approximation, they may be the best available surrogate for data on R & D activity – data which, in any other form, are more difficult to obtain and often seriously biased or inaccurate. But as noted in earlier chapters, aggregate series of patents also are flawed as an index to significant inventive activity in every historic period. Individual patents were never necessarily introduced into use at all, or for the purposes originally specified for them in patent applications. Inherent in the administrative and legal processes through which patents are granted and defended are reifications that subtly distort the notion of “invention” itself. Like technologies themselves, they “depend upon one another and interact with one another in ways which are not apparent to the casual observer, and often not to the specialist.” Especially in the conditions of rapid technological progress and intensified competition now obtaining, their significance is becoming more and more limited. Advances have been so rapid in some fields like biotechnology that the distinction between basic science and technological R & D has almost disappeared. New products are introduced, altered, and replaced before the formality of a patent can be secured. Having a significant headstart in producing a new and complex product largely displaces the need for either patent protection or any form of secrecy. In addition, patenting inevitably involves a trade-off. Necessary for the issuance of a patent is the disclosure of essential information on the product or process for which legal protection of rights to its exclusive use is sought. In very rapidly changing fields like semiconductors and microelectronics, this trade-off is not necessarily advantageous. Earlier and more complete market penetration may be gained in a race for what will be at best short-term superiority by failing to disclose (in fact, by seeking to obscure) research discoveries that have been incorporated in a product than by seeking formal legal protection for them. Spiraling costs of litigation are still a third factor. While there has been an apparent decline in patenting activity over the last two decades, a more complex picture emerges when this trend is disaggregated. Patents continue to be a widely employed source of protection in industries producing chemicals, plastics, synthetic fibers, and devices whose design would be relatively easy to duplicate. Particularly in industries whose products take the form of complex systems, however, the attitude is different: “Our respondents from industries producing aircraft and guided missiles, canonical complex systems, reported that it would cost a competent imitator three-fourths or more of what the innovator invested to come up with something comparable, that considerable time would be involved as well, and that it did not matter much whether or not there were patents. Producing complex systems effectively requires that many components and details be got right, and this is difficult to learn to do even if one has a model to take apart, or a blueprint to follow. These industries, and others like semiconductors, also involve complex production processes with tooling and equipment often finely tuned to product design. Simply getting the production line in place and running right can yield the inventor a substantial lead over potential followers.” The enormously active biomedical field has special patenting complexities of its own. Medical devices have attracted the interest of many small start-up firms, which have recognized opportunities to develop specialized applications of microprocessors in a relatively relaxed regulatory framework. Patent protection is largely unavailing since many alternatives usually can serve the same therapeutic end, but there is the compensating advantage that a particular approach can undergo continuing improvements during the course of testing and subsequent production. The rate of product obsolescence is high, and firm failures greatly outnumber successes. The large, well-entrenched firms comprising the pharmaceutical industry, by contrast, are accustomed to lengthy time horizons and very large R & D commitments. While the international environment is certainly competitive, the usual role of consumer preferences as the ultimate arbiter of market mechanisms is sharply reduced and somewhat distorted. This is certainly the case if patients are considered as the consumers, most of whom lack knowledge of the efficacy, risks, and alternatives to their choices, and in fact leave the choices themselves in the hands of their attending physicians. The role of clinician thus often blurs the usual distinction between developers of and customers for new technologies. From another direction, public and private third-party payers are more often the actual purchasers than the consuming public. Commensurate with their often very large purchasing power, they are increasingly exercising price leverage upon medical technology suppliers. The regulatory environment, by extending the duration of testing and heightening development costs, also places a premium on rapid, worldwide penetration of mass markets in order to assure profit and cost recovery before generic products become available. Little incentive is provided to direct R & D toward therapies for rare illnesses, or for illnesses found mainly in less-developed countries without hard currencies. Change with regard to patent protection, in short, has been complex, differentiated by sector and even micro-sector, and closely tied to marketing and financing conditions. The roles of science and technology are not easily distinguishable from one another, and both intercommunicate closely with corporate interests and strategies. Public policy and regulatory interventions, under the pressure of many interest groups and often subject to unanticipated second-order effects, are seldom comprehensive and wholly effective. And no effective means is yet in sight to hold in check the unprecedented share of GNP devoted to the gigantic health-care industry, among the many components of which technology may well be the one growing most rapidly. All in all, the world context of industrial strategies is a volatile, highly competitive, correspondingly unsettling one. There is no apparent lack of new opportunities to be exploited, but the risks – including risks of unforeseen second-order consequences – have also grown enormously. Immediate and long-term clashes of interest are increasingly severe and difficult to contend with, and the real power and initiative in deploying new technologies has moved largely into the hands of corporate boards. Both as a unit of analysis for a study like this one and as a master of its own technological household, the nation-state, even the United States as the industrially most powerful nation-state, becomes more and more deeply embedded in, and difficult to hold separate from, its wider, international context. Japan, having emerged as our most successful – some would say most dangerous – technological competitor, has nearly doubled its share of both world output and exports of high-tech manufactured products within little more than a decade. It displaced the United States as the leading high-tech exporter in the mid-1980s and today occupies the dominant position in fields in which the United States long thought itself securely pre-eminent. No longer merely successful at commercializing foreign technologies, Japan has increasingly demonstrated its capability to operate at the technological frontier in key fields like fiber optics, advanced and composite materials, fermentation processes, computer peripherals, memory chips, and computer-numerically controlled machine tools. While the strength of Japan’s position in this rivalry must be recognized, we should also take note that this strength is essentially confined to a fairly narrow sector of its industrial economy. Only some 13 percent of Japan’s working population is employed in its extremely successful, high-tech, hardware-exporting industries. Many primary and secondary industries, as well as the entire service sector employing 56 percent of the population, meet only relatively low standards of competitiveness. Moreover, the resilience of an emergent U.S. competitive response is evident in many scattered corporate reports and should not be underestimated. Under the new conditions of corporate interdependence and intensified competition, there are few impediments to the borrowing and adaptation by U.S. firms of the most advantageous features of Japanese industrial practice. Hence, any attempt to predict the overall long-term outcome of the rivalry would be unjustifiably speculative. Our primary interest, however, is concentrated precisely on the advancing front of technology. Whether or not the United States is successful in borrowing and even improving elements of the Japanese approach, its initial, systemic features deserve to be considered. The coherence of Japanese industrial strategy in the high-tech fields sustains comparison with the American system of production that first emerged as an international presence in the 1850s – which, after all, was for a long time even narrower in its impact. In the earlier case, U.S. industry had been able to pioneer its new and innovative approaches to mass production within a much more isolated milieu. It was powerfully assisted by the rationale of meeting military exigencies that the Congress was prepared to accept as overriding considerations of cost, and by what proved to be an atmosphere of public tolerance with regard to limitations of consumer choice that had no European counterparts. The long production runs of standardized products that became the distinguishing characteristic of American mass production now are giving way, as we have seen. Customized production preserves many of the same cost advantages as a result of greatly improved, more flexible strategies for automation, product innovation, inventory reduction, and the overall organization of production. These are all innovative strategies that are mostly Japanese in their origins, and that together constitute the essential manufacturing elements of the “Japanese System.” Underlying these features, however, has been for many years an equally vital contributor to Japanese competitive performance in the form of a substantially higher rate of consumer savings. The outcome of a host of essentially cultural factors associated with lifestyles, intergenerational relationships, and much more, it has meant that Japanese capital costs are about one-third of what they are in the United States. As a result, capital investment per employee can be approximately double that of the United States in manufacturing, accounting in considerable part for significantly higher Japanese labor productivity in the economic sectors important for international competition. It also helps to explain Japan’s tolerance for long time horizons for the recovery of investment capital, and hence for sustained investment in product development. Perhaps it can be considered a modern counterpart of nineteenth-century American tolerance of cheaply finished, standardized products. Still a third major element that contributes to the Japanese system has been a consistent emphasis on quality: “Quality, they say, is no longer simply the assurance of durability and reliability (the product works); that was the old way of thinking about it. Quality today is change, that is, ceaseless improvement, the continuing incorporation of new features that redefine the product and its uses and, so doing, make the consumer feel he wants it. Quality is the invention of needs. In such a game, speed means market share. Whereas in the automobile industry, for example, the lead time for new models was running four years and more, the Japanese reduced it to two. This kind of entrepreneurial advantage (in the Schumpeterian sense) can be translated into durable gains, and losers find themselves on a treadmill, running hard to stay in place.” The relationship of an aggressive, nationally coordinated, long-term R & D program to all of these developments is obvious. As a percentage of gross national product, Japanese industrial R & D more than doubled between 1965 and 1986, increasing over this period from less than one-tenth to more than one-third of comparable U.S. expenditures. Japan has long had the great advantage of being able to limit itself to a comparatively minor defense budget – on the order of 1 percent of gross national product. Thus it has been able to devote a correspondingly much larger part of its R & D resources to the improvement of its manufacturing base as well as its consumer products. But a fundamentally different valuation of the role of technology in planning for economic success is also apparent. Japanese firms, for example, are said to employ far more engineers on the factory floor than do their U.S. competitors, both to de-bug new production equipment and to improve manufacturing process know-how and extend its applications. More than two-thirds of Japanese firm-financed R & D is devoted to process research and improvement rather than new products, exactly the reverse of the proportions in the United States. 67 Japanese responses to a 1992 survey of leading technology-intensive firms, for example, indicated that more than 90 percent of their senior technical executives were members of their firms’ boards of directors, as contrasted with less than one-quarter of their counterparts in the United States. Also testifying to a closer integration of R & D into management are contrastive Japanese and U.S. diversification strategies: “Over the last two decades, while some of the leading U.S. industrial corporations have looked to acquisitions to diversify their businesses and technologies, Japanese firms increasingly have made their R & D organizations the centers of diversification efforts. Firms in such mature industries as shipbuilding, steel, and textiles have exhibited an especially strong drive to technological diversification to provide opportunities for the growth their core businesses can afford no longer.””
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