How Innovation Works

Matt Ridley's book How Innovation Works (2020) is a mass market book that offers a thematic run down of innovations (in health, energy, transportation, etc). The chapters are mostly brief descriptions, with little on the "so what?" of the innovation processes. When there are very interesting questions, such as simultaneous innovations in distant locations, these remain largely hanging. Nonetheless, this is an interesting read. A few notes:

"Innovation is the most important fact about the modern world, but one of the least well understood. It is the reason that most people today live lives of prosperity and wisdom compared with their ancestors, the overwhelming cause of the great enrichment of the past centuries. (p.4)

"Innovation happens when people are free to think, experiment, and speculate. It happens when people can trade with each other. It happens where people are relatively prosperous, not desperate. It is somewhat contagious. It needs investment. It generally happens in cities. And so on. But do we really understand it? What is the best way to encourage innovation? To set targets, direct research, subsidize science, write rules and standards; or to back off from all this, deregulate, set people free; or to create property rights in ideas, offer patents and hand out prizes, issue medals; to fear the future, or to be full of hope? You will find champions of all these policies and more, fervently arguing their cases. But the striking thing about innovation is how mysterious it still is. No economist or social scientist can fully explain why innovation happens, let alone why it happens when and where it does." (p. 6)

"If innovation is a gradual, evolutionary process, why is it so often described in terms of revolutions, heroic breakthroughs and sudden enlightenment? Two answers: human nature and the intellectual property system. As I have shown repeatedly in this book, it is all too easy and all too tempting for whoever makes a breakthrough to magnify its importance, forget about rivals and predecessors, and ignore successors who make the breakthrough into a practical proposition." (p. 243-244)

"The main ingredient in the secret sauce that leads to innovation is freedom. Freedom to exchange, experiment, imagine, invest and fail; freedom from expropriation or restriction by chiefs, priests and thieves; freedom on the part of consumers to reward the innovations they like and reject the ones they do not. Liberals have argued since at least the eighteenth century that freedom leads to prosperity, but I would argue that they have never persuasively found the mechanism, the drive chain, by which one causes the other. Innovation, the infinite improbability drive, is that drive chain, that missing link." (p. 359)

"Politicians should go further and rethink their incentives for innovation more generally so that we are never again caught out with too little innovation having happened in a crucial field of human endeavour. One option is to expand the use of prizes, to replace reliance on grants and patents." (p. 387)