Matt Ridley Keynote Lecture

Summary:

On 18 May 2021, the Rafael del Pino Foundation organised the conference "Keys to innovation. How and why it develops in freedom", which featured Matt Ridley, journalist and science writer, on the occasion of the publication of his work of the same title.

Innovation is the adoption by people of new habits and new technologies. It is everywhere, it is a widespread phenomenon. Everyone has experienced innovation at some point in their lives, for centuries, but we don't really understand how innovation happens, why it happens, where it happens, more quickly in some technologies, more slowly in others, and then it changes.

Innovation is not the same as invention. Inventing something new is great, but that new device then has to be available, affordable and reliable, and this process takes longer, is more expensive and requires more ingenuity. Innovation is a process that takes place within society, it is a collective process involving many people because for innovation to take place, ideas need to be shared. Consumer feedback is also essential. Without innovation there would be no prosperity and no economic growth, but we don't have a good theory of how and why this happens. Hence the origin of this book, which is an attempt to put together a theory of the origins of innovation.

Innovation is about ordinary people and technology, about ordinary people and their habits and customs. Out of this interaction comes a tendency to experiment in the case of some people somewhere who decide to try something new. That experimentation is essential to the very process of innovation. It doesn't work when people only try one thing. When you talk to innovators they repeat over and over again that, in experiments, trial and error are essential to the process.

A good example of this is the invention of aeroplanes. In December 1903 there were two groups of people in the United States who were trying to achieve powered flight. One was led by Samuel P. Langley, a very intelligent, very well-placed, politically savvy, important person, who was an astronomer and secretary of the Smithsonian Institution. Langley thought he could design an aeroplane. He got a very well endowed government grant and launched his plane from a boat on the Potomac River, but it fell after twenty metres of flight. Ten days later, on an island off North Carolina, two bicycle mechanics from Ohio, the Wright brothers, managed to keep his aircraft in the air. Over the next few years they improved the aircraft enormously. What the Wright brothers had done well was experiment a great deal, which Langley did not. They had worked with gliders, with kites, with aerodynamic elements, in wind tunnels, for many years before they even thought of putting an engine in one of the devices. They solved the problems gradually, for example, how to steer in the air, how to decide on the ratio between the height and the width of the wing. They were inspired by the work of many other people, from Australia, from Germany, from France. The key is to draw on the collective wisdom of the world, to experiment, to try and try again. This is the fundamental method from which innovation emerges. It is not about a very clever person who locks himself in his office and the light bulb goes on. In fact, we tell the story of inventions badly because we celebrate a genius who has that eureka moment. But that's not how things happen. It's a gradual, collective, messy process, with a lot of trial and error. If we continue with the narrative of genius inventors who transform the world overnight, we confuse people. In fact, in a way, we hinder those who seek innovation.

The Renaissance in Italy was a fantastic time, one of those moments, the 15th century, when there were more innovations in that part of Europe. There was Leonardo, Machiavelli, Fibonacci, who is the mathematician who brings to Europe the Hindu numbers, which are a very important innovation. He didn't invent anything, he just introduced them. The key is that these are city-states, trading centres. Fibonacci comes from Pisa. His father was a merchant and he grew up in North Africa, where the Arabs counted differently. The essential element is trade, the centres open to world trade. There you are going to come up with new ideas, you are going to combine them with ideas from other places and you are going to come up with innovative ideas because the technology and the ideas we have now are combinations of technologies that already existed previously. But there is one exception, which is important. It is the fact that empires are not good at innovation. The Roman Empire did not innovate much. The same thing happened with the Ottoman Empire, with the Ming Empire in China, which prevented innovation. Why is that? Because, although empires are free trade zones, where a lot of ideas come in because of free trade, they tend to be very centralised, there tends to be a lot of bureaucracy that decides what people can and can't do. You see this clearly in the Ming empire, where every trader was given instructions about when he could travel, where he could go, what goods he could store, and so on. This stifles innovation.

Four centuries earlier, China had a period of great innovation. The printing press, gunpowder, the compass, fantastic things under the Sung dynasty, which approached things very differently than the Ming dynasty did later. It was not controlled from the centre, each city was free to run itself. In fact, it was ruled by merchants and was a series of city-states. The ideal political structure for innovation to emerge is a city-state, an agglomeration in the Renaissance in Italy, in the Netherlands a century later, or what we have seen in the San Francisco Bay Area in the United States in the 20th century. Cities are important because they are where a lot of innovation takes place. The Wright brothers even lived in a city, Daytona, which was tiny, but not in the middle of nowhere. What's more, at that time, Ohio was a place where there was a lot of innovation, many machines were invented, including the sewing machine. Cities are important, but they are small, self-governing cities, not great capitals of empire.

The institutional framework is important for innovation to flourish. It is important to have a society where people can earn money, spend it as they want, exchange ideas through the existence of media. All these institutions are very important. In Queen Victoria's England, or in 20th century America, the right incentives for innovators are the ones that were in place. So, if you decide to create a new device and you're going to experiment to improve it, you can get a reward. That can take the form of a financial reward, in the form of patents. Patents, however, do not encourage innovation. Rather, they encourage monopoly, which stands in the way of innovation. There is more innovation when patents are prescribed. So it's not so much about ownership. It has more to do with institutions that allow the exchange of ideas, of capital, of investment, of people, that people can move around and, with them, their talent. If we think about California, the most innovative part of the world, between the 1960s and the 2000s, very specific things happened there. There are a lot of people coming from all over the world, with a lot of freedom to think. But there are also other very specific things. For example, being able to sell part of the company, but keeping control. That seems to be very important. Again and again we see that, in countries, people come up with innovation, they don't design it from scratch. There is no example of a country sitting down with a group of experts and saying let's organise ourselves to be innovative, to be the best at innovation. Therefore, we are going to be prosperous. Something happens, but it is often too centralised, too directed, often the government chooses the technology.

A very interesting counter-example is China which, right now, is an extraordinarily innovative country. Not because of political freedom, but China is quite free in economic terms. If you set up a company in China, the bureaucratic hurdles are much lower than in the West. China is not an institution by rule. The institution that matters most is the institution of freedom.

We need educational institutions. The role of MIT or Stanford is extremely important, but if we think of England as an example of an innovative country, especially in the 1800s, Oxford and Cambridge are not so important. There are other universities, with important contributions from Scotland, in Edinburgh and Glasgow. But the great industrial revolution, the explosion of innovation in Birmingham and Manchester has little to do with universities. It's good to have good centres for training people and for research, but we tend to exaggerate that the starting point comes from the university because we tend to think in a model that tells us that science is generated in the university, that science is applied through investment and that leads to economic growth. It's a linear model where you start with science, you move on to technology and then you move into the business world. Sometimes it happens, but surprisingly often it doesn't work that way. You come up with a technology and then you have to explain the underlying science. Take vaccines, for example. They were invented three centuries ago and we had no idea how they worked. In fact, for centuries we didn't know how they worked and we still don't know how they work. We know something about the immune system, but we do not understand why some vaccines work and others do not. Another example is the steam engine, which was invented before the science of thermodynamics was developed. There is a relationship between technology and business on the one hand, and science and universities on the other. Sometimes it goes in one direction, sometimes in the other, and the truth is that it is very useful to have these institutions, but we should not expect them to be the source, the origin of all innovation. You put too much pressure on them if you think like that. These institutions should often be the result of innovation, not the seed of innovation.

Ordinary people can also be innovators. We must forget that only geniuses can be innovators. Often when we talk to children in school we seem to be telling them that unless they have creativity in their veins, they can't achieve anything, but that's not the case. If we go back to the Wright brothers, none of them had been to university. Their sister had, but they hadn't, but their rival, Langley, had, he had a PhD. There are many examples of ordinary people who have contributed a great deal. John Harrison, who solved the problem of determining longitude in the 18th century, was a Yorkshire watchmaker. All the famous astronomers of the time rejected Harrison because he was a watchmaker. But, in the end, it was he who solved the problem.

There is also another, relatively new phenomenon, which is that of free innovation. The normal consumer develops innovation that is used in technology, for example, parents of diabetic children who want to measure their blood sugar level remotely while the children are at school. A group of parents got together and developed software to do this and sold it to the companies that were developing the blood sugar testing devices. This is a user-generated innovation.

The Internet is also a good example. We can say that the inventors of packet computing are very important. We can say that the internet exists because computers exist. But these are minimal contributions compared to the work of millions of users who innovate little by little in how they use the internet and other people learn from these changes. There is a lot of free innovation. It's the same with languages. Spanish will be like English: words appear, words disappear, words change meaning over time. Change doesn't happen because there is a committee deciding which words are going to be used and which are not. We do it all together, it's a collective phenomenon.

The role of women in innovation is extremely important and the example of vaccines is perfect. The person who brings vaccines to Europe from Constantinople is an Englishwoman, Lady Mary Wortley Montagu, the wife of the ambassador to Turkey. She met the women of the Sultan's harem and discovered that they had a practice of inoculating themselves via saliva. When she returned to London, she persuaded the Prince of Wales to try it. It wasn't a vaccination, it was an inoculation, but it led to this very idea, to a safer version which is the vaccine. So at the origin of the vaccine are the women, not only Lady Mary, but also the harem women. In the 1930s, in the United States, there were also women who developed a pertussis vaccine, in four years, in their spare time. They were bacteriologists working in this field, but this was not their main project. They did it and everybody was surprised, nobody could believe it. But they did it and they were able to convince the world with the help of Eleanor Roosevelt.

Women have also played a very important role in the world of computing. This Grace Hopper, and other women, who developed practically all the software routines that are now so important for computing, because men felt that the important thing was the hardware, while the software was an extension of the work, what typists did, so they left it to the ladies. They were extraordinary women who developed programming techniques, subroutines and so on.

Women play as important a role in innovation as men, but to some extent they do it differently. There is not so much fuss about reward. The women to whom we owe the whooping cough vaccine never tried to make a profit, never considered patenting it, never got rich. Nor did they become famous, partly because World War II broke out while they were working on it. You don't see women getting involved in the tremendous patent court fights that often occur when male innovators are involved. For example, Morse, Marconi, the Wright brothers, spent years of their lives fighting in court defending their right as inventors against rivals. Perhaps women are not so willing to waste their time in this way.

Innovators have some common traits, but it is surprising to see many exceptions to the rule. For example, Gordon Moore, the person who has been absolutely essential to the chip, the integrated circuit, Intel, etc., has been pivotal as an innovator, has been the heart of Silicon Valley. If you think of the typical Silicon Valley neighbour, he is an immigrant, unreasonable, impatient, demanding, aggressive, very energetic, very vital, like Steve Jobs. But Gordon Moore is just the opposite. He was born in California, a few miles from where he lives right now. He's incredibly calm, friendly, not at all aggressive, he's very reasonable, just the opposite of what Steve Jobs was like. So there is a personality, there are some typical traits. But there are some essential traits. You have to be a person with a broad outlook because the inventor has to realise that there are some things that don't work, but others do, so you have to change course quickly. For example, Art Fry, the inventor of the post it. He was trying to develop a glue for paper and it turned out that he discovered that what he was doing was useless. But he also discovered that it could be used for his hymn book, because he sang in a choir. So he realised that he could change course. This is serendipity, being ready to change all of a sudden. Not everyone has this flexibility.

You also have to be willing to share. The Langley story shows that trying to do things on your own, without sharing the secret, does not work. You have to sit down with your neighbour and think together. These are the traits that innovators need. But people don't matter as much as we might think. There are twenty-one different people in the world who invented the light bulb at the same time. If none of these people had lived, someone would have come up with the light bulb. The same goes for the search engine. If we didn't have Google we would have another search engine. So there is a certain inevitability about certain innovations with which personality can be, in fact, a distraction.

The introduction of the potato in Europe is also an innovation. It is one of the examples in the book that does not refer to machines, to devices, but which represented a novelty, a new practice, a new habit, a new custom, something different. The potato is a tremendous innovation in Europe. Not only does it feed a lot of people and need little land. It's also easily stored, it's an excellent way to feed armies, so the war machine keeps going, and so on and so forth.

The arrival of the potato in Europe was very difficult. There was a lot of opposition. In England, for example, many priests denounced the fact that the potato came from Spain, which is a Catholic country. The French also refused to accept it. It was accepted thanks to the Germans, who did nothing but eat potatoes. The Prussian army was better fed than other armies. In view of this, other countries organised centralised campaigns to persuade people to eat potatoes. Even Marie Antoinette took part in this campaign, putting potato flowers in her hair.

The potato originated in Peru. It was brought to Europe by the conquistadors. It grows at high altitude in the Andes, where the day lasts the same length all year round. At first, potato cultivation was not easy in Europe because the conditions were not the same. For a while it was cultivated in the Canary Islands to acclimatise it, to change its genetics, until it could grow and thrive in the European climate.

Coffee is another innovation, arriving around the same time as the potato. The potato comes from South America, coffee comes from Africa. Again, there was a tremendous ban. When coffee came, they banned it. The rulers, the kings, were constantly outlawing coffee because the wine and beer industry didn't like this competitor and they gave very strange reasons. For example, they said that they had seen that coffee was terrible because it dried out the kidneys and poisoned the liver. That is a very early example of the precautionary principle. Another reason is because coffee was consumed in cafés. It was ground, it was roasted, it was made and people would go, sit, drink coffee, talk and sometimes talk a lot and get excited because the coffee cheered them up. So the king was criticised. That's why it was banned. In the 16th century, King Charles II banned coffeehouses on the grounds that they circulated false news.

We all think we like innovation. We remember, for example, when the mobile phone arrived, but there are many technologies that we are suspicious of. There are campaigns against them, for example in the case of coffee or genetic modification. Genetic engineering of plants is a great technology that has been enormously successful in Latin America, in North America, but in Europe it is rejected because of concerns about what is going to happen to the climate, to the earth, to human beings. These are crazy theories, but it is very difficult to overcome this opposition for three reasons. First, because of the campaigns against it by vested interests for technologies that already exist. This is the case of vintners and brewers against coffee, or pharmaceuticals against the electronic cigarette, because it has an important market with nicotine chewing gum and nicotine patches. The second reason is that bureaucracies are very cautious. Government agencies say we don't know it very well, we're going to legislate against innovation because they're worried about what's going to happen. The third reason is psychological, is that human beings are suspicious of the new, wary of it. When the new thing is very useful, like the mobile phone, what people say is that they don't care what people say because it is such a fantastic device that they don't care if they are told that the waves are going to fry their brains. In general, innovation overcomes this psychological barrier when it is useful for the consumer, but when it seems to be advantageous only for the producer, which is what happens with genetically modified crops, the consumer is less willing to adopt it.

Innovation has economic benefits. The most important is that it improves people's standard of living. So we can afford to help ourselves. The concern about innovation is its impact on employment, the possibility that it will destroy jobs. This is a concern that has been around for hundreds of years, ever since the first threshing machines, when people thought that jobs would be lost. In the 1960s there was a lot of concern about IT in factories because it would lead to mass unemployment and there would be no more jobs. But it turns out that innovation leads to new jobs, for example, software engineer or flight attendant. If there are no computers, there is no software developer, and if there are no aeroplanes, there are no flight attendants. So technology helps us in this respect. Understandably, some people are concerned about the destruction of jobs that artificial intelligence may entail. Some jobs will disappear, others will appear. But innovation gives us more leisure without destroying jobs. We see this when we look at what the average person did a hundred years ago. He dropped out of school at fifteen, died at sixty, worked sixty hours a week. He spent 25% of his life working. Today, on the other hand, a person who reaches the age of eighty has worked for forty years, finished school at 25, retires at 65, works 39 hours a week. They only spend 10% of their life at work. That is extraordinary. What this tells us is that, in this mechanised world, we can produce what others need by spending only 10% of the time and you can consume what others produce the remaining 90% of the time. This is what we have achieved through technology. There is something interesting when we think about how the world works, and that is to realise that we have been moving away from self-sufficiency over hundreds of thousands of years, so instead of everyone producing what they consume, everyone produces less and specialises. It is their job and, in return, they consume a great diversity of things, food, films, and so on. All of these things are within people's reach with just a little bit of time. So when people say that life is more boring, more monotonous, they forget the fact that most of life is spent consuming what other people have produced.

Europe has a problem with innovation in general: it has failed to spawn giants like Amazon, Apple, or Alibaba in China. It has not been able to implement new technologies, energy technologies, biotechnologies, etc., not at the same pace as other parts of the world, because it tries to manage itself as if it were an empire and the philosophy of the European Commission is harmonisation. This does not work as well as it would work to say that if it is safe in Spain, then it is safe in England, although the way you say it is different. We don't allow diversification of experimentation, which does happen in America, because it's a federal state, and it does happen in Asia because they are different countries doing different things. How do we do it in Spain? It's not going to be easy. We would have to think about different rules in different parts of the country, for example, somewhat different tax regimes, free ports in different parts of the country, reinforcing specialisation in certain technologies in certain regions.

The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of their authors.

The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.

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