More on Scale and Innovation

PPI’s scale and innovation paper continues to attract discussion. Irving Wladawsky-Berger,  a former leading tech exec at IBM,  discusses the paper, and concludes that

Large companies that make the successful transition to an open, collaborative style of innovation will emerge as effective ecosystem leaders.  Such companies will find that their scale is a major asset for the kind of complex systemic innovation that will be increasingly important in the decades ahead.

At the National Review, Jim Manzi addresses the issues I raise in my paper:

I’m glad to see somebody on the left arguing for a modernized view of antitrust, but I think that what is essential if we are to do this is to reduce simultaneously the political power of large companies to stifle competition, as manifest in manipulation of patents, financial regulation, safety rules, and the endless list of regulations, subsidies, and tax breaks that govern the modern economy. This is similar to what Reihan called in his post “completing the neoliberal revolution.”

The market process is imperfect and takes time, but in my view is preferable to one in which we allow large companies (which will always have an advantage in lobbying and compliance) to use the political process to protect their position, which we then counter-balance with antitrust regulation.

At Mother Jones, Kevin Drum  responds to Manzi by citing my paper, and going on to say:

One of these days, when the Republican Party returns to sanity and Democrats feel like they can safely sit across a table from them again, I suspect that this will be a fruitful area for conversation. Obviously conservatives are always going to have a more expansive view of deregulation than liberals, but if everyone is being honest this is the kind of regulatory reform that can fit the agenda of both sides. For a variety of reasons of political economy, liberals dislike entrenched corporate power and should be eager to dismantle regulations and tax breaks that protect the interests of big corporations and put up barriers to entry that keep smaller companies at bay. Likewise, conservative dedication to the principles of competition and free enterprise should lead them in the same direction. There won’t be any Kumbaya moments here, just a lot of grueling political horsetrading, but there’s still plenty of scope for agreement here. And it’s the only way this stuff will ever happen. Neither party alone will ever be willing or able to stand up to the tsunami of corporate lobbying that stands in the way of this kind of reform.

We’re years away from anything like this taking place. Democrats will have to decide that deregulation per se isn’t a dirty word, and Republicans will need to edge away from the tea party cliff and agree to genuinely deregulate in the interests of competition, not their corporate masters. Maybe it’ll happen someday.

Great stuff.

Trackbacks

  1. […] me a bit of the Michael Mandel paper (via) on how innovation requires large corporate investment. Here’s Mandel with his similar but […]

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