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Will Regulation Destroy a Revolution in Physics?

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Tags Global EconomyEntrepreneurshipInterventionism

A few weeks ago I had the privilege of listening to Nobel Laureate Andre Geim talk about graphene, the wonder material he and Konstantin Novoselov discovered at the University of Manchester in 2004. Graphene is a layer of pure carbon so thin it’s essentially two-dimensional, and its structure gives it a number of other notable properties: it’s the lightest known substance, the strongest compound, the best conductor of heat at room temperature, and the best conductor of electricity.

These and several other characteristics mean that graphene has enormous market potential. However, for all its scientific impressiveness, its commercial development has been relatively slow. This is not due to a scientific failure to adequately explore the technology, however: the problem is economic.

The graphene case offers an important example of the difference between scientific and economic progress. Scientific discoveries, however technologically impressive they might be, are generally useless until they can be commercialized and thereby brought to the masses. Without the market, most scientific advances fail to ever substantially improve human well-being, and many are simply consumption goods for their inventors.

What struck me about Geim’s talk was his insistence that the real problem he and other researchers face is not a lack of scientific knowledge or funding, but of entrepreneurs able to take the latest discoveries into the marketplace. This reluctance to push market boundaries is mostly institutional. University researchers have little incentive to commercialize their ideas, so it’s up to entrepreneurs to shoulder the burden of market uncertainty by coming up with applications for new knowledge.

Unfortunately, many are unwilling to do so. European entrepreneurs, for example, are well-known for being averse to risky ventures, preferring instead to imitate already-proven technologies. Their attitudes are due, among other things, to a harsh regulatory environment, which encourages playing it safe rather than pursuing original, daring projects likely to spur healthy growth. And graphene, although promising scientifically, is considered too great a risk by investors in the UK and Europe.

In the US, on the other hand, the oppressive regime of intellectual property law is one factor preventing graphene-based technologies from catching on. Geim has stated several times that US companies refuse to commercialize graphene without first being guaranteed defensible patent rights. The culture of patenting encourages firms not to take risks without first acquiring protection from competition, which in turn stifles the adoption of radically innovative technologies. For his part, Geim has been hesitant to patent his discoveries, although under pressure, he’s recently opted to acquire a series of basic patents on his work.

In any case, the message here is that economic progress doesn’t happen without institutions that encourage experimentation and entrepreneurship. Without freedom in ideas and the profit motive, entrepreneurs will be unable and unwilling to spread the benefits of science across the globe, and countless advances will be doomed to obscurity, when they could be used to improve human life.

Matt McCaffrey, former Mises Research Fellow, is assistant professor of enterprise at the University of Manchester.

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