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technological to a financial focus. It makes management increasingly a matter of finding the right financial investment.

This constant pressure of the tax laws, which results in a swerve from the scientific and technological toward the financial and from the long term toward the short term, is then aggravated by the antitrust laws, which probably are responsible more than any single factor for turning American industry away from building on a technological, science-oriented base and toward the financially based conglomerate.

In the world economy, even businesses that are very large on the national scene are becoming marginal, if not too small. The “big business" of 1938 or even 1958 is a small, if not a marginal, business in the 1979 world economy. Yet our antitrust laws frown on the scalingup of businesses except through the formation of conglomerates, which, however, lack the fundamental core of technological unity. This conglomerate is focused on financial rather than on technological results. Hence, investment in long-range research and in the application of scientific knowledge to economic production becomes difficult in the conglomerate. People who are good at building and running conglomerates are financially oriented people. Yesterday's business, with its unified technology, organized around a process, such as making glass, was basically technologically oriented and therefore looked to science for its future. The conglomerate, which comprises everything from tin cans and electronics to fast-food restaurants and dress shops, from airlines to banks and toys, is, of necessity, financially oriented. Research becomes a cost center rather than a producer of tomorrow's wealth.

Similar forces operate in government in respect to the interest and the investment in science. Even the most short-sighted businessman still has to focus on both the short term and long term. But a governmental budget is always myopic. It knows no time span other than the fiscal year. It has to justify allocation of resources on the basis of short-term and mostly political expediencies. This was one reason why some older and wiser heads in American science warned against dependence on government 25 years ago. Their fears proved well founded. As soon as science ceases to be an article of the faith and popular, and becomes one application of governmental funds rather than the application of governmental funds, the pressures of the budget process make science a low-priority choice for politician and bureaucrat alike.

There is also disenchantment with the results. Whether science oversold itself or whether industry and government expected miracles, is beside the point; the results that business and government anticipated when they rushed into lavish expenditures on scientific research have rarely been attained. Surely, the relation between scientific work and results, whether in terms of goods, services, or such benefits as better schools or better health care, is far more difficult and complex than either scientist or policy-maker thought.

As a result of these pressures and developments, industry and government are drifting toward what might be called a scholasticism of the budget in which the budget is a closed system, with its own absolute logic.

Both the business executive and the governmental executive proclaim their faith in research, but neither can practice it today. The mind-set of executives, whether in business or in government, and their values thus inexorably shift from what Thorstein Veblen, about 60 years ago, called “the instinct of workmanship to what he called “the spirit of business"—the right term today would be “the spirit of the budget." It is a shift from a concern with the creation of wealth-producing resources toward immediately payoffs. It is a shift in cost-effectiveness from emphasis on cost. And this trend is perhaps a good deal more pronounced in government today than it is in business. Estrangement

Let us now look at what has happened to change the mood, the mind-set, the value of American science. Those changes, or at least their underlying causes, go back to an earlier period during which the relation between science and its nonscientific patrons and customers both in industry and in government seemed to be closest, most harmonious, and most productive.

American science first began to feel uncomfortable in the traditional relationship of mutually advantageous coexistence. Or perhaps science was uncomfortable all along, but did not see any alternative until after World War II, when government emerged as its rich and more generous patron. Whereas industry had at best spent hundreds of thousands and hired a dozen scientists, the government spent billions and seemed to have an insatiable appetite for well-paid science professionals in an ever increasing number of government agencies.

Even more appealing: Government increasingly offered scientists, including a great many junior ones still at the beginning of their scientific careers, the bp

both worlds—to live in academia on a Washington income. No wonder that grantsmanship rapidly became the most prized and the most accomplished of the liberal

expecting results, government, or so it seemed, was willing to support the scientist for science's sake. Indeed anyone who in the palmy days of the early 1960's raised such nasty questions as the accountability of grants-receiving scientists for performance and results, risked being branded on anti-intellectual. And anyone who then doubted that government support would continue to grow, let alone whether government's intentions were truly honorable, was likely to be dismissed as an old fogy.

As a consequence, science became accustomed to large sums of public money, in return for which it then had to accept political rather than economic yardsticks for success and performance, the main yardstick being whether a program for the support of this or that major scientific enterprise could be sold to the governmental policy-makers; and-a logical consequence—whether this or that search for knowledge fitted the political ideologies and popular fads of this or that clique or faction. Thus American science, quite understandably, came to consider the question of economic application and economic benefits to be irrelevant and irksome, of not somewhat demeaning. Few raised the question whether political favor and acclaim might not be equally irrelevant and perhaps even more demeaning as yardsticks of scientific achievement.

But I would consider even more crucial in the estrangement from industry on the part of science the fact that, for the last quarter-century, work in graduate school has come to focus on the production of Ph.D.'s, certified for teaching in institutions of higher learning. Prior to World War II, science teaching in the university focused on undergraduates, on students who were unlikely to make science their career. In graduate school the focus was largely on the preparation of research scientists for outside laboratories, that is, in industry and, to a lesser extent, in government. The best graduates were the ones who then got the good jobs in industry; other jobs for graduate scientists were exceedingly scarce.

The “educational explosion” of the mid-1950's, of necessity, meant a shift in focus to basic theory, which is what an undergraduate teacher teaches. It meant, of necessity, a loss of close contact with industry. For one's brightest graduates no longer went into industry—and it is largely through his graduates that the university scientist stays in contact with the world outside of science. Indeed the distinguished scientist's best students did not even go into undergraduate teaching, but stayed on in graduate teaching and graduate research. The educational explosion made the scholar into an industrialist who produced graduates. Graduate school became a growth industry, and the university largely became a closed system, preparing people for its own continuation and perpetuation.

This also changed the meaning of research. Research now became something for which one gets entitlement to a specific type of job, to promotion, or to tenure. It became a ticket of admission. Whenever a piece of work becomes a ticket of admission, it becomes increasingly formalized. It increasingly focuses on satisfying requirements rather than on producing results.

Again, 15 years ago only an “old fogy" would have dared to suggest that graduate school enrollment and, especially, enrollment in graduate programs preparing for teaching in graduate school would not and could not expand indefinitely. Long after the “baby bust” of 1960-1961 has occurred-indeed long after it had clearly become irreversible-graduate schools, and especially those in science, continued to intensify their efforts to produce larger numbers of graduates trained and mentally prepared for rapid careers in the academic “growth industry," of the ever expanding university. When the university stopped expanding, these graduates then understandably felt let down. The did not blame the university which has led them on and had overpromised. They did not accept the facts of baby boom and baby bust. they tended to blame the outside would, namely, industry and government.

These developments may account for what, to the outside viewer, seems to be the most fundamental shift of all. This is the shift toward a definition of knowledge as “whatever has no utility and is unlikely to be applied.” This is not a form of Marxism, let alone social responsibility. It is incompatible with any philosophy of society or economy. And it is far more elitist, and in the worst possible way, then the so-called elitism of the traditional scholar. It is a view of science as existing primarily for the sake of academia.

The American scientist, by and large, still invokes Francis Bacon as his patron saint. But to an outside observer, and especially an outside observer located in the employing institutions other than the university itself—that is, in government or industry-it sometimes seems that American science is rapidly shifting to its own neo-scholasticism, its own closed system. Like any scholasticism, it suspects experience, despite its emphasis on experiments. It tends to reject utility, application, technology, and any kind of payoff altogether. To the outside observer it looks as if the mind-set and the values of American science are becoming incompatible with, or at least alien to, application, utility, and results. The dangers

The drift of science and industry from mutual respect and advantageous interdependence to the antagonism and alienation which characterize the last 10 or 15 years, is dangerous first to American industry. The great danger is that what I have called the "spirit of the budget" will paralyze the ability to innovate and to change.

We know very little about the actual relation between scientific knowledge and technology, but we do know that science creates both vision and performancecapacity. It would be a very poor trade-off to exchange the increased analytical capacity of the policy-maker in government and business for lack of vision, lack of will to innovate, and paralysis of the capacity to change. We face a period in which ability to change will be crucial-with the impacts of 20th-century science on our vision, as well as on our technology and our way of life, just beginning to be significant.

The danger of the drift into antagonism and alienation is, however, even greater for science than it is for industry. It is possible, and even fairly easy, to buy the application of science. By its very nature, science is public. Technology, the application of science, is usually available in prepackaged and applicable form and for a reasonable fee. This has been proved by such totally different countries as the Soviet Union and Japan. In both, investment in science has been kept low-in the Soviet Union it has essentially been focused on a few selected areas considered of prime importance for defense; and in Japan it has been reserved for areas that were considered intellectually prestigious. In both countries, the technological fruits of science were readily available by purchase from the outside world.

It is not true, in other words, that a modern developed country needs a science base. It can purchase it or import it. If American science loses the support of industry and of government policy-maker because it spurns both in the name of scientific “purity,” it may find that for long years to come the country can get along without it. Ultimately there may be a very high price to pay-but this may well be far into the future.

In purely opportunistic terms, American science can therefore ill afford to be estranged from industry. Clearly the expectation that government would turn out to be a more reliable, let alone a less demanding, patron than industry can no longer be maintained. Government may turn out to be a far less dependable and a far more restrictive patron than the economic sector would ever be. Certainly, government is likely to impose political values on science, far more than pluralistic and atomized industry would ever do, whether this is in respect to biomedical research with its politically popular fads and crash programs, in respect to the demand that scientific research be focused on projects rather than on knowledge, or in demand that what is science is what elects politicians or what pleases an intellectual mob.

Equally, it is no longer able to anchor American science in the graduate training of Ph.D.'s for college or university teaching. Colleges and universities will for long years to come be amply staffed, especially in traditional scientific disciplines. At the same time, government employment for scientifically trained people has reached a plateau, and may indeed go down rather than up-both because the pipelines are full and because spending cuts are likely to fall on areas of long-term promise—that is, on areas that employ scientists in large numbers-rather than on areas of immediate performance.

For the next 25 years or so, American science will therefore have to look to industry to find employment for its graduates. It will again, as it was 40 or 50 years ago, become the rule to expect one's ablest graduates to find employment and livelihood in industry. The alternative is a sharp curtailment of the academic establishment in science, and especially of graduate work in science, and almost certainly a drop in standards and quality. The philosophical issue

Modern free society rests on three foundations: autonomous local government as opposed to the centralized bureaucracy of enlightened absolutism; the autonomy of science as independent value and self-directed intellectual inquiry; and pluralism in the economic sphere, in which autonomous self-governing institutions in the pursuit of their own mission promote economic well-being. The three are interdependent.

Of the three, industry has shown itself capable of survival even if free society is snuffed out. In the most totalitarian society, the economic unit—that is the management of industry-is still autonomous. Whenever a modern tyrant tried to suborr.

nate the economic institutions to the all-powerful Party, he failed, and very soon. Stalin's successors learned this lesson and so today do the successors of Mao in China.

Science, by contrast, has proved to be fragile, easily subordinated to tyranny, subject to dogmatic thought control and easily swallowed up in the bureaucratic apparatus of a totalitarian system. Science, in other words, has a greater stake in the survival of an autonomous and self-governing industry than industry has in the survival of an autonomous and self-governing science.

The deterioration in the science/industry relationship may be only a symptom of far more profound changes in world view way below the surface. But the change is in itself a dangerous, a disturbing, a painful symptom that deserves being treated.

Most needed perhaps is an attitude of responsibility on the part of science. It is no longer permissible for scientists to dismiss the difficult question of the results the laity might expect from scientific endeavor and research. To say, as scientists are wont to do, that scientific knowledge is its own result beyond appraisal or measurement, could be justified when science was a marginal activity. For this is an argument with which one justifies a small luxury, or a harmless self-indulgence. We may never be able to measure scientific results, let alone to plan them. But science may-and should-be able to tell us what to expect, what to anticipate, and how to judge. Science is unlikely to be measurable. But it might hold itself accountable.

Such a change in attitude may not cure anything. But it would enable science, industry, and government to function better and more productively. And the initiative clearly rests with science. We may never be able to work out the complex relationship between science, technology, and innovation-whether in the economy, in education, or in health care. But that the scientist has a stake in the relationship and in its productivity needs to be emphasized-and most by the scientist.

But industry and the decision-makers in government also need to change their attitudes and correct their vision. They know that slighting research and long-term work is dangerous and may even be suicidal. The means to convert this knowledge into action is systematic abandonment of the obsolete, the outworn, the no longer productive. In a few businesses this is understood. There every product, every technology, every process is considered as becoming obsolete, the only question being “how fast?” And then an attempt is made to assess the amount of the new, and expecially of the new science and technology that is needed to fill the gap, accepting that of every three major innovative thrusts, one at the most is likely to live up to its promise. For most businesses, however, this is still something only talked about—if not something stoutly resisted as a threat. Most businessses-and practically all governments-seem to believe that yesterday should last forever.

The traditional relation between science and its customers in the economic and governmental system was based on mutual respect and understanding and a keen awareness of interdependence. American science must effect a return to these values however old-fashioned they now appear to be.

Senator SCHMITT. The hearing is in recess.
[Whereupon, at 1:05 p.m., the hearing was adjourned.]


FRIDAY, JULY 27, 1979


Washington, D.C. The subcommittee met, at 9:40 a.m., in room 5110, Dirksen Senate Office Building, Hon. Adlai E. Stevenson (chairman of the subcommittee) presiding. Senator STEVENSON. The subcommittee will come to order.

OPENING STATEMENT BY SENATOR STEVENSON Senator STEVENSON. This morning we continue hearings on S. 1215, a bill introduced by Senator Schmitt to establish a uniform policy for determining the rights of the Government, its contractors and employees to exploit publicly financed inventions.

For energy development, health care, and transportation improvements, civilian applications of military and space advances, and a variety of other public purposes, the Government depends largely on private industry to commercialize the technology it develops. Federal support of research and development does not eliminate the risks to investors of turning its results into marketable products and processes. Indeed, the risks are high if competitors can legally copy an invention because the Government refuses to allow a producer exclusive rights for the period necessary to recoup his investment. The principle of granting temporary rights in return for public disclosure is the foundation of the patent system. It should be recognized in most Government R. & D. grants and contracts.

But the Federal research budget is only half of the Nation's total investment in R. & D. The returns on private expenditures are no less dependent on the security of commercial rights. We therefore want to examine the state of the Nation's patent system. What is the value of patents to inventors, entrepreneurs, investors, and firms of various sizes? In what circumstances is patent protection essential or not to the commercialization of innovative technologies? What, if any, trends in the patenting process and patent litigation have diminished the utility of patents? Is the alleged weakness of American patents a deterrent to domestic innovation or an incentive to the transfer of technology abroad? Finally, what should Congress do to strengthen the patent system?

To help us answer these questions we have invited a group of distinguished inventors, investors, and representatives of the private and corporate patent bars. Our first witnesses are Tom


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