INSTITUTIONAL AND EVOLUTIONARY METHODOLOGY AS THE BASIS FOR A NEW ECONOMICS OF SCIENCE
abstract

The «old» economics of science, that was being developed in the Cold war context, was predicated upon the argument that science was a public good produced suboptimally by the private sector. Therefore the need for government subsidies was emphasized. Another group of economists adhered to the view that scientists’ behavior was to be modeled as that of rational utility-maximizers driven by selfish interest. An important feature of both lines of research is that they almost completely ignore a possible impact of economic factors upon the very process and the final shape of scientific knowledge elaborated. The «old» economics of science was part of the economics of innovation and technological change in which the transformation of  fundamental science’s results into applied research and further into new products and processes was regarded as a linear, unidirectional process.

In the recent post Cold war decade, the context of scientific and innovation activities in the countries possessing the strongest scientific potential has significantly changed. The importance of scientific knowledge for economic development has escalated; at the same time fiscal constraints and reduced defence expenditures have led many governments to cut back on R&D expenditures. Private sector R&D outlays are downsized as well. Concomitantly, strengthening a country’s international competitiveness, rather than improving defense, becomes the major rationale for the support of scientific sector.

The character of research within the economics of innovation has also changed. The innovation process is no longer regarded as a linear and unidirectional one, but rather as the process of interaction among various participants of the innovation system, including research organizations, firms and the government. This interaction is shaped and structured by formal and informal institutions specific to the particular country. This approach underlies the research on national innovation systems. Institutional and evolutionary economics serves as the methodological basis for this line of research.

The concept of the national innovation system provides a case for a more active government technological policy, going beyond subsidies and tax incentives. In the leading OECD countries, active interaction among the private sector and the government-financed research organizations in carrying out R&D is being encouraged; the share of R&D funding distributed on the competitive basis is on increase; calls for guaranteed payoff from investments into science intensify. Thus results of scientific research are increasingly taking the form of commercial products.

Unfortunately, whereas the methodology of the economics of innovation has undergone a considerable change, the public good theory and rational choice models continue to reign in the economics of science. In this paper, it is especially important to us to stress that the reigning methodology does not make it possible adequately to analyze the production of scientific knowledge, although the need for such an economic analysis is stipulated by the intensifying commercialization of science. One has to admit that while the innovation process has ceased to be a «black box» for economists, the scientific process to much extent remains to be such. Since academic research is an inherent element in modeling the innovation process (for instance, in «new growth» theories), the inadequate economic analysis of science may significantly lower the explanatory power of the economics of innovation.

The following argument is presented in this paper: the commercialization of science may lead to the weakening of cultural institutions that make science qua social system viable. As a result, strange as it may seem, science’s productivity and usefulness for society and economy may decrease rather than rise. To substantiate this argument, we make use of some of the methodological elements of the institutional and evolutionary economics. In this paper, we also draw upon the ideas developed by economic anthropologists (B. Malinowski, K. Polanyi), sociologists of scientific knowledge (S. Fuller, B. Latour, A. Pickering), and economists of culture and art (A. Klamer, D. McCloskey). The following aspects of the «marketplace of scientific ideas» are analyzed in the paper: the process of value formation, the consequences of changes in motivation and value systems underlying decision-making, implications of bounded rationality, positive feedback and lock-in situations, institution-filtering. Examples from the experiences of OECD countries’ and Russia’ scientific communities are utilized as illustrations.

The methodology of institutional and evolutionary economics as a conceptual basis for the new economics of science will enable us to look from a new angle at the changes in the major science systems, first of all in Russia’s. We also attempt at formulating some of the features of science policies that arise from the utilization of the above methodology. We compare these features with the approaches to science policy practiced in Russia and OECD countries.

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