Innovation does not come from the free market from "summary" of 23 Things They Don't Tell You About Capitalism by Ha-Joon Chang
The idea that innovation does not come from the free market may sound counterintuitive at first. After all, the prevailing belief is that competition in the market drives companies to innovate in order to outdo their rivals and capture market share. However, this is not always the case. In reality, the free market does not always encourage innovation, especially when it comes to long-term, high-risk research and development projects. This is because companies operating in a free market are often focused on short-term profits and shareholder returns. As a result, they may be reluctant to invest in projects that may take years to yield results or that carry a high risk of failure. Moreover, the free market is not always conducive to collaboration and knowledge-sharing, which are essential for innovation. Companies are often more concerned with protecting their intellectual property and gaining a competitive edge over their rivals. This leads to a lack of information sharing and collaboration, which can hinder the progress of innovation. In contrast, innovation is often driven by government intervention and support. Governments can provide funding for research and development projects that the private sector may be unwilling or unable to undertake. They can also create policies that encourage collaboration and knowledge-sharing among researchers and companies. Furthermore, government intervention can help address market failures that may impede innovation. For example, the government can provide incentives for companies to invest in new technologies that have positive spillover effects for society as a whole, such as clean energy or healthcare innovations.- While the free market plays a role in driving innovation, it is not the sole or even the primary driver. Government intervention and support are often necessary to foster innovation, especially in areas that require long-term investment, collaboration, and risk-taking. By recognizing the limitations of the free market in promoting innovation, we can create a more balanced and effective approach to fostering technological progress and economic growth.
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