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ENGINEERING AS A SOCIAL ENTERPRISE Technology and Government JOHN W. FAIRCLOUGH Technology's positive contribution to society grows remorselessly, and the engineering enterprise provides an essential contribution in terms of the functioning of the market. One need only compare the success of the market economies in bringing new technologies on stream with the dismal record of the East European economies to see the deadening effect of the ideological approach. This paper examines the factors that influence the way governments handle technology. My experience in both the public and the private sectors has led me to some conclusions about the role of government in the encouragement and exploitation of science and technology and its contribution to the collective wealth of nations in three central areas: the interaction between industry and science, the role of government as regulator and major procurement agency, and the influence of financial institutions and economic factors. Moreover, the role of public opinion in shaping decisions in each of these three areas implies responsibilities for scientists and engineers to become better communicators about their work. INTERACTIONS BETWEEN INDUSTRY AND SCIENCE The fundamental objectives of national governments are the security and the prosperity of their citizens. This applies to postindustrial economies in the last decade of the twentieth century just as it did to countries with democratically elected governments a century ago. Today, technology is still seen as a liberator to the same degree that
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ENGINEERING AS A SOCIAL ENTERPRISE it replaced the inhuman factory conditions in the sweat shops during the first industrial revolution. It has the power to transform routine, boring, and dangerous tasks, elevate the individual to loftier pursuits, and save lives. But technology's contribution to corporate results, rather than its enhancement of quality of life, is now widely perceived as its prime task. Economics seems to have taken over as the driving force of technology, with productivity and profitability assuming the dominant role. The technological and scientific vitality of a country is of increasing concern to governments. It is no coincidence that the electorate judge governments on their economic record. To get elected, let alone reelected, governments need comprehensive policies in education, training, health care, defense, environment, and transport infrastructure —sectors where technology and its application play a fundamental role and are seen as a panacea. National governments, like companies, face the reality that economic competitiveness in the international marketplace is essential, and not just for countries such as the United Kingdom, which have been traditionally dependent on trading. The principle applies across the board. It affects high-technology products as much as traditional manufacturing industries. Technology is the common thread determining success or failure in the service sector, an important component of all economies, and manufacturing. Economic prosperity, technology, and quality of life are accordingly inextricably linked. In these circumstances, it is now accepted wisdom that the successful exploitation of technology is a prerequisite for strong economic performance and the generation of wealth and resources needed to provide services demanded by taxpayers. It is equally observable that governments are becoming more active in examining initiatives to support the formation of competitive technologies and assessing the relative resources required for science. Even the United States government, which has tended to play a somewhat limited role in formulating technology policy, is considering such initiatives. There are generally thought to be two main fountains of technology: scientific discovery and industrial innovation. In my view there is a third, possibly even more important mechanism: the flow of new ideas between industry and the academic community. This relationship is not without tensions. The interaction will prosper only if there is a receptive attitude by industry and fertile ground for academic initiative. Industry has to foster such an attitude by posing academics with fundamental scientific challenges that contribute both to the future success of industry and a better targeting of academic work. Absent this mutually reinforcing process, the academic community will be tempted to undertake work that bears little relevance to industrial commercialization. The question of a nation's ability to pay for such an unselective approach to technology innovation cannot be ignored. In my view, industry sometimes fails to recognize its own self-interest in this regard by neglecting a responsibility to specify its requirements for
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ENGINEERING AS A SOCIAL ENTERPRISE scientific and technological research in such a way that maintains and develops academic excellence. Corporate endowment of universities and institutions is to be welcomed. But many industrial chairmen believe their duty extends no further than charity. This surely is subsidiary to ensuring the existence of an intellectual partnership, which is infinitely more valuable to both universities and industry than mere charity alone. Governments' first duty is to ensure that academia is awarded its fair share of public money with complete freedom to pursue intellectually interesting fields of scientific inquiry. Governments then need to be satisfied that resources for targeted work, where commercialization is the goal, are supported by sound industrial underpinning where setting priorities is essential for judging the relevance, rather than scientific excellence, of the proposed research. In the United Kingdom, outside chemistry and the life sciences, we have a standoff: industry says it cannot rely on academia because of lengthy time horizons and an inability to apply multidisciplinary skills or work to a schedule; academia's reaction is to claim public money to work on every promising field! Within industry conflicting pressures include the tug toward self-sufficiency in technology to protect long-term competitiveness and the temptation to renounce substantial in-house research and license know-how and technology. The inescapable fact is that almost no company can expect to master directly all the technologies to which it needs access. It must depend on the flow of ideas, patents, and intellectual property to ensure a complete portfolio. Only by balancing these conditions can international competitiveness and a margin of superiority be achieved. All this underlines the fundamental importance of an effective relationship between industry and the academic community. It is partly the responsibility of government to ensure that this constitutes a virtuous circle of cooperation, not a dialogue of the deaf. However, governments cannot enforce a change of attitudes; it is up to the participants themselves to be mutually reinforcing. The lead must come from industry, not simply with money, but with a statement of future needs expressed in terms that capture the imagination of academia. ROLE OF GOVERNMENT AS REGULATOR AND MAJOR PROCUREMENT AGENCY Governments purchase huge quantities of equipment and services. In doing so they can provide leadership and inspire the development of new technology to serve their requirements while also reinforcing the competitiveness of their national industries. At the same time they may unwittingly act as a cushion for complacent industry. The “beltway bandit” is not a species unique to the United States. There may be something of a contradiction between governments' natural caution in pursuing value for money and the element of risk taking essential
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ENGINEERING AS A SOCIAL ENTERPRISE to promoting technological innovation. Although governments need to guard against buying unproven and potentially unworkable technologies —the graveyards are full of monuments to such white elephants—they also need to avoid simple dependence on “easy” or obsolescent technology. The thesis that defense procurement is a primary source of commercial spin-offs in the civil sector has been largely exploded. Indeed, technologies that underpin defense systems are increasingly derived from civil development work where the necessary economy of scale for introduction to the marketplace obtains. New materials and electronics, for example, are rarely driven by defense specifications even if certain products need to be custom designed. The new situation in Europe seems likely to bring further changes in the defense technology sector as the imperative for companies to diversify reduces the technology push from defense to civil applications. That is not to say that the flow of technology from defense to civil applications should be underestimated. The record of the Defense Advanced Research Projects Agency in the United States shows what can be done. This organization has made an admirable contribution to the recognition of dual-use technologies. This trend toward developing dual-use technology, however, has put some governments in a difficult position. For example, in the United Kingdom the Ministry of Defence is required by Parliament to show that every penny is exclusively devoted to the defense purpose, making it hard to be associated with dual-use technologies. This is an area where governments need to step up their efforts. Regulatory Environment One of the most potent ways governments can stimulate technological innovation is by creating a favorable regulatory climate. Regulation is intended to protect the individual, to ensure effective competition, and to control the social consequences of industrial processes. The control of emissions from large power generating plants or the replacement of polluting processes by cleaner technologies are areas where government influence is seen as positive and benign. It is no coincidence that those countries with tough environmental regulations also have well-developed environmental technologies. Information technology and electronic communications services offer another example of technology development sensitive to regulatory frameworks. When the first generation of mobile telephones was developed in Europe, a series of incompatible systems were introduced in 12 European Community (EC) countries. Agreement on a common standard for the next generation will mean freedom of speech from the Atlantic to the Urals will take on a new and literal connotation! It is also notable that liberalization or deregulation of electronic communication in the United States, Japan, and the United Kingdom has led to greater expansion of telecommunications and data networks than in France or Germany, where
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ENGINEERING AS A SOCIAL ENTERPRISE state monopolies maintain more rigid control. The whole area of standards is one where the is EC taking on a key role through collaborative prenormative research by the member states. Much of the EC R&D Framework Programme is devoted to establishing common standards in such fields as telecommunication and computing networks, new materials and their routine testing, medical drugs and pesticide testing, and so on. A European Single Market will be achieved only through standards normalization, and the EC is already proving to be a highly effective negotiating forum and enforcement agency in such work. Governments also need to regulate to take account of public opinion. In doing so, however, it may act as a brake on innovation. Nuclear energy is a classic example. Following Three Mile Island, Chernobyl, and other accidents, the French, and to a lesser extent the Japanese, have retained confidence in a large-scale nuclear energy program. Elsewhere the termination of major investments in nuclear capacity, despite its attractiveness in terms of CO2 emissions, has been the direct consequence of eroding public confidence in a technology and its management. Governments alone are probably powerless to reverse such attitudes. It is the responsibility of business enterprises and the engineering profession to match public expectations of inherent safety design and to show that this dominates the design selection rather than the strictly technical need for maximum efficiency. In a paper entitled “Engineering in an Age of Anxiety,” Alvin M. Weinberg (1989) discusses this subject with great eloquence. It will take many years for the nuclear power industry to recover from its relentless devotion to the kilowatt-per-dollar equation rather than the pursuit of public confidence in fail-safe measures. By contrast, public attitudes toward biotechnology and genetic manipulation are still being formed. We are at a crucial stage. Although we have seen considerable progress with the application of these techniques for diagnostic kits, there is growing fear of these genetically engineered materials entering the food chain either directly or indirectly by herbicides and pesticides. This public concern is probably more highly developed in Germany where, for example, a major German company had to abandon a significant investment in a biotechnology process to produce insulin for human application. A license to operate the plant was refused by government following a strong expression of public concern. The technologies needed to modify a DNA sequence, including a germ line, of all living things is rapidly being developed. The potential for good is enormous. Equally the risks and dangers are profound. Powerful moral and ethical questions are also being raised. Genetic engineering could well follow nuclear energy down the slippery slope of disapproval. The scientific and engineering communities themselves must address these issues, and there is a case for self-regulatory bodies. These could add to build public confidence that genuine control is at work. But statutory regulation seems the more probable outcome. The cue for such government intervention might
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ENGINEERING AS A SOCIAL ENTERPRISE well be in response to an accident or individual professional malpractice. A more restrictive regulatory climate imposed in the interest of public safety would be to the detriment of scientific and technological aspirations. The solution may therefore lie in our own hands to win the necessary public confidence by leading this debate rather than following public opinion in a defensive way. Governments face an increasingly harder task in legislating wisely on these issues and simultaneously providing a stimulus to technology. Simple solutions with universal application are unlikely. Religious factors, varying historical experiences, and national concerns make bioethics a minefield. An informed government, technically literate public servants and an aware public opinion are indispensable. Without these, our ability to develop and apply new technologies will be even more difficult. Major Government Programs There are other ways to stimulate innovation. The French call them “les grands programmes,” major national initiatives. These may fit at any point on the spectrum from basic science through defense and industrial ventures such as the Moon and Mars program, space plane, nuclear fusion, decoding the human genome, a superconducting super collider, or the Strategic Defense Initiative. Some of these projects pursue national prestige through scientific means. All require vast resources and time scales that stretch well beyond a governmental or presidential mandate. As superpower competition is replaced by cooperation, the three most powerful economic blocs—United States, Japan, and the European Community —will look for ways to avoid and defuse competitive tensions, and most likely take on programs with an international, and intercontinental character. Competition between researchers as a way of stimulating vigorous debate is one thing. Duplication of vastly expensive facilities is another. The resources required for the projects just mentioned are financial and technical investments no single country can afford alone. The obvious advantages that stem from broader international collaboration must be followed up. There are welcome signs that all the leading technological powers, including the United States, are beginning to realize this is the only logical direction to take. The increased complexity of these international projects will bring increased tensions to the technical community and new management problems. What is needed is a mechanism to bring together the principals from each major industrial country to review and share their ideas at an early stage of gestation for these large projects. Without such a mechanism, countries are making proposals for collaboration at a late phase in the planning process and creating the impression that the collaborator is being asked to help pay but without having sufficient opportunity to contribute to the setting of goals. There is need also to set up institutional arrangements to enable collaborators to participate in the major decisions during the life of the project. The arrangements at CERN are a good
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ENGINEERING AS A SOCIAL ENTERPRISE example of a management system that works well. In the United States, an encouraging move is that of the Carnegie Commission on Science, Technology, and Government, which in February 1991 invited science advisers from the principal industrial nations to meet for informal discussion. Government as the Champion of Technology The close coupling between technology, economic performance, and quality of life encourage some to believe that government should go beyond funding basic science to also subsidize industrial product development. So-called enabling technologies are cited as examples where government intervention is justified on the grounds of international competitiveness. Debates over the desirability and extent of support for high-definition TV or the semiconductor industry are not unique to the United States. All governments aim to maximize the return on public investment in R&D, notably through technology transfer to industry. The history of the last 30 years shows that such intervention needs to be sustained over a considerable period if it is to succeed. The Japanese ability to maintain a political and corporate consensus on technology issues has directly contributed to their success. Such continuity is less likely where there are frequent changes of government or ministerial responsibility, or where powerful lobbies can throw established policy off course because a genuine strategy is lacking. Politicians do not inherit the initiatives of their predecessors easily; they wish to put their stamp on things, generate their own initiatives. They find it difficult to accept changes of direction to lit emerging understanding of a new product or technology. My experience in industry taught me that starting new ventures is easy; stopping them is hard. In government it is virtually impossible. I have come to believe that government sponsorship of technology is fraught with difficulty. If the desired results are to be achieved, then great care is needed to develop a strategic commitment by government and industry and, at the beginning of the sponsorship, to be clear on the terms of the support and the period over which it will be provided. In an ideal world governments would not attempt to pick either technological or industrial winners, a job for which they are ill-qualified. Instead they would sponsor high-quality academic science and provide fiscal incentives for industry to invest. As already advocated, cross-fertilization between industry and the academic community must be encouraged and strengthened, and include the use of public funds. The importance of small and medium-size companies in all economies is universally accepted, and with government support they can advance their R& D, manufacturing, and marketing skills.
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ENGINEERING AS A SOCIAL ENTERPRISE INFLUENCE OF FINANCIAL INSTITUTIONS AND ECONOMIC FACTORS The successful commercialization of a new technology involves taking technical and financial risks. If shareholders have confidence in the ability of their management to deliver profitable new technology, they are likely to adopt a more patient attitude toward their investment. The attitude of financial institutions toward technology investment is therefore crucial. In Britain there has been much debate about the status of “patient money,” the effect of mergers and acquisitions, often pan-European, and the need for demonstrably strong management. Despite the protestations of the financiers, there remains widespread belief that the long-term commitment required to pull leading-edge technologies through to commercialization is incompatible with the demand for the best quarterly corporate results and the buy and sell recommendations of the market analyst. Yet, the structure of equity holdings varies considerably from country to country. In the United Kingdom, and to some extent in the United States, pension funds and investment trusts own much of industry, and actively trade their portfolios. In Germany and Japan, the industrial banks and conglomerates control a wide range of industry acting more as owners or active partners than third-party investors. Whatever the balance of advantage between the two approaches, the need for financial backers to understand the full importance of development work associated with technologies is undeniable. An ethos that some attribute, possibly unfairly, to business schools such as Harvard University may also feed the tendency to short-termism. This appears to emphasize making money out of money rather than making profits from products that respond to or create a market. The creation of new and useful technologies do not fit happily with quarterly results mania and balance sheet myopia: there are no financial shortcuts to new technologies. If consistently better results are required, the answer is usually to employ competent and well-trained people, develop the best management, and build the most competitive technology. Governments can influence this position through fiscal policies, and through intervention where they perceive market failure. But in my experience, when sound company management earns the confidence of financial institutions these same institutions both expect longer-term R&D investment and are prepared to underwrite it. Foreign Investment The United Kingdom is a major foreign investor. It accounted for more than 30 percent of total foreign investment in the United States at the end of 1989, more than $100 billion. Not surprisingly, the United Kingdom also strongly
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ENGINEERING AS A SOCIAL ENTERPRISE encourages foreign manufacturing investment in Britain. Government policy toward inward investment can stimulate job creation and economic growth. The British government believes that such benefits far outweigh the downside. There have been calls in Europe for stronger defenses against foreign investment, notably Japanese, on the ground that it constitutes an industrial Trojan horse and merely strengthens the competition facing national companies. The United Kingdom has always resisted such protectionist pressures. In my view inward investment can be the vehicle for introducing advanced technologies, better management techniques, and enhanced market responsiveness from local suppliers: a spur to national companies, not a threat. In time, it is likely that more foreign companies would extend their commitment to include R&D activity in their portfolios as many large U.S. multinationals already do. If this becomes a mutually beneficial process, there is no reason to oppose such a trend. But it must not be used simply as a guise for exploiting local academic research labor and expertise. There must be a genuine two-way street. Current British government policy is designed to foster this. The Globalization of Technology The ability of governments to control technology policy has always been limited. It is almost certainly declining. The term “globalization of technology” has been coined to describe the worldwide flow of ideas and their application as processes and products. Gold used to be the currency of mercantile business. Arguably it has been supplemented or maybe even replaced by a new commodity—technology. Borders have ceased to have much significance in the exchange of technology, as the policemen of intellectual property rights will confirm. Governments are passive observers rather than active players in this process. Globalization is most striking in industries where economy of scale is the lifeblood of competitiveness, and the semiconductor industry provides the most extreme example. With a minimum stake of $0.5 billion demanded to tool up a new generation of memory chips, it is impossible to rely on a single-country market, even one with the appetite of the United States. In such a capital-intensive and high-risk industry, the only logical solution is to go global. Although a truly global corporation has yet to be born (even IBM for all its international credentials is still at heart an all-American child), the dynamics that dictate that most high-technology industries look to the international horizon is firmly established. Governments have to respond to that new environment. In semiconductors both the U.S. and Europe have established collaborative programs, Sematech and JESSI, to underpin their industries' competitiveness. More widely, the EC is devoting increasing funds to collaborative R&D. Possibly more important, are joint programs encouraging companies and academic centers to look for
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ENGINEERING AS A SOCIAL ENTERPRISE transborder research partners. The belief of companies and business executives that the European Single Market will materialize creates something of a self-fulfilling prophecy. It has taken strenuous efforts by the EC to convince the U.S. administration and others that the Single Market does not equal the construction of fortress Europe. A similar message for its R&D programs should be stressed. This is not an attempt to shut out the rest of the world. The amounts involved are still small: the total EC R&D budget is less than 5 percent of the total research expenditures by the 12 member states. But there is a clearly rising curve. Like the United States, Europe believes that technology holds a vital key to future industrial competitiveness, and the member states of the EC are backing that belief in a legitimate fashion. There is now a need to establish an EC-U.S. dialogue on these issues to avoid potential conflicts in the technology sector spilling over into damaging trade disputes. Individual governments will have less control over technology issues in the future, but collectively they will have increased responsibility for setting and monitoring an adequate framework for the exchange of technology. PUBLIC UNDERSTANDING OF SCIENCE AND TECHNOLOGY John K. Galbraith once commented, “The enemy of the market is not ideology but the engineer.” Galbraith's somewhat scathing view shows that engineers and scientists need to overcome widespread distrust. There are ample grounds for believing that we are witnessing a declining public confidence in science and technology and that it is driven partly by a lack of understanding and partly by fear of the unknown. The suspicion that new and menacing technologies are going to be imposed without consent is a natural consequence. Scientists and engineers must accept a considerable share of the responsibility for such a situation, as politicians themselves are not the prime movers of public. The news media unsurprisingly highlight dramatic events, be they in space or medical advances or the failures of technology, and the tendency will always be to accentuate the negative. The scientific and engineering community must face this challenge. It cannot expect government to do the work for it. Whether it is human embryo research, the search for an AIDS vaccine, global warming, or the confidentiality of electronic data, the public has the right to expect an explanation of where science and engineering are taking society. The onus is on the technologists to make their arcane activity comprehensible to a broader community. The excuse that only Nobel Prize minds are capable of the necessary understanding is no longer acceptable in a world where individual scientific disciplines are becoming minutely fragmented. The government role in all this is to encourage scientists and engineers to be better communicators with politicians, public servants, and the general public. Although the academies and institutions should take the lead, there is a case for
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ENGINEERING AS A SOCIAL ENTERPRISE requiring recipients of publicly funded research grants to undertake some form of educational work, in the widest possible sense, at the conclusion of their research. The need to boost the image and credibility of engineering has never been greater especially as advanced economies face difficult demographic shifts and a decline in the numbers of science and engineering graduates following a career in their subject of study, even in Japan. SUMMARY Technology and the well-being of society are inseparable. The innovative character of a nation will largely decide its future and affect the quality of life for its inhabitants. But it is becoming increasingly unlikely that a single nation can expect to excel in all fields of technology. Once a technology becomes established, global forces take over. National competitiveness will depend more and more on the processes that create and apply superior technologies developed from a sound scientific foundation. Government should devote public funds to good academic science and the formation of technologies. But government commitment to developing patently superior capability must be related to those areas where industry itself shows commitment. The peer review processes within academia should perhaps take more account of this factor in judgments on the allocation of money. Governments should encourage inward investment by companies that are participating successfully in global technologies. This provides a direct economic contribution and stimulates national industries. Growing public unease about science and technology puts an urgent responsibility on scientists and engineers to communicate widely and in terms that can be understood, particularly by the general public, who ultimately hold sway over governments in any democratic society. The creation of a national body within the science and engineering profession to monitor and set professional standards of ethical and moral conduct might ensure the freedom to do good, useful science and push technology forward. It would also act as a confidence building measure. There are a growing number of megaprojects in science and technology that are so costly that it is unproductive to continue, purely for reasons of national prestige, to duplicate the capital investment needed. There is a growing realization that governments must create the political conditions for a radical shift to greater international collaboration. It should be strongly encouraged. The following quotation vividly describes the challenges we face: There is nothing more difficult to carry out, nor more doubtful to success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all who profit by the old order and only lukewarm defenders in all those who would profit by the new order. This lukewarmness arises partly from fear of their adversaries, who have the law in their favor;
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ENGINEERING AS A SOCIAL ENTERPRISE and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it. Was the author Keynes, Friedman, Drucker? It was Machiavelli in 1513. REFERENCE Weinberg, A. M. 1989. Engineering in an age of anxiety. Pp. 49–59 in Engineering and Human Welfare. Washington, D.C. : National Academy of Engineering.
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