The Past Speaks

The conventional wisdom is that giving inventors patent protection encourages technological progress. Without the ability to make money from a valuable patent, why would anybody spend thousands of hours trying to invent a better mousetrap? The contrarian view is that patents actually slow down the rate of technological progress.

Needless to say, this is an important debate with massive implications for one of the most important realms of public policy. It also have implications for the study of economic history. The experience of Britian during the Industrial Revolution provides evidence both for and against the view that patents encouraged economic growth. The lively scholarly debate on this issue, which centres around Watt and Boulton’s controversial patent extension for their steam engine, is discussed in a recent blog post by  Dick Langlois.

Professor Langlois writes:

“I found the Selgin and Turner argument about Watt persuasive. They are certainly right to make fun of the idea that the Boulton-Watt patents retarded the industrial revolution by ten years, especially as Nick von Tunzelmann has calculated, in a Fogel-like exercise, that if Watt had not invented the improved steam engine in 1769, British national income in 1800 would have been reduced by only 0.1 percent. Nonetheless, I remain sympathetic to the general thrust of Boldrin and Levine’s skepticism about patents, especially wide-scope patents. In automobiles, the famous Seldon patent protected the very idea of an motor car powered by an internal combustion engine. Although it’s hard to say how much if at all this retarded innovation in automobiles (before Henry Ford rose up to demolish it in court), one would certainly be hard pressed to argue that it helped innovation in any way.”

See also Selgin, George and Turner, John L. (2009) “Watt, Again? Boldrin and Levine Still Exaggerate the Adverse Effect of Patents on the Progress of Steam Power,” Review of Law & Economics: Vol. 5 : Iss. 3, Article 7