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The article presents a discussion on the paper titled Determinants of Inventive Activity written by Jacob Schmookler and Oswald Brownlee. Inventive activity may be very much affected by other economic variables, and moreover, it is likely to lag rather than lead some of the more important ones. However, the main new point of the current paper, while related to the previous work, is really different. In this paper, Schmookler and Brownlee present the hypothesis that the rate of inventive activity, measured by patents granted, depends on expected absolute returns, derive from it the implication of a positive correlation between the number of patents and the size of the industry, and find such a correlation holding for a substantial number of years. The author of this paper argues that the implication tested is in fact consistent with many alternative hypotheses. A much stronger implication could be derived from their assumptions and tested by the same data, but that the available data do not support either implication strongly, nor are they suitable for testing them.

Although science and business are distinct, the operations of businesses produce data of scientific interest, and businessmen are willing to pay scientists to answer certain kinds of questions. On the other hand, scientists working on their own initiative discover things which business can profitably use. Thus, both for the economy and for science, there exist autonomous changes and induced changes. It requires care in formulation to avoid imprecision in thinking. Research, as used in the paper, will refer only to a flow of new statements about the natural world. Invention, as used in the paper, consists of a flow of prototypes of articles which have never been made before, or processes which have never been used before. Development, as used in the paper, means a flow of instructions which enable the construction and equipment industries to build fixed plant of kinds never used before and also enable the personnel of these plants to operate them when finished. It may also make it possible to use existing fixed plant to make articles unlike those they had hitherto made.

The article presents an economic research on determinants of inventive activity. The earlier papers on this topic have shown, contrary to common expectation, that taking one industry at a time, inventive activity pertaining to an industry's capital goods appears to follow rather than lead investment. Once this lead-lag relationship is taken into account, the evidence suggests that capital goods invention in a given industry varies directly with the volume of investment in that industry. This relationship seems to hold in both the long run and the short run. The results just described raise but do not answer the question of whether industries with more investment also have more capital goods inventions. Conceivably, while inventive activity may rise and fall with the rise and fall of investment within a given industry, the trend levels about which the fluctuations occur may differ substantially between industries. This paper explores this problem. Presumably gross investment in an industry is positively correlated with value-added and net investment with changes in value-added.

The article presents discussions by economists on some papers that are published in the May 1, 1953 issue of the journal "American Economic Review." The author in this article discusses economist Yale Brozen's paper, which covered many aspects of the study of the direction of technological change. The author states that his systematic presentation set the matter in clear perspective. The blend of economic analysis with supporting illustrative data, presented by Brozen, is convincing. The author also states that his remarks largely involve qualifications that he would add to the discussion or matters on which he would place a somewhat different emphasis. The author's comments cover three principal points. The first of these concern Brozen's conclusion that technological change is largely endogenous within the economic system and that, perhaps, economists should incorporate technological change as an endogenous variable in their models. This conclusion could come, in part, from the use of a concept of technological change, which includes both the introduction of known but previously unused techniques when factor supplies become favorable and the development of entirely new techniques. The selection of the best combination of factors from the production function in the light of relative factor costs is, of course, entirely an economic matter and as Brozen implies, has for a long time been a part of economic models.

In this article the author comments on the research papers on technological inventions and economic activity put forth by economist William D. Nordhaus and K.J. Arrow. He argues that Nordhaus' empirical testing of the relation between inventive activity and the growth of productivity has not been positive. The author points out that the number of patents taken need not be a good measure of inventive activity. Nordhaus' second test, the relation between economic activity and invention gave a positive result. The author does not agree with Arrow's de-emphasis of the role played by economic factors in "bias" in technological progress. Technological progress and theory of economic growth problems cannot be solved without mathematical knowledge. The author is impressed by the strikingly micro character of the process of invention and of technological change. The research papers introduced by above two economists helps to understand increases in productivity and it is suggested in the article that their approach is being directing in different directions.

In this article, the author comments on the article "Invention, Innovation, and Imitation," by economist Yale Brozen. The authors says that Brozen has done an excellent job with an extremely difficult subject. The author says that in dealing with the problem, Brozen tries to use the technical concepts and language of economic theory and to make the problem as concrete and tangible as possible. The author says that he has approached success closer than most writers. The author says he has two major criticisms to make at this fine. The first has to do with the difference between cost-reducing and demand-increasing innovations. Although Brozen recognizes the difference, he appears to be mainly concerned with the former and introduces the latter rather tangentially when he is discussing the legal or market limitations upon a firm's ability to reinvest its profits in ways which primarily increase the scale of operations. The author's second major comment relates to Brozen's analysis of the market situation and its effects on the rate of technological change.

The article presents information on small business enterprises and large business enterprises in the U.S. The identification of small business is based on four criteria including the number of persons employed, asset values, net worth and the annual volume of business. It is suggested that the upper limits for small business, which is 250 workers employed, $250, 000 in value asset used, $100, 000 in net worth, distinguishes it from large business. It is noted that large business enterprises exist in the form of corporate. It is reported that technological improvements and inventions making for large-scale production aided big business immeasurably.

The article focuses on the utilization of private business agencies to achieve public goals in the postwar world. The businessman of today is not afraid of "change." Change is the essence of progress. It is the motive of modern research. Industrial research is the actual process of improving on the present; always the goals are new and better things. Any business that, in times like these, attempts to stand still or look backward is doomed to extinction. A question comes in the author's mind as what is meant by a postwar world. Everyone is entitled to his own definition based on his guess as to the duration of the war and the nature and circumstances of the reconversion process from war to peace. The author assumes the Axis nations will not all be defeated before 1945, and that in the U.S., the major reconversion from a war to a peace basis will take three years, up to the end of 1948. The author defines the postwar period as the time after 1948. Next question arises as what is meant by public goals, which is defined as the goal, for which people are supposed to be fighting the war by leaders of two of the United Nations in the Atlantic Charter as the four freedoms.

The article discusses determinants of the direction of technological change. According to the author, technological change as the phrase is usually used in economic theory means a change in a production function which embodies all previously known techniques. In this sense, the introduction of a previously unused but known technique is not a technological change. It is simply a shift within the production function to a new ratio for combining resources. However, whenever actual changes in techniques is examined, economists find it difficult to distinguish between cases which are new techniques and those which are applications of already known methods. Whenever a technique is put into operation where it was not formerly used, refinement and further development almost always occur whether it is new or old. If it is a technique which is being newly incorporated into the production function, it will usually have a history of previous unsuccessful trials. An examination of this history will reveal a course of development which on its surface is little different from that of the technique which was previously known but not economic under earlier ratios of resource prices. Both may have been commercial failures earlier although one may have failed because of technical non-feasibility while the other failed because of economic non-feasibility, the difference will not be shining clear.

Investigation of the role of technological change in economic growth is made easier if we examine it at three different levels: at the level of invention, of innovation, and of imitation. We are led to this approach quite naturally through the circumstance that movement in technology has been defined as a change in the production function and that this may have any one of three different meanings. The production function, as an expression relating the quantity produced of a good (or goods) to quantities of inputs, may be used to express (1) what is technologically possible (the maximum output obtainable from any one of many sets of factors or the minimum inputs required for any level of output with any ratio between inputs), (2) what is possible with techniques that are (or have been) used in firms which are technological leaders, or (3) what is occurring in the economy as a whole. Technology, then, may change at any one or all of these different levels. The level of technological possibilities, the level of the technological leaders, and the average technology of the society may move at different rates and in different directions. Usually the interlinkings of these levels are such that movement in any one is reflected in the others. This, however, is not necessarily the case. Directionally opposed movement can occur. Schumpeter has pointed out that invention (change in technological possibilities) may occur without innovation (change in the productive methods of technological leaders) and innovation may occur without invention. Similarly, innovation may occur without imitation or even in the presence of retrogression in the rest of the society. The relationship of technological possibilities to technological leadership and of these to the average technology of the economy is a problem long neglected by economic theorists. [ABSTRACT FROM AUTHOR]

Patents stimulate inventors mostly through delusion rather than reward. Worthless inventions and weak patents may be expected, of course, to bring the inventor no financial return. On the other hand, many a patentee-the independent inventor especially-has received little or nothing for meritorious inventions. One reason is his lack of ability or facilities for putting his invention into commercial form. Other reasons are litigation, lack of market, and sale of patents for a lump sum rather than on a royalty basis. Patent litigation is notoriously prolonged and expensive. Inventors generally cannot carry such a burden and therefore they seek a buyer for their patents. In most instances the only possible purchaser of an improvement patent is the owner of the patent on the basic invention. Further, a corporation which already has most of the patents in a particular industry provides practically the only market for other patents in its field and, therefore, it can practically dictate the purchase price. It usually insists upon the payment of a lump sum rather than royalties and thus deprives the inventor of the opportunity to receive returns from his patent according to the extent of its importance and use. Needless to say, the inventor's lack of finances and business ability invites the very abuses which discourage him.