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Death of a giant

In the late sixties and seventies I lived in DuPage county, Illinois. This was/is a county remarkable for the concentration of scientific and physical research conducted there. In addition to Argonne National Laboratories and the Fermi National Accelerator Laboratory, there was the largest of Bell Laboratories many facilities, the one in Naperville/Lisle, Illinois that employed about 11,000 people. That period of time was the zenith of Bell Labs legendary status. In the seventies its employees received two of the six Nobel Prizes for Physics that have been awarded to Bell Lab’s researchers.

It was with sadness and some sense of foreboding that I learned via Instapundit this morning that Bell Labs is abandoning basic research and instead “focusing on more immediately marketable areas”. I say “foreboding” for the likelihood that Alcatel-Lucent will join the chorus (if it hasn’t already) of companies demanding that tax-payers assume the sole cost of basic research ‘for the common good’. I also say it because I believe it is the inevitable consequence of a long trend of companies being taken over by accounting priorities and run for short term profits. At least as recently as the late nineties, four Bell Labs researchers were awarded two Nobel Prizes for physics, one received his for cooling and trapping atoms with laser light and, three shared one ” for the discovery and explanation of the fractional quantum Hall effect “. No, I have no clue. If you must know, look it up. Bell Labs has been my number one example that it is possible to do pure research without being part and parcel of the state.

I encourage you to read in the Wikipedia entry some of the history of Bell Labs. Perhaps some commenters can cheer me up with information about other profit motivated corporations (or individuals) engaging in pure, no application yet visible, research.

22 comments to Death of a giant

  • Anonymous Wanker

    Bell Labs, run by the government monopoly AT&T, has not been part and parcel of the state? IBM’s (now defunct) fundamental research labs would be a much better example.

  • Midwesterner

    Wanker (how appropriate), thank you. I won a bet for predicting your comment almost precisely. The last two of those six Nobel Prizes for Physics came a decade and a half after the January, 1982 resolution (to a case brought in 1974) that resulted in the breakup of AT&T. Its monopoly had been taking smaller hits for a couple of decades prior to that.

    Nice try and thanks for winning me the bet.

  • Just Sayin

    I found this qoute on the Wikipedia page about AT&T:

    “There are two giant entities at work in our country, and they both have an amazing influence on our daily lives. . . one has given us radar, sonar, stereo, teletype, the transistor, hearing aids, artificial larynxes, talking movies, and the telephone. The other has given us the Civil War, the Spanish-American War, the First World War, the Second World War, the Korean War, the Vietnam War, double-digit inflation, double-digit unemployment, the Great Depression, the gasoline crisis, and the Watergate fiasco. Guess which one is now trying to tell the other one how to run its business?”

    – A sign that hung in many Bell facilities in 1983

  • >Perhaps some commenters can cheer me up with
    >information about other profit motivated corporations
    >(or individuals) engaging in pure, no application yet
    >visible, research.

    It’s hard to compete in a market where your chief competitor has been granted the power to round up new customers at gunpoint.

  • J

    The charity Cancer Research in the UK funds some pretty abstract stuff in the area of computer reasoning and formal logic systems. The idea is that this technology will one day provide a way of processing the huge amount of medical statistics that exist. These aren’t million-dollar projects, but they are certainly very abstract and academic in nature with no immediate commercial application (or in this case, no immediate hope of curing cancer)

    A few years ago Canon had a research centre in Europe that was doing stuff a long way away from Canon’s main business. Mind you, they shut it down :(

    Don’t forget Honda’s massive investment in robot technology. When you look at the sums they pour into it, and the level they are working at, you can’t really say that there’s a link between the robotics and the cars. I think someone important at Honda just really likes robots.

    Lots of companies are willing to fund research that is not directly relevant to the business, but perhaps there are fewer willing to commit really big sums of money to it.

  • Correct me if I’m wrong, but isn’t this exactly what we should be expecting?

    Companies fund stuff they think they can make money from. Pharma companies, especially, spend trillions on R&D that make take decades to pay off – but they make the business decision to do so anyways.

    ‘Pure’* research is done in quite a number of private universities that receive little to no government funding. Bond University in Australia, for instance, has quite a number of research centres – although I am unsure which ones concentrate on ‘pure’ research.

    *I’m not sure there’s such a thing, anyway. All research has a purpose; whether it’s monetary or otherwise, immediately realisable or longer-term, there’s always a reason someone’s doing R&D beyond ‘just because’.

  • Ian B

    The charity Cancer Research in the UK funds some pretty abstract stuff in the area of computer reasoning and formal logic systems. The idea is that this technology will one day provide a way of processing the huge amount of medical statistics that exist. These aren’t million-dollar projects, but they are certainly very abstract and academic in nature with no immediate commercial application (or in this case, no immediate hope of curing cancer)

    CRUK are hardly a good example of the private sector. They’re part of the social medicine movement which prospers both directly and indirectly from government funding and patronage and one of whose primary goals is political campaigning to use government force as a tool against smokers, eaters of tasty food, beer drinkers, and anybody else who dares enjoy themself without asking a doctor first.

    Their interest in all those medical statistics is as grist for their campaign mill and wringing new marginal correlations out of them. It might not have an overt “commercial” application, but it very much has applications if you’re a politically driven zealot running around the byzantine third way bureaucracy banging a drum for interventionist government and, ooh yes, some more money for us crats, please, and another committee or two to sit on, thankee koindly.

  • J

    Their interest in all those medical statistics is as grist for their campaign mill and wringing new marginal correlations out of them.

    No offense, but that’s simply not true. CRUK’s own published accounts show that 1/40th of their expenditure is on ‘advocacy’, which includes patient information as well as (presumably) any government lobbying. That leaves 39/40ths for hard scientific research into cancer and its treatments. Regarding major scientific establishments like CRUK as some kind of evil socialist hive just makes you look paranoid. I’ve worked with them, I’m guessing you haven’t. They fund hard-science, serious research in (obviously) chemistry, pharmacology, radiology and so on. They also (less obviously) fund serious hard-science research into artificial intelligence, semantic networks, formal logic systems and so on.

  • bob

    I worked at Bell Labs in Naperville and Murray Hill during the 70’s and 80’s. One of its advantages regarding basic research did come from its regulated status. We did not look at profit as the most important thing because AT&T’s profit was capped by government fiat. If we made more than the regulators allowed we had to give the excess back in refunds to subscribers. In large company meetings and small group bull sessions excellence of service was stressed over profit. We had the advantage of being able to take a longer term view. Multi-year projects were the norm and quarterly results were rarely discussed and never heeded. That’s not to say we didn’t have cost controls because we definitely did, and the spirit of competition was alive between the different labs. The only time I worked as hard as I did at the Labs was as an undergraduate at Caltech, so complacency was never a problem. And as a private company we had the ability to fire those who couldn’t keep up, which was done with the dispatch that a government agency could never do.

    There is a place, I think, for many different kinds of company structure. The fact that, as a regulated monopoly, we were insulated from quarterly results pressure allowed us to pursue avenues closed to profit oriented companies. In my own area, it’s hard to see how Unix could have been invented and developed in a quarterly revenue mindset, especially given that it’s not clear AT&T ever made a profit on Unix. I will be forever grateful for the chance to play a role in its development and management. I lean mostly libertarian, but nothing is right if carried to extremes. Bell Labs played a role in between the profit driven and the government agencies and I share your sadness over the loss of its basic research which was a part of that role.

  • Ian B

    No offense, but that’s simply not true. CRUK’s own published accounts show that 1/40th of their expenditure is on ‘advocacy’, which includes patient information as well as (presumably) any government lobbying.

    Hmm. According to their website their budget is over £300M per year. 1/40 of that is about £8M. That’s a lot of money for propaganda. I wish there were a Libertarian group spending 8 million quid every year propagandising freedom. You need to look at the absolute figure rather than the proportion (rather like risk factors, hah). Additionally, a lot of the propaganda they hawk is for free. From their website-

    “We take every opportunity to meet with Ministers, politicians and civil servants and tell them what we think about important issues and how legislation could be changed for the better.

    Our researchers and doctors provide expert evidence to Select Committees, All Party Groups and public inquiries. They also help us frame responses to Department of Health, NICE and other public consultations.

    Our Public Affairs team write detailed briefings for parliamentarians for debates and raise the profile of cancer issues at the political party conferences and other events.”

    And remember, they’re synergising with the rest of the health fascist crats, so that propaganda system is punching way above their weight. Again, imagine Libertarians being able to wander into ministers’ departments and advise them as experts, sit on committees and so on.

    Look over their website and you’ll see them hawking the usual stuff. The passive smoking nonsense, anti-alcohol, anti-processed foods. Attacks on fat people. Apparently salt causes cancer. Really? They’re making it up aren’t they? I mean, let’s be honest here, they’re lying.

    Epidemiological studies purporting to show that X “is a risk factor” for cancer won’t count in that advocacy lobbying budget, but that’s what they are. And that’s no doubt why they want your AI research, as I said, to wring more interventionism support out of statistics.

    So let’s be clear here. They’re a very well funded organisation with direct access to government power, who brazenly lie to further their own cranky pietist agenda. They’re entirely evil.

    From time to time, we do receive a small amount of government funding, ring-fenced for specific projects. For example, in 2003 the Dept of Health gave us two and a half million pounds to develop anti-tobacco campaigns.

    A mere two and a half million quid for propaganda. Small potatoes to them. Think how much good that much money could do on the side of Good.

  • Ian B

    Bob, the argument that government intervention resulted in Unix seems to be much the same argument as “The BBC is a good thing because without it there’d have been no Doctor Who”. It’s a kind of application of Bastiat’s urging us to see also the unseen. The BBC stood in the way of other (private) broadcasters who’d have created other shows we might have liked just as much as Doctor Who, but were never made.

    Likewise, we don’t know what would have happened in the OS market without Unix. But it’s safe to assume that were there a demand for an OS, somebody would have answered it with a product. We can’t look at that Unix-less alternative reality to see what people would be using if it did not exist. But we can reasonably conclude that they would be using something. There wouldn’t be just a big hole in the market where an operating system ought to be.

  • Midwesterner

    bob at September 3, 2008 05:19 PM,

    Thank you very much for that comment. You touch on many of the elements that concern me in the present corporate atmosphere, particularly the living quarter to quarter management.

    My foggy recollection from the time is that the senior management of AT&T knew the monopoly was over long before the Jan, ’82 ruling and the following MFJ(?). The work that earned the last two NPs for physics was during and after the end of the monopoly and much more similar work was done well into the nineties.

    This passage of yours is of great interest to me:

    In large company meetings and small group bull sessions excellence of service was stressed over profit. We had the advantage of being able to take a longer term view. Multi-year projects were the norm and quarterly results were rarely discussed and never heeded. That’s not to say we didn’t have cost controls because we definitely did, and the spirit of competition was alive between the different labs. The only time I worked as hard as I did at the Labs was as an undergraduate at Caltech, so complacency was never a problem.

    If I can interpret ‘profit’ in the first sentence to mean ‘short term profits’, then your are stating my observations very accurately. My question is what structural features caused them to think so long term. You suggest that part of it was a government cap on profits but surely this must have ended with the MFJ, no? And yet they continued to conduct pure research for two more decades, albeit with reduced priority and results. I knew people who worked at Motorola in product creation (as opposed to development) research and watched the company lose its long term values and, ultimately, sell its reputation for a larger (inevitably short term) profit margin. What is causing these companies it start consuming their futures?

    Perhaps if you have the time, you can discuss from your perspective and recollection inside the labs, how they carried this through the transition from a price and profit controlled monopoly to an open market competitor. Particularly if you have worked in an accountant dominated research environment since then, I would like to hear what you have to say about the two sets of priorities and if there is something in our present regulatory structure that is encouraging companies to sell their futures for a quarterly profit loss statement. It is a problem that far exceeds just long term research funding.

    Thanks.

  • Ian B

    People seem to be making a distinction her between “pure” research and “profit driven” research. Presumably for research to fit into the first category, it must have no hope of ever being any use, otherwise it’s in category 2. Why should we expect anybody to do research in category 1? It can never be of any benefit to them. Should we really criticise people for not wasting time and money on things which are by definition entirely useless?

    Research which may pay off in the future, or indeed research which benefits the company indirectly by enhancing their status or keeping a pool of highly skilled scientists and engineers on their payroll is category 2- profit-driven, however indirectly.

    So isn’t the distinction here really between doing research with a high probability of returning a profit, compared to speculative research with a lower probability? We don’t really expect companies to spend their money on the entirely useless, do we? And even in the lesser case, can we really fairly criticise a company who choose to focus on research with a higher chance of a return?

  • Midwesterner

    Ian B,

    I admit to problems with terminology. My distinction is between stuff done with out any concept of how to make money directly from it and stuff done with a specific purpose in mind. This is not so much a distinction in probabilities of return as a distinction in guiding parameters.

    Some companies have been able to benefit from ‘pure’ research that was an accidental by product of goal oriented research. My favorite example of this happened at 3M. All of us are familiar with reflective paints, decals and surfaces. Every time a traffic sign or fabric on clothing or shoes reflects our lights back at us, it is the result of a 3M researcher’s discovery. But it did not come out of any related research. It came out of a laboratory doing research in abrasives. One of the researchers was experimenting with various formulations of abrasive paper and decided to try using glass beads to make ‘sand’paper. One day he is standing in the door of the lab with the lights out and the hall lights behind him. He saw something shining brightly back from the darkness and the rest, as they say, was history. But in a highly structured, goal focused environment, he would probably never have seen (literally) the light. There was something in the environment of 3M that encouraged discovery.

    There is also an abstract benefit of having esoteric research and therefore its researchers, in house. Non quantifiable benefits are one of the first things that accountants dump. My brother worked for a company that was acquired by a numero-centric company and the first thing that happened was safety awards were discontinued because “safety is in the job description, we shouldn’t have to reward it”.

    Some things are done with a very vague and abstract knowledge that they give strength to a company and assure its future by building a strong foundation. JIT (Just In Time) philosophy seems to have been adopted in regard to companies future strength as well. I have a wider concern than perhaps I conveyed in my article. I wonder as I type this if it is a consequence of large corporations slipping out of the hands of individual share holders and into the control of fund managers. I don’t know.

  • Paul Marks

    Finding out scientific truth is a good think in its self – regardless of whether it has a commercial application or not.

    To demand that science “pay off” is the same as to demand that the study of history (trying to find out what happened) should pay off (for example by offering polticial advice or giving students “learning skill sets”).

    To those who demand such things, I would say “I do not agree with you” and leave it at that.

    Although there is an argument over whether pure research should be funded by charitable trusts/foundations rather than by commercial corporations.

    However, one can never know in advance (or sometimes for many years after the event) if a discovery will have any commericial implications or not.

    As for the end of Bell Labs (as a serious research centre).

    This is sad news – part of the general decline of our civilization.

    And it useless to deny that.

  • Paul Marks

    Finding out scientific truth is a good think in its self – regardless of whether it has a commercial application or not.

    To demand that science “pay off” is the same as to demand that the study of history (trying to find out what happened) should pay off (for example by offering polticial advice or giving students “learning skill sets”).

    To those who demand such things, I would say “I do not agree with you” and leave it at that.

    Although there is an argument over whether pure research should be funded by charitable trusts/foundations rather than by commercial corporations.

    However, one can never know in advance (or sometimes for many years after the event) if a discovery will have any commericial implications or not.

    As for the end of Bell Labs (as a serious research centre).

    This is sad news – part of the general decline of our civilization.

    And it useless to deny that.

  • Anonymous

    Midwesterner, I also have the same concerns. What is causing the relentless refusal of risk-taking in so many institutions and the refusal to engage in any strategy that may go beyond a short deadline. I see hotel companies selling off their entire land and property assets and leasing them back and their stocks jumping through the roof and their investors praising the management – what the fuck? Does everyone really just want to sell up the nanosecond they can bank a profit, any profit, no matter how tenuous?

    The mere existence of ‘risk management’ which is so prevalent and fashionable in modern management strategies is perhaps to blame. I studied this incidentally at university and the overall tendency was simply to refuse to engage in areas where the risk cannot be quantified. There was a large focus on management being able to point to risk assessments and say ‘not my fault, check the numbers.’

    What also of the pension funds that are investing in these ‘blue-chip’ big companies that are meant to be the bedrocks of the markets. Why are they not exercising their positions and demanding that management take a long term view? Do they really feel that they can daytrade their funds to success?

  • Smallcreep

    There are two giant entities at work in our country, and they both have an amazing influence on our daily lives…one has given us radar, sonar, stereo, teletype, the transistor, hearing aids, artificial larynxes, talking movies, and the telephone. The other has given us the Civil War, the Spanish American War, the First World War, the Second World War, the Korean War, the Vietnam War, double-digit inflation, double digit unemployment, the Great Depression, the gasoline crisis, and the Watergate fiasco. Guess which one is now trying to tell the other one how to run its business?

    Am I reading this right? The transistor owing its existence to one ‘giant entity’ is a fudged half-truth, and one that has an air of arrogance about it when you consider most inventions on the list – radar, sonar, stereo, sound film – didn’t originate there either. It’s a nice sign, but one that could be pinned to a wall almost anywhere in the world.

  • Ian B

    Finding out scientific truth is a good think in its self – regardless of whether it has a commercial application or not.

    To demand that science “pay off” is the same as to demand that the study of history (trying to find out what happened) should pay off (for example by offering polticial advice or giving students “learning skill sets”).

    To those who demand such things, I would say “I do not agree with you” and leave it at that.

    Paul, who do you think should pay for these things which have no commercial application? It’s one thing to approve of them, but you have to answer that question. Should the state pay? That means forcing me to pay for scientists to play whimsically in their laboratories. I’d prefer to choose what to spend my money on myself, thanks.

    For instance, if there is such a clear benefit to mankind, presumably at least some of mankind will be willing to foot the bill of their own free will. I think in the absence of state funding I’d strongly consider contributing to astronomical and space research, for instance. That would also give me some oversight over what the spending were to go on. You see, a space telescope (for instance) has utility to me, since i’m an astronomy fan. There are millions of other astronomy fans in the world. Maybe we could pay for the research we’re interested in.

    I think that’s rather more honest than demanding money from taxpayers for The Good Of Mankind.

  • This post reminds me of one of John Kay’s FT pieces, which I talked about a year ago.

    Is less basic science being done in the private sector today than was when Bell Labs was in it’s heyday? I don’t think so. What we are seeing is the decline of the conglomerate.

    Science today is not done by megacorps like ATT or ICI who can hide the overheads in their accounts – it is done by specialist startups funded with venture capital. The greater flexibility and efficiency of capital markets is the main reason for this change.

  • Midwesterner

    amguinn,

    Are you sure you are talking about basic research? I know of lots of start-ups in applied research (around here genetics is particularly popular) but I can’t think of any in basic research. Can you name any companies, start-ups or otherwise, doing research for which there is not intended product(s) associated with it?

    I was hoping quite a few companies would be named in this thread to disprove the point. So far there have been a couple that have been debated.

  • Paul, who do you think should pay for these things which have no commercial application?

    Ian, you have been here long enough to know better than asking Paul of all people a question like that:-)