Does management's pursuit of efficiency crowd out innovation? I ask because of two interviews I've seen recently.
First is Matt Ridley's with Hon Lik, inventor of the e-cigarette, which describes how Mr Lik's invention was inspired by his own desire to quit smoking and facilitated by the fact that the "lab where he worked had a good supply of pure nicotine".
Secondly, Toru Iwatani, the creator of Pac Man, tells the FT:
Japanese game companies used to be places of total freedom. We had almost no orders, except to make fun games.
Mr Iwatani, says the FT, is "the product of a typical Japanese company structure that insulated people such as him from job insecurity and thus incubated creativity."
What we have here are two case where innovation occurred in situations which would horrify many Anglo-Saxon managers. Allowing employees to use company materials for their own personal pet projects as Mr Lik did, or giving them jobs for life and little oversight as Mr Iwatani enjoyed, aren't generally considered good management practices. And yet they produced important creations.
This point might generalize. If you have your nose to the grindstone and are working flat out, you might be very efficient but you don't have the time to experiment with new ideas.
For this reason, many innovative companies give employees space to follow pet projects: think of 3M's bootlegging (pdf), Google's 20% time, Microsoft's Garage or Apple's Blue Sky. These recognise the fact that orthodox managerialist structures, with their emphasis upon cost-effectiveness and following routine and protocols, militate against creativity. Employees thus need some protection from managerialism if they are to innovate.
Hence my question. Could it be that the spread of managerialism and the pursuit of "efficiency" in the static sense of trying to maximize output for given inputs has squeezed out innovation?*
Two things suggest an affirmative answer. One is casual empiricism: the growth of managerialism has been followed by a decline in trend labour productivity growth. The other is a paper from David Audretsch and colleagues, which shows that since the late 70s innovation has tended to come less from incumbent firms and more from new ventures.
If this is the case, then perhaps secular stagnation is not so much an aberrant feature of hierarchical capitalism as its logical consequence. I've said that stagnation might be the result of firms' wising up to the fact that a lot of innovation doesn't pay. But it might also be due to managerialism squeezing out the slack space in which innovation can occur.
Perhaps, then, Marx was right: whereas for a long time capitalism promoted growth, it no longer does so. As he put it:
At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters.
I say all this to endorse a point made by Mariana Mazzucato - that the Labour party can no longer assume that the economy will grow nicely but must instead put in place the policies and institutions that generate such growth. How compatible such institutions are with managerialist capitalism is, however, an open question - and one which Labour isn't even asking.
* My question is consistent with John Kay's theory of obliquity: maybe growth and innovation are unintended consequences which are stifled by attempts at conscious control.