Seeding an Energy Technology Revolution in the United States: Re-conceptualising the Nature of Innovation in ‘Liberal-Market Economies’

Abstract

This article aims to contribute to comparative capitalisms debates about the nature of the so-called liberal-market economy/coordinated-market economy divide by drawing attention to the extent and nature of the developmental state apparatus being deployed in Washington's efforts to develop markets for novel climate and energy technologies. Against the deluge of literatures in comparative capitalisms debates which suggest that liberal market economies typically breed ‘radical’ innovation cycles based on the relative absence of states, internal corporate hierarchies, and competitive market arrangements, this article uses a regulationist framework to understand how critical tensions and contradictions inherent to liberal market economies serve to engender new forms of direct state intervention, particularly within the innovation process. Building on Block's (2008) concept of a ‘hidden developmental network state’ emerging in Washington beginning in the late 1970s, this article explores the tensions that have led to the use of such developmental policies in the climate and energy realms, and provides a description of how these policies function.

Keywords:

• United States
• developmental state
• innovation policy
• Varieties of Capitalism
• climate change
• energy

Notes

The use of the divided term ‘climate/energy’ here and throughout may perhaps be cause for confusion, but I have opted to use it for two reasons. First, because, obviously, many of the developmental programmes in question are not exclusively about alternative energy or energy security, but rather are concerned with technologies designed to reduce or remove CO₂ from the atmosphere in an effort to combat global warming (and develop markets for these technologies) – and thus the term is more technically accurate. But also, to a certain extent, it acknowledges the careful semantic game that federal policy-makers are forced to play in a country where environmentalism remains a wedge issue. Indeed, for political expedience, the Obama administration has largely purged the term ‘climate change’ from its vocabulary, and has sought to frame these policies strictly in terms of energy security, jobs, market development, and competitiveness to avoid appearing too close to the ‘environmental left’. Yet, ironically, much of the architecture of these policies was developed by the first and second Bush administrations which consistently referenced them as ideal means by which to address climate change – to be sure, much more preferable than traditional command-and-control policies or cap-and-trade schemes. In short, depending on the speaker and the intended audience, these programmes are either about energy or climate or both.

These four categories are borrowed (with modifications) from Block (2008).

There is an array of key texts in the VOC tradition, many of which look at different levels of analysis. While Hall and Soskice 2001 stands as the archetypal micro-level analysis, the classic macro-level study is Kitschelt et al. 2000, while the key meso-level analysis is Iversen et al. 2000.

There are also a range of hybrids (sometimes referred to as Mediterranean Market Economies) characterised by a mixture of liberal and coordinated arrangements. Examples include France, Spain, Italy, and Turkey.

This is not to suggest that a given country will be able to excel only at one or the other, but simply that varying institutional arrangements will create obvious comparative advantages for one type over the other.

In cases where developmental programmes have been centralised in a conspicuous manner, they have often become the target of political attacks from the far right of the Republican Party, which indignantly accuses them of being guilty of ‘wasteful corporate welfare.’ See for example Negoita's (2010) analysis of the demise of the Advanced Technology Program.

These efforts translated into the following wave of laws and initiatives: Stevenson-Wydler Technology Innovation Act; the Bayh-Dole Act; the Small Business Innovation Development Act; the National Cooperative Research Act; the establishment of a Program for Engineering Research Centers; the Federal Technology Transfer Act; the Advanced Technology Program; the Manufacturing Extension Program; the Defense Industrial and Technology Base Initiative; the High Performance Computing and National Research and Education Network Act; and the Small Business Research and Development Enhancement Act (see Block 2008).

O'Riain (2004) provides a helpful distinction between the Developmental Network States (DNS) in operation in the US and parts of Western Europe and the Developmental Bureaucratic States (DBS) present in East-Asia in the post-war era. While the DBS model (epitomised by Japan's Ministry of International Trade and Industry) was a highly centralised bureaucratic entity designed to help domestic industry ‘catch-up’ with the technological advances of the West, the DNS, by contrast, as its name suggests, is effectively a networking effort that aims to help the nation's scientific and engineering communities navigate the most promising avenues for novel innovations that do not yet exist and commercialise them – a task for which the DBS model is obsolete since there are no existing competitors to ape. In contrast the centralised bureaucratic nature of the DBS, the work of the decentralised DNS takes place in thousands of labs, businesses, and universities across the country.

Full text of the Energy Policy Act of 1992 is available at: http://thomas.loc.gov/cgibin/query/z?c102:H.R.776.ENR.

Full text of the bill available at: http://www.epa.gov/oust/fedlaws/publ_109-058.pdf.

Full text of the House Bill available at: http://energy.senate.gov/public/index.cfm?FuseAction=IssueItems.Detail&IssueItem_ID=f10ca3dd-fabd-4900aa9d-c19de47df2da&Month=12&Year=2007. The House bill of EISA called for the creation of a national renewable energy portfolio mirroring those currently maintained in many individual states. This provision was, however, left out of the final Senate bill, along with more radical provisions redirecting tax expenditures for oil and gas companies to renewable energy projects.

These figures can be found at: http://www.whitehouse.gov/issues/energy-and-environment and http://www.energy.gov/recovery/ [accessed 9 January 2011].

All defence and non-alternative energy related figures have been subtracted to get this amount in both the 2010 and 2011 budgets. Text of the FY 2010 budget and 2011 budget request can be found at: http://www.whitehouse.gov/omb/ [accessed 11 January 2011].

http://www1.eere.energy.gov/commercialization/technology_commercialization_fund.html/ [accessed 20 February 2011].

http://online.wsj.com/article/SB126074549073889853.html/ [accessed 14 March 2011].

Examples include the United States Council for Automotive Research and its 30 component programmes (of which the Partnership of a New Generation of Vehicles was among the most prominent).

There were three crucial pieces of legislation specifically tackling technology transfer. First, the Stevenson-Wydler Technology Innovation Act of 1980 officially added technology transfer to the mandate of all federally funded research labs in an effort to guarantee the full use of the country's federal investment in R&D activities. The Act further provided for the ability to use federal funds for this purpose. Second, the Bayh-Dole Act (or the University and Small Business Patent Procedures Act) of 1980 gave federally funded small businesses the right to take full ownership of any intellectual property created in the course of their work in the labs. And finally, the Federal Technology Transfer Act of 1986 allowed the labs to establish Cooperative Research and Development Agreements (CRADAs) with private businesses. This arrangement gave the labs the option to share research costs with a private partner and negotiate an exclusive licence to the resulting technology without the otherwise necessary public notice (freedom of information) requirement.

Of course, to properly generalise this claim would require a much larger study, one well beyond the scope of this article. The explanatory potential of this article is thus obviously limited to the American context.

See for example Weiss 1998, 2003; Cerny 1997; Palan et al. 2000.