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  • Inventing Ideas: Patents, Prizes, and the Knowledge Economy by B. Zorina Khan
  • Jochen Streb (bio)
Inventing Ideas: Patents, Prizes, and the Knowledge Economy By B. Zorina Khan. New York: Oxford University Press, 2020. Pp. 462.

Economic historians have often delved into the causes of the Industrial Revolution in Europe with this question: "Why Britain?" In this book, B. Zorina Khan, one of the world's leading experts on the history of innovation, proposes a new direction for the debate. With the question "Why America?" she asks to clarify how the United States succeeded in overtaking Europe in the nineteenth century to become the global technology leader of the twentieth century; in the author's view, "the greatest divergence in history" (p. 398). Khan is an opinionated author with great faith in the efficiency of free-market institutions. Her clear answer to the question of American ascendance is therefore not surprising. In Europe elites ensured that patents and innovation prizes were distributed primarily among their peers, while American technology policy, with the help of its democratic patent system, was designed from the outset to activate the creativity of broad sections of the population.

To justify this hypothesis, Khan undertakes a two-step line of reasoning. In a first step, she shows that encouraging innovation by awarding prizes is inferior to granting patents. In the second step, she tries to convince readers that the U.S. patent system was superior to European patent systems. Khan uses extensive data on individual inventors, patents, and innovation awards, compiled over her lifetime of research. Because she eschews sophisticated econometric studies in this book, which can be found in her more technical articles, her explanations are well understandable to readers who do not have advanced knowledge of statistics. Europe is represented throughout by Britain and France. She neglects recent research on Germany, Italy, or Scandinavia, as found, for example, in the volume "Patent Law and Innovation in Europe during the Industrial Revolution" of the Economic History Yearbook.

Using the examples of the British Royal Society of Arts and similar organizations "by elites and for elites" in France and the United States, Khan examines the allocation of innovation prizes in the eighteenth and nineteenth centuries (p. 176). She finds that innovation prize competitions were "markets for lemons" to which inventors mostly submitted inventions that they did not expect to generate profits in the real marketplace. In general, Khan notes an "essential inability of bureaucrats to replicate the market mechanism" (p. 173).

Khan's comparison of patent systems is based on the insight that the effects of a patent law depend very much on the legal details. Khan emphasizes the low patent fees in the American patent law, which made it possible for inventors from the working class, including women, to acquire [End Page 252] patents, unlike in Europe. This difference was based on different legal concepts. While in the United States it was believed that an inventor was entitled to legal ownership of his or her idea, in Europe patents were traditionally seen more as a privilege granted by the authority.

Khan points out that by the end of the nineteenth century, many European countries reformed their patent laws in light of American success and adapted them to the American model. Surprisingly, she leaves unanswered the question of why this convergence came too late to make any difference to the technological dominance of the United States in the twentieth century. The German example, which Khan largely ignores, raises additional doubts about the general validity of her hypotheses. Despite high patent fees, German inventors excelled after 1877 with many patents and great economic success in the high-tech industries of the Second Industrial Revolution, namely chemistry and electrical engineering.

Khan criticizes dissenting views of other scientists with the same vigor that she argues her own. For example, she rejects Petra Moser's approach of using world exhibition data to learn more about the effectiveness of patent laws. She also repudiates the notion that during the first Industrial Revolution innovations were brought about in particular by elites with "upper-tail knowledge," as argued, for example, by Mara Squicciarini and Nico Voigtländer in "Human Capital and Industrialization...


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pp. 252-253
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