Following the Nature article discussed previously, this is a 2010 paper looking into innovation in the US based on patent data (1970-2005). It already depicts that invention (used here interchangeably with innovation) exhibits diminishing returns. An interesting distinction is made between two different approaches to innovation.
One understanding of innovation is that it is driven by incentives and the supply of knowledge capital producing either constant or increasing returns. This view is connected to economy and markets and therefore innovators are expected to provide solutions corresponding to price signals. In this paradigm, “private efforts at knowledge making increase the overall stock.”
Second (contrary and also what the authors ultimately believe) understanding is that innovation is “subject to the evolutionary dynamics of all living systems” and thus not constant. It is not only reliant on incentives and knowledge capital but also on constraints and it grows increasingly complex and costly and reaches diminishing returns; higher expenditures produce fewer innovations. Whereas early research plucks the lowest fruit and that specialized questions require more time and money to resolve, and more preparation.
The authors claim that “the stories that we tell about our future assume that innovation will allow us to continue our way of life in the face of climate change, resource depletion and other major problems.” However, solar power and wind energy investments are found to be producing fewer returns; innovation in these fields is shrinking. So do all research challenges where pioneering research has already depleted the broadly applicable questions and research is now required to more specialized fields. Were we to continue to produce innovation in one field, then we would have to allocate more resources to this field and fewer resources to others.
Strumsky, D., Lobo, J. & Tainter J.A. (2010). Complexity and the Productivity f Innovation. In Systems Research and Behavioral Science Syst. Res. 27, 496-509. DOI:10.1002/sres.1057
(photo taken at the recent Rotterdam biennale)