Innovation

Innovation is the formulating of new ideas that when applied to the material realm, results in new or improved products or services. Though capitalists and pro-capitalist authors often claim that the free market and especially patents and small businesses are the best driver of innovation, it in fact is generally the result of public funding and research where innovative people are given the resources to express their ideas, with a basis in the given needs and circumstances. Through abuse of patent and IP law, capitalism actually stifles innovation, which generally abounds not because of the institutions of private property, but rather in spite of them. Private institutions are under systemic and legal obligations to make money and quickly to reward investors, thus expensive, uncertain, and long-term research is harder to justify as fiscal quarters go by with few results to show. Much of the research which is "private" is publicly funded through government grants such as SBIR and STTR, as well as being subsidized by tax breaks (like R&D credits). Beyond funding, private firms characteristically benefit from the pioneering developments of the public sector, and when neoliberal policies gut public agencies, private firms benefit even more by directly absorbing their various assets. To an uninformed audience however, it appears that the output of the private sector is sheerly its own work. Many of the "innovations" that do come from the private sector are furthermore not used for common good but to reify class hierarchy and further enrich the capitalists; Apple for instance, focuses its efforts on developing water-sensitive seals to void warranties rather than working on spill resistance.

The Entrepreneurial State by Mariana Mazzucato examines this topic, elucidating on the role of government-funded research in innovation, and how everything in products like the iPhone have been created by the public sector; because it was not profitable for a private-sector company to do so itself.

Public and voluntary sector innovations

• The Internet, which began as ARPANET in 1966, was a project by the US Department of Defense and affiliated universities that helped share access to then-scarce computer resources and military purposes. It served as a decentralized, nuclear-survivable network that was also used to manage a vast espionage network. The government asked AT&T to take over ARPANET in 1971 but it turned the proposal down, stating it was incompatible with the existing network and did not see a use in it. By the early 80s many universities were connected to ARPANET using funding from the National Science Foundation (NSF), and as usage climbed, telecom companies finally took interest and pressured for the privatization of the networks. When military leaders and policymakers went through with this idea they conceptualized multiple commercial suppliers to the public, but cable ISPs went on a giant merger spree after deregulation of the industry with the Telecommunications Act of 1996, which resulted in widely unpopular cellphone and cable oligopolies with companies like Verizon, AT&T, Comcast.
• Google, originally google.stanford.edu, was developed on a publicly subsidized research campus. It was able to thrive because of the long-term research stability and freedom from needing to obtain short-term profits granted by being part of a major research institution. Founders Larry Page and Sergey Brin wrote that ad-funded search engines will be biased towards advertisers, and that it is crucial to prevent a monopoly, keep search engines transparent, and under the wing of the academic realm ― this idea ended up being departed from and Google became characterized by intrusive, privacy-eroding, (and increasingly obnoxious) advertising.
• Wi-Fi, which has roots in ALOHAnet, began because the University of Hawaii struggled to network its island campuses, developing new radio technology for this purpose using funds from the public, ARPA, the US Navy, but no private investors.
• Though Steve Jobs famously claimed at the original iPhone launch that Apple itself developed and patented the multi-touch smartphone interface, it was in fact first developed by a University of Delaware graduate student under a NSF/CIA research program before being purchased by Apple in 2005
• LCDs were created by a Pentagon-organized industry consortium, working on flat display panels that were being developed by the manufacturer Westinghouse, but the company later shut down the program. The leading project head had to appeal to US tech giants like IBM, Comcast, Xerox, and 3M to keep program alive, but they all turned away. The program was revived with a contract from ARPA in the late 80s.
• GPS, developed by the Department of Defense in the 1970s for more accuracy in managing materials and munitions
• Lithium-ion batteries have a story similar to other inventions neglected by the private sector, ultimately arising from the NSF and the Department of Energy
• Insulin, discovered at the University of Toronto in 1921 and the patent to which was sold for $1. Capitalist pharmaceutical firms later went on to charge prices at an extreme markup that leads many to forgo other basic needs or ration their prescriptions, as they cannot afford the full recommended dose. Because of profit-extracting innovations in the insurance sector, this can easily result in individual costs of over $1,000 a month if a patient does not have the right level of health coverage.
• Advancements in understanding physics, which are almost completely the result of state funding for public institutions.
• Open-source projects like GNU, Linux, Mozilla's suite of software, online wikis, and nearly countless others. Most of Android and a large portion of iOS are built on open-source software.