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historical accounts of technological change come down on the side of the “sciencedriven” view, emphasizing the autonomous progress of science, and how important
breakthroughs–perhaps macro innovations discussed above–have taken place as
scientists build on each other’s work, with little emphasis on profit opportunities.
For example, in his History of Modern Computing, Ceruzzi emphasizes the importance of a number of notable scientific discoveries and the role played by certain
talented individuals, such as John von Neumann, J. Presper Eckert, John Maucly,
John Backus, Kenneth H. Olsen, Harlan Anderson and those taking part in the
Project Whirlwind at MIT, rather than profit motives and the potential market for
computers. He points out, for example, how important developments took place
despite the belief of many important figures in the development of the computer,
such as Howard Aiken, that there would not be more than a handful of personal
computers in the United States (2000, p. 13). Many economic historians, including Rosenberg (1974) and Sherer (1984) similarly argue that a key determinant
of innovation in a particular field is the largely-exogenous growth of scientific and
engineering knowledge in that field.
In contrast, most economists believe that profit opportunities play a much more
important role, and the demand for innovation is key to understanding the process
of technological change. John Stuart Mill provides an early and clear statement of
this view in his Principles of Political Economy, when he writes:
“The labor of Watt in contriving the steam-engine was as essential a
part of production is that of the mechanics who build or the engineers
who work the instrument; and was undergone, no less than theirs, in
the prospect of a renumeration from the producers.” (1890, p. 68,
also quoted in Schmookler, 1966, p. 210).
In fact, profits were very much in the minds of James Watt and his business
partner, Matthew Bolton as the previous quote illustrates. James Watt also praised
the patent system for the same reasons, arguing that: “...an engineer’s life without
patent was not worthwhile” (quoted in Mokyr, 1990, p. 248). The view that profit
opportunities are the primary determinant of innovation and invention is articulated
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