RecensionsBook Reviews

How Innovation Works: And Why It Flourishes in Freedom, By Matt Ridley (2020) New York: Harper, 416 pages. ISBN: 978-00629-165-94.

  • Jeffrey Muldoon

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  • Jeffrey Muldoon
    Professor, Emporia State University School of Business, United States

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Cover of Volume 76, Number 1, Winter 2021, pp. 3-176, Relations industrielles / Industrial Relations

Matt Ridley’s How Innovation Works is destined to be a classic of popular social science; well written, argued and researched. This book should be on the bookshelf of every business school professor. For those who research business history and entrepreneurship, this book is a blessing as it provides well-explained theory with excellent examples. I would strongly recommend this book as a text for an undergraduate class. Likewise, this book is a rebuttal for those who dismiss modern capitalism and entrepreneurship. Simply put, I am writing this review on a laptop that did not exist 50 years ago. I ordered the book online, a method that did not exist until 25 years ago. These are just two examples of many (Ridley has scores of examples) demonstrating how humanity has emerged from a grim past. Ridley’s work is a correction to the theory that great individuals make history or the “great man theory.’ As he shows innovation is often the result of an evolutionary process, with numerous false steps, competing strategies, and is random in nature. Thomas Edison may have invented the first practical lightbulb—but there were 21 competitors hot on his heels. Although inventors play a key role in that, they combine these various elements, nevertheless, the process is random and cannot be directed through government programs. Although government can be a partner (something Ridley undervalues). Furthermore, mere invention is not enough, rather as Ridley demonstrates, new discoveries must establish they are “sufficiently practical, affordable, reliable, and ubiquitous to be worth using.” Sometimes, as in case of “gorilla glass,” used in the modern cellphone, the invention could occur well before it becomes important or useful. Likewise, Ridley is highly skeptical of the ability of governments to create innovation. Although Ridley does not cite Hayek; he clearly understands the complexity of information that no one person, especially a dictator, can harness the information needed to innovation. Rather only when we have a free society, where information can be changed, can innovation truly occur. Likewise, Ridley also demonstrates that governments can ban items for no reason—except either to help politically connected groups or out of ignorance. Margarine and coffee were considered products of the devil due to the impact they had on existing producers. Ridley notes; “entrepreneurial spirit often goes into protecting existing interests, rather than the creation of new products.” Ridley is a Conservative member of the House of Lords. Therefore, people will believe his answer is ideologically charged. Ridley does have an ideological viewpoint; however, his viewpoint is based upon on excellent theorizing as well as historical examples. For example, Ridley cite the case of the competition between the R100, made by Vickers, and R101, made by the government. The one made by the private corporation worked; the government one did not. He has a libertarian perspective, arguing that patents on technology may not be needed. As an example, he cites the impact of the internet and music. Napster made music more available; artists now had to create more music. Likewise, Ridley is also highly critical of big business, noting the failure of IBM to further develop products. His arguments for the malfunction of both big business and big government in innovation is that the rules of their game: conformity; are different then the rules of innovation: contrarianism. As could with any book, some criticism is warranted. Firstly, innovation and invention are not as well defined and distinct as they need to be. This may be partly because Ridley’s work covers both aspects of science and social science without delineating the difference. For Ridley, it is clear that the “great man …