In product development there are two kinds of errors. A “go” error occurs when the green light is given to a product that eventually fails. The Edsel, a $250 million write-off by the Ford Motor Company in 1959, is one example. The “drop” error occurs when an idea that could have been highly profitable is eliminated from further consideration. How do we know that the idea could have been profitable? In a free market dropped ideas have the habit of being picked up by someone else. Chester Carlson’s invention was dropped by such notables as General Electric, 3M, Kodak, RCA, and IBM, but picked up by the small Haloid Company. In 1961 Haloid changed its name to Xerox. Even go errors in a free market often get corrected; just a few years after the Edsel fiasco, Ford rolled out a better idea called the Mustang.
Peer review is the process by which millions of dollars of government money are handed out to researchers in medicine and the physical sciences; the process by which recognition, promotion, and tenure are determined for professors, especially those in the “softer” sciences who do not need or use grants for their research; and one of the criteria — numbers of peer-reviewed journal articles, for example — used to determine accreditation for universities.
Peer review, a “blind” process in which the names of author and evaluator are concealed from each other, requires two or three so-called peers to read a paper or proposal to judge the quality of actual or proposed research before acceptance. As such, peer review is a product development process that protects only against go errors. It is at best quality control that insures accuracy and reliability of research done. At worst it holds back innovation through drop errors. Since there is no free market in scholarly research — today’s government-university-science complex is a severely hampered market — dropped ideas either never get a hearing or take many more years than they otherwise should to surface.
Medical researcher and long-time critic of peer review, David Horrobin, argued that the peer-review process, which developed in its current form largely as a screening device after World War II, has perhaps improved the accuracy and reliability of conventional research published in medicine, but it has done so at the price of innovation. Prior to World War II, unknown researchers could submit papers to journals only with the endorsement of a published author. The editor would then decide whether or not to publish. Peer review was ad hoc and not common. It was the growth of government involvement in education and, especially, the government’s lavishing of money on research that called for the blind-review screening process.
In a paper titled “The Philosophical Basis of Peer Review and the Suppression of Innovation”1 Horrobin urged that more unconventional and innovative research be encouraged by journal editors. When a reviewer questioned the need for such a statement, Horrobin produced eighteen incidences of medical innovations rejected by the peer-review process. In 1995 Horrobin’s paper was cited by the US Supreme Court as support for the argument that some “well-grounded but innovative theories” may not be published in peer-reviewed outlets.2
Horrobin’s solution to divvying up grant money was to give funds equally to all researchers and let each work on whatever his or her interests indicated. Prior to 1960, said Horrobin, this interest-as-guide process was essentially how funding was distributed in the UK and more innovation in medicine resulted in those years than in the years since 1960. Horrobin approved of government involvement in and funding of research, but the analogy to free markets in his solution — bottom-up, self-interested choice by researchers — versus central planning — top-down, “expert” direction by peer reviewers — cannot be escaped.
Never mind that Socrates and Galileo were badly treated by their peer reviewers or that frauds and hoaxes sometimes dodge the quality controllers or, further, that you may want to cite Ayn Rand and Ludwig von Mises but can’t figure out how to get past your peer-review gatekeepers, the real problem of peer review is the severely hampered market in scholarly research. What would a truly free market in scholarly research be like?
First, publishers of journals and scholarly books would have to earn a profit from their buyers and not live off the donations of their authors or other benefactors. Some university presses, for example, are now publishing what are called “supported books,” which means someone, usually the author’s department, must contribute one or two thousand dollars to the publication of the author’s book. And at least one commercial press requires authors to do their own copy edit and provide camera-ready typeset text; this can add up to two thousand dollars or more that authors must fund. Twenty-five dollars per page, charged to authors or their departments, has long been the going rate for published papers in some fields. (In some quarters today this method of getting into print would be called subsidy or vanity publishing.)
In addition, the so-called nonprofits, which finance a portion of today’s research and journals, are in fact creatures of the tax system and must, despite their descriptive name, show an excess of donations over expenses lest their organization become some philanthropist’s very expensive hobby. Under laissez-faire, in the absence of tax write-offs and the guilt and ignorance of economics that wealthy business people tend to exhibit, there probably would be far fewer such organizations than exist today.
Second, there would be no government money to dangle in front of researchers and no government-owned or -regulated universities filled with bureaucratized product lines (curricula designed by committee), bureaucratized sales reps (the professors), or bureaucratized performance evaluations (those mounds of paper, which include lists of published research, that must be produced for promotion, tenure, and most every other consideration). All of this distorts the market and probably encourages the overabundance of pretentious minutia that fills today’s overabundance of academic journals.
Under laissez-faire, only the market would decide who produces what and who gets what in scholarly output. Indeed, the market for this research might not differ much from the product development market in automobiles. Private, profit-making firms, both traditional businesses and universities, would finance the work and effectively and efficiently produce market-satisfying results. Portions of the results might be published in profit-making journals and books, much of it perhaps not.
Yes, there might be some Edsels created by this free-market development process and there might still be some delayed acceptances of Xeroxes, but there also might be a lot more Mustangs! Absent the government-encouraged gatekeepers and other hurdles that must be jumped in order to get into the market, researchers who cannot find an outlet will be free to start their own journals, publishing companies, businesses, or even universities. The hampered market today, which includes the “golden handcuffs” of tenure, makes this quite difficult.
Jerry Kirkpatrick is professor of international business and marketing at California State Polytechnic University, Pomona. He is author of In Defense of Advertising: Arguments from Reason, Ethical Egoism, and Laissez-Faire Capitalism (http://www.tljbooks.com).
Notes
1. JAMA, The Journal of the American Medical Association, March 9, 1990, 263:1438–41. See abstract.
2. Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579.
{ 10 comments }
Seems to me, this type of market distortion is even more destructive to the economy. Perhaps someone can explain this better, but if hamper the market by X in R&D, wouldn’t this have an X times some factor effect in the manufacturing and retail sectors?
And mentioning Ayn Rand in the same sentence as LVM is egregious.
It is happening – entrepreneurs ARE bypassing the gatekeepers! Online journals are popping up, and Trump University materialized in 2005.
“Peer review” is just another reason why non “mainstream” journals and publishers (“on line” or old style) are so important.
For example, some of the basic principles of “mainstream” economics – not the details, some of the basic principles.
But it is folly to think that the mainstream journals and publishers will tend to publish stuff that tends to point this out – to do so would be to undermine their own people.
The same is true of universities. Of course it is harder for someone who says that their are basic things wrong with mainstream economics to get a post than it is for someone who does not. That is why colleges that are “out of the mainstream” is vital (both for scholars and students).
Government subsidy just makes the problem worse – as government subsidies will tend to go to the “mainstreamers”.
Seems to me, this type of market distortion is even more destructive to the economy. Perhaps someone can explain this better, but if hamper the market by X in R&D, wouldn’t this have an X times some factor effect in the manufacturing and retail sectors?
Not only that but government funding in R&D disproportionately drives out private R&D funding. In the Thatcher era they reduced Government R&D funding. For every £1.00 they reduced government spending, private R&D funding increased by £1.50.
At the end of the day, the state science industry does not survive based on market needs. And that’s so terrible.
And that’s why people go to the moon instead of having a better quality of the market.
Andrew wrote: “It is happening – entrepreneurs ARE bypassing the gatekeepers! Online journals are popping up, and Trump University materialized in 2005.”
New technology, such as the internet, always helps entrepreneurs get around government-erected barriers to entry, but if the market were clamped as tight as it was in the Soviet Union, this would not be possible. In Bureaucracy Mises states that academic freedom in much of Europe means you’re free to agree with the government (chapter V, section 4, “The Bureaucratization of the Mind”).
The proliferation of journals today stems in large part from accreditation drives for “academic qualification,” which is usually defined as a certain number of peer-reviewed journal articles—books don’t count, or, at most, they count only as equivalent to one article. University administrators have become bean counters and the faculty all plan strategies for getting around the peer-review gatekeepers. Innovation? What’s that?
The ultimate in “let the market decide,” I think, is to post your ideas on the internet and let the world be your “peer” reviewers!
Thank you for this article, one of the most interesting I’ve encountered on the Mises website in quite some time. I was particularly interested to learn that peer review is an outgrowth of tax-financed command-research.
Ayn Rand wrote that intelligence and coercion are fundamentally antagonistic. One can’t force another to solve a difficult problem. So dictators can’t take over and successfully run sophisticated technology companies, or create new medical drugs, or “run” a complex economy (except into the ground).
This glaring antagonism is especially obvious today in the realm of tax-and-command “science”, in which new “discoveries” are promoted at government press conferences, and “scientific consensus” is marshalled to protect such “discoveries” from intelligent criticism. Two contemporary examples of such “science” are anthropological global warming; and the HIV-causes-AIDS hypothesis (which has been logically and thoroughly demolished by Peter Duesberg).
Of course, state coercion has only recently begun to impose its restrictive orthodoxy on the physical sciences–most obviously where “science” is used to promote some political vision. State funded-and-sanctioned institutions of ideas have long sponsored rigidly “correct” ideology in philosophy, economics, and history. Von Mises’ struggle to obtain a university position is only one example of this anti-intellectual hegemony.
You have no idea how things actually work in the sciences. Profit-based scientific research is a terrible idea. We have institutions like the NSF and NIH to distribute grant money because scientists know better than shareholders what kind of research is worthwhile. The overwhelmingly disproportionate amount of money spent on rehashes of high selling drugs (anti-depressents with the same mechanism of action, for example) proves this point.
The lab I work in does mouse genetics research. Left to the free market, we wouldn’t receive much money; it would mostly go towards human research. The problem is that there’s vitally important research that can only be done with mice/rats; you can’t inbreed humans and conduct a huge number of experiments that would be very immoral. Mice are very similar to humans, so researching them yields great results. But in a free market absent of public funding, this research probably wouldn’t take place. Instead, research would focus almost entirely directly on conditions that affect large numbers of people and could generate the most profit. This actually happens to an extent right now.
If you honestly believe that 95+% of climate scientists are somehow being coerced and HIV doesn’t cause AIDS, you’re delusional. Duesberg’s hypothesis has been completely debunked; there’s no significant connection between recreational drug use and AIDS. Duesberg cherry picked data for his paper.
That actually brings me to another reason why scientific funding should be determined by scientists; most people simply don’t understand how you’re supposed to conduct research. Just like you were fooled by Duesberg’s use of cherry picking (climate change deniers do the same thing), most people don’t understand the variety of deceptive fallacies that can be used to “prove” a point.
Brilliant essay. The peer reviewers are often individuals who are dominant in their field. When publications come along that question or contradict their own views, they will often reject them. In life sciences research, it is not uncommon for peer reviewers to delay publication of data so that they can perform the experiments in their own labs and scoop the people who did the creative work. Sad but true.
Jerry:
Great to see you quote from Mises’ BUREAUCRACY in your article. I have a real soft spot for that book; in my own estimation, it is the most promising “wedge” that Mises folks have in their arsenal with which to penetrate the body politic of the public at large. (And, that it hasn’t thus far been recognized and promoted–to such wider audience–could be viewed as a “drop” of the type you describe).
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