BPF Book Review | “How Innovation Works and Why It Flourishes in Freedom”

Matt Ridley is a true renaissance man – an Oxford educated man of letters, commentaries and TED Talks, an author with millions of books sold in 31 languages and a 12 year member of Great Britain’s House of Lords.  Most importantly for readers, Ridley is a great writer and storyteller with a rare gift for explaining complex subjects in terms lay people can understand and appreciate.

Ridley’s latest book tackles the complex subject of innovation with a treasure trove of stories and anecdotes from the past 500 years of real life inventors and innovators that moved history forward by improving productivity and with it, our quality of life.  How Innovation Works is a great book for entrepreneurs, investors and those tasked with economic development.  It also provides key insights as to why some economies outperform others.

In Ridley’s framework, invention comes first with innovation close behind as a process that develops new applications and uses for said inventions.  The book puts special focus on innovation in the energy, public health, transport, food and communication sectors.

As the book’s subtitle suggests, innovation does best where it is treated best.  That means a fair and reasonable regulatory environment.  In short, freedom is vital for innovation to successfully deliver the goods or as the author states on page 373, “Innovation is the child of freedom and the parent of prosperity.”

Patents are an important form of regulation and while they protect inventors, they can have unintended consequences of slowing, if not curtailing, novel applications if patent owners are stubborn and too tight-fisted.  Velcro is a great example of how patents delayed its worldwide consumption by thirty years.  It was invented in 1948, inspired by the cocklebur but wide-spread applications didn’t take off until the patent expired in 1978.

Of special value to many readers will be the final chapters, “Fakes, Frauds, Fads and Failures”, “Resistance to Innovation” and “An Innovation Famine”.  These topics are often avoided in business books so pay attention.

Ridley laments that “Corporate managerialism is gradually squeezing the life out of enterprise as big companies in cozy cahoots with big government increasingly dominate the scene. Their bosses shy away from uncertainty, and instead make their companies increasingly bureaucratic.” (page366)

Innovation is one of the critical engines of economic growth and an ideal subject for Matt Ridley’s intellectual exploration.  How Innovation Works is a great contribution to the subject at a time when we too often take our cornucopian abundance for granted.

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