Some open questions on the financial history of technology
A quest for those with the skill and daring...
Plenty of people (even serious historians) have told the stories of inventing new technology and discovering new science. But there’s frustratingly few financial histories of research. Changing that would be incredibly valuable.
Detailed work on how money was spent enables unique comparisons to the past. Historians have dug into the archives and poured over old account books to pull out the amounts spent on dowries, salaries, and household items in Renaissance Italy, comparing that spending to the yearly wage of a day laborer, and then used that wage to convert all of those amounts to contemporary dollars. From this work we can learn that a well-paid Renaissance professor made potentially more than a tenured professor today (up to $800k/year vs ~$200k/year) but what you could buy with that money was very different – a nice set of clothes could cost as much as a Lamborghini today. (See Ada Palmer’s excellent new book for more.)
As far as I know, nobody has taken a similar look at finances in the history of science and technology. Some historian friends and LLMs have corroborated this, so I’m pretty sure these are legitimately open research questions.
First, I’m going to describe these questions (each of which is a hardcore, dig-into-the-undigitized-archives-and-try-to-piece-things-together-from-account-books, history research project) and then I’ll explain why answering them is important (and just interesting and cool). Ideally, someone would find out the following for a wide range of technologies, not just the most charismatic ones:
How long did the technology take from conception to being sold? Taking into account both when the person or group who started selling it successfully started working on it and when other people who maybe went bankrupt or never brought it to market. (Many people who invented important things went bankrupt!) And the corollary, how long did it take for the technology to go beyond being a niche thing once it was being sold?
How much did a technology cost to develop in current $$? Again, taking into account both when the person or group who started selling it successfully started working on it and when other people who maybe went bankrupt or never brought it to market did work.
What was the return on investment for the people who put money into creating the technology? This question goes for both the inventor and other backers. Ideally these returns would be recorded over time so you could calculate time-discounted returns (a dollar ten years from now is worth less than a dollar a year from now).
What were the returns on comparable investments when a technology was created? If someone took a chunk of money they spent inventing a technology and bought bonds, real-estate, or stocks (if they existed) — what returns could they expect with what levels of risk?
What fraction of people’s wealth did they put into research and invention? How much of their savings did the Wright Brothers put into the airplane? How much of his fortune did Alfred Loomis put into Tuxedo Park?
I’m particularly interested in the answers to these questions in the 19th and early 20th centuries. Before that period, the idea of deliberate invention for the sake of making a profit was more rare; after that period we enter the era of modern venture capital.
Why do these questions matter?
The answers to these questions add color to the assertion that “we have picked all the low-hanging fruit.” It might be that indeed, it was once faster and cheaper to create valuable technologies. But I don’t think that’s obviously true. It may also be that our expectations around timelines, risk, or returns have shifted so that comparable work that yielded “low hanging fruit” in the past are no longer rational today (or were never actually rational).
We’ll learn things about how the enterprise of research has changed over time. It might turn out that building technology has become a worse (or better!) investment. Likely the answer depends on the type of technology. More generally, we might see patterns that hint at constants in the “nature” of technology.
We would also learn things about ourselves. The questions about comparable investments and fractions of wealth would give a sense of how risk tolerance around doing science and technology has changed. (I have a personal hypothesis that collectively we’ve all become much more risk averse.) We’ll also see how the personal value that people put on tinkering around or doing science has changed over time.
Finally, it would just be cool to know! Having more concrete information about the nitty-gritties of technology development in the past is another lens on history and the human enterprise.
If you’re a historian or funder interested in collaborating on this, get in touch!