A modest prediction: In post-pandemic America, populists and progressives will point to Operation Warp Speed’s role in COVID-19 vaccine development as a powerful example of effective industrial policy. And almost certainly to argue for more of it. Here’s what we know about OWS and the Pfizer-BioNTech partnership, at least according to The New York Times:

In July, Pfizer got a $1.95 billion deal with the government’s Operation Warp Speed, the multiagency effort to rush a vaccine to market, to deliver 100 million doses of the vaccine. The arrangement is an advance-purchase agreement, meaning that the company won’t get paid until they deliver the vaccines. Pfizer did not accept federal funding to help develop or manufacture the vaccine, unlike front-runners Moderna and AstraZeneca.

Now the subtleties here are likely to get lost. Market guarantees to help generate a technological solution to a singular, clear-and-present-danger problem are one thing. But fashioning what economist Mariana Mazzucato calls an “entrepreneurial state” where government broadly provides  “mission-oriented directionality” to R&D efforts — well, that’s quite another. A crisis when the clock is ticking seems an appropriate moment for “mission-oriented directionality.” Yet even during this pandemic, Washington hasn’t been picking a preferred vaccine approach. As the Wall Street Journal editorial page notes, “The apparent breakthrough is a credit to the innovative capacity of the private pharmaceutical industry. Pfizer has developed the vaccine using its own capital.” And how many similar missions are there? I suppose climate change would be another one. But we don’t want to let “mission-oriented directionality” squeeze out the scientific serendipity of basic research. This from my podcast chat earlier this year with Tony Mills, director of the R Street Institute’s science policy program.

Here’s what I would not like to see: someone saying, “Here are the practical goals. Let’s throw money at them and see if we can solve the problem.” I think in some discrete cases that may be perfectly fine. If we’re talking about developing a vaccine for the novel coronavirus based on what we know about its underlying virology or whatever, then okay. But in focusing on large-scale, “we need a moonshot” kinds of things, the danger is that we are not very imaginative. And by “we,” I mean people that are not developing the scientific ideas about how discovery, innovation, and progress really take place.

And we can talk ad nauseum about this. There are a lot of examples of these kinds of serendipitous discoveries, where developments in physics lead to breakthroughs in parts of biology or something. So I think it’s very difficult to put your thumb on the scale ahead of time and come up with the right answer.

Yet even the most incompetent government can sometimes seem to achieve big advances. Take the Soviet Union and the Space Race. It jumped out to the lead with Sputnik. But it was America that got to the Moon first. Why did the US win and the USSR lose? A 2019 Air & Space magazine piece makes a number of interesting points. The Soviets were at a disadvantage in both money — America was simply a far wealthier nation — and time. As to that second point, the piece notes that the Soviets didn’t start pushing hard until more than three years after President Kennedy’s 1961 declaration. Then there’s this:

The late start, however, was not the only—or even the most important—problem. The Soviet defense industry was beset with a chaotic management system completely at odds with what we might imagine for a socialist economy. While NASA was a centralized, top-down system run by the federal government, the Soviet space program acted more like a socialist version of a competitive market. But rules were followed only half the time, and the program was held hostage by bureaucratic gridlock and the whims of powerful individuals.

Longer-term, the failure of the Soviet economy to bury America’s is an interesting subject. As I have written, the USSR had plenty of natural resources; a big, educated population; and an impressive scientific establishment. And yet that was not enough. In his famous analysis of why the Soviets’ centrally planned economy failed, economist Joseph Berliner wrote, “It is only a slight exaggeration to assert that if the Soviet Union had succeeded in matching the technological attainment of the leading capitalist countries, there would have been no Gorbachev, no perestroika, and no retreat from socialism.” Berliner also notes that there was plenty of incentive to innovate — and not just for the glory of the Party, The Soviet system provided big bonuses to workers and managers for increased production, bonuses that increased as it became clear the nation was losing not just the Space Race but the Innovation Race. What the Soviet economy lacked was the Darwinian struggle for market share and profits that otherwise would have compelled industry to seek and adopt new innovation, either technological or operational. There was, Berliner explains, no “invisible foot” of competition where firms faced the threat of failure from new rivals if they did not innovate. Here, according to Berliner, is how a typical Soviet manager would have thought about pushing an innovative new product:

Not exactly the attitude of Silicon Valley startup.

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