T NVENTION, defined as activity directed toward the discovery of new and useful knowledge about products and processes, is one of the most important phases of the growth of civilization. Yet it is one of the least understood. Who engages in an inventive activity, why, when, and how? Only in recent years has serious research been undertaken on these problems, and even now the amount of work being done to ferret out the answers is lamentably small. The low level of genuine knowledge in the field has permitted the propagation of views sufficiently at variance with the facts as to raise doubts concerning the soundness of existing policies, public and private, designed to foster invention. Most of us believe the independent inventor is dead and buried. Most of us believe, too, that invention today has become the exclusive stamping ground of the salaried Ph.D. working in the laboratories of large corporations, surrounded by mysterious instrument panels, electronic brains, and other Ph.D.s. The prevailing view was well expressed by Professor Galbraith when he wrote, There is no more pleasant fiction than that technical change is the product of the matchless ingenuity of the small man forced by competition to employ his wits to better his neighbor. Unhappily, it is a fiction. Technical development has long since become the reserve of the scientist and engineer. ' Similarly, M.I.T.'s famous mathematician-inventor, Norbert Wiener, recently wrote, Invention came to mean, not the gadget-insight of a shopworker, but the result of a careful, comprehensive search by a team of competent scientists. 2 This belief is substantially reflected in official attitudes at the highest levels. Thus, in a recent 99-page report of the National Academy of Sciences-National Research Council to the Mutual Security Agency on Applied Research in the United States, team research in organized laboratories alone receives attention.3 The activities of independent inventors, and even those of hired inventors whose main function is not invention but the guidance of existing processes, are ignored. The prevailing view has a factual basis in the great and well-advertised increase in industrial research laboratories since World War I, and more especially since World War II. Well-advertised is italicized, for it is probably mainly because business managements have been shouting their own progressiveness from the transmitting antenna-tops that these ideas are so popular. It makes a difference whether the widely held view is true or false. If false, continued public belief in it will help make it true. Potential independent inventors will be dissuaded from inventing and thereby help make true what had only been believed to be true all along. The fundamental argument of this article is that the prevailing view has magnified an important characteristic of modern invention into a universal one, and that in doing so a serious distortion of reality has occurred.

Forty-six years ago when various social theories, pregnant with nineteenth century optimism, postulated a continuous increase in the rate of discovery and invention, a Swedish scholar noted that the annual number of patents issued by the principal industrial countries showed signs of leveling off.3 This retardation contrasted sharply with the rapid increase in patenting characteristic of the nineteenth century. Subsequent investigation disclosed that the number of patents issued per capita tended to level off and perhaps to decline for every nation after it had passed through the rapid industrialization phase.4 Whether the retardation in patenting reflected a genuine stabilization or diminution in the per capita rate of invention or merely in the proportion of invention which is patented is therefore a question which has perplexed social and physical scientists for some time.5 The issues raised by this trend in patenting in the western world are not merely academic, for if the possibilities enumerated by Kuznets many years ago are indeed correct, and patent statistics (for the period under review) reflect either inventive activity, changes in technical knowledge, or technical change,6 then the retardation in statistics of patents issued means that the growth rate of one or another of these fundamental phenomena has been declining. True, no retardation in the rate of technical change has appeared in other, more reliable indexes, such as output per unit of input, but the possibility exists that the data reflect a decline in

T HE index of output per unit of total input that is discussed in this article is intended to describe the pattern and magnitude of technical change for the United States as a whole from I869 to I938. Based on national output and input, the index possesses the following attributes: I. Output equals gross national product in I929 prices (the Kuznets series). 2. Input equals the sum of labor, land, capital, and enterprise inputs in I929 prices. a. Labor input, involving separate weighting of agricultural and non-agricultural labor by I929 wage rates, is presented in two variants one measuring labor in manhours, the other, in man-years. Two alternate total input measures result. b. Other than capital consumption, property input (including enterprise) is determined by weighting the given-period's combined value of land and reproducible producers' wealth in I929 prices by the I929 rate of return on property. c. Changes in the amount of farm acreage dominate the land component. The land valuation weight, however, reflects the I929 value per acre of both urban and farm land. d. Reproducible producers' wealth in I929 prices is derived from one of Kuznets' series. e. Capital consumed in I929 prices is included in nonlabor input. 3. Input and output are presented in overlapping decade averages. We may now note the leading merits and shortcomings of the indexes. Formally our statistics measure output and input for the period in I929 prices. Our objective is, however, to measure them as though valued by baseperiod buyers. Since relative quantities of different products and resources varied over the period, we can assume that base-period buyers would have valued each ingredient otherwise than in the base period. Because of these variations, the precise relation of our indexes to the true valuation of aggregate inputs and outputs is indemonstrable. This flows from the permanent and insoluble defect of index numbers. For the index exactly to fulfill its intended purpose, the measurement of technical change, linearity should pervade transformation relationships between goods, substitution relationships between factors, consumer indifference relationships between goods, and production relationships between factors and goods (including constant returns to scale). Though these requirements are not met, so long as the defects are not destructive of all significance of results, a defective tool is preferable to none at all. For shorter-period comparisons, an index number can give fairly valid results. For longer-term comparisons, the uncertainties mount, but the need for at least a rough approximation remains. Linked by a common language, government, and monetary system. America's economy with all its manifold diversity has been a fairly coherent whole. Averages of attributes of its parts are not only computationally possible: the averages themselves in a real sense significantly influence the parts. For this reason aggregative measures, conceptual flaws notwithstanding, are indispensable. That the secular and cyclical position of the economy exerts great force upon the corresponding characteristics of its components cannot be gainsaid. In this paper adumbrations of one.more such influence will appear. As we shall also see, our indexes describe patterns of technical change corroborated by independent vidence. We shall discuss first the components of the indexes, and then compare the aggregative efficiency index with similar indexes for major industrial segments.