From your reading of Chapter 2, you will know that many scientists—and academics generally—are concerned about receiving due recognition for the information, ideas and arguments which they have contributed. Often this is the only direct reward they receive for their work.

A key feature of this acknowledgment is the use of references in written work. Therefore, the proper understanding of referencing is important in making sense of much scientific and scholarly writing. In addition, you will have noticed that this book itself is referenced, and you may wish to understand the system used.

There are excellent—and lengthy—guides to the different referencing systems. The Australian Government Publishing Service (1988) for instance, devotes about thirty-five pages to explaining how to reference. We will give an outline of the two most important systems, and suggest you consult the Australian government if your thirst for knowledge is greater. Since the best way to learn something is by doing it, imagine that you are writing a piece of text, and you wish to reference it. What are you trying to do?

A reference should enable the reader of your text to find the passage which you have reproduced, or the ideas which you have used, by looking up the relevant page in the book or article from which it came. Therefore your reference must identify the book or article and state the relevant page number.

This book sprang from two different sources, both related to our positions as academics teaching Science, Technology and Society in the Faculty of Science and Technology at Griffith University. In the first instance, the imperatives of providing undergraduate students with a broad view of the relationships between the sciences, technology and the larger society seem to become more pressing as the years go by: industrial empires rise and fall, computerisation transforms the nature of work, and biology cuts ever closer to our concepts of who we are and why we are here. As a society, we have a fairly simple choice. We can ignore these changes and attempt to cope with them as they appear. Or we can seek to understand what is happening and to exert some measure of control. Our view is clear: we favour the latter option. The second reason for writing the book was the need to fill a gap in the market. Although many excellent books and papers exist for our area, we have not found a single work which covers the material we want students to understand, at the level which seems appropriate. So, after a good deal of thought, we decided to write our own.

At its most basic level, this book seeks to show undergraduate students (and first-year students in particular) what science, technology and society is all about. It presupposes no study in or knowledge of the area, and is pitched at a level which most students should find clear and comprehensible.

In this book so far, readers have been introduced to a range of issues involved in the interactions of science, technology and society, and it has been seen that science and technology have been steadily growing in importance throughout history, especially since the so-called Scientific Revolution of the sixteenth century, at about the time of Copernicus. Much of this importance has arisen from the employment of science and technology, from an early date in the economic sphere—as was seen, for example, in Newton's attempted experiments in alchemy (Westfall 1994) and, more recently and seriously, the vast expenditure on R&D in the drugs industry. But contrary to a commonly held view—that there exists some kind of inevitability in scientific and technological ‘progress’—it can be shown that conscious decision by policy-makers can have a major bearing on the directions taken by science and technology, including the kinds of economic activity in which science and technology are employed. In this chapter, specific illustrations of this general principle will be given, beginning with a study of the British alkali industry of the eighteenth and nineteenth centuries, and following this with a comparison of the ways in which science and technology have been utilised in Australia and in two highly industrialised nations—Sweden and Japan.

The British alkali industry

In Chapter 6, it was explained that the Industrial Revolution of the late eighteenth and early nineteenth centuries in England and Continental Europe, at first based on textile manufacturing, largely took place without science.

This chapter complements the last two by outlining some major ways in which economists have sought to understand the relationships between science, technology and the economic system. The economic impact of science and technology is probably the major reason why governments pay so much attention to these factors, as shown in Chapters 2, 6, 7 and 9. Equally, economists have expended much effort trying to understand how new knowledge, and new technology, fit into economics. Some surprising results have emerged: for one thing, the orthodox approach to economics has not proved very useful in understanding technological innovation and change, although it has continued to make major impacts in other areas (e.g. Becker 1976). For another thing, following one of the major themes of this book, it has become clear that where knowledge is produced in the economy, and how it is linked to business and industry, are crucial in determining the economic outcomes.

It is a characteristic of industrial societies that we tend to take for granted the flow of new products and processes, such as computers, drugs and food products, but this was not always so. As we saw in Chapters 6 and 7, science did not begin to influence industry directly until the middle of the nineteenth century. Technology has always been important to humanity, but in the past, change was much slower: entire generations might pass and experience little that was new or innovative (Clark 1985:27).

Controversy is a normal and natural part of human existence, and also of science. If science is to advance at all, new theories and findings must be put forward, and older ones discarded. This often produces controversy, especially if the proponents of outdated findings and theories are still active. Therefore, how science handles controversies is an important aspect of how science actually works.

Conflict within science is inevitable, but so too is conflict in the larger community. Furthermore, an increasing number of these larger controversies involve science and technology. If an airport or freeway is to be built or expanded, questions arise about the science and technology involved: what construction techniques will be used, is there danger to anyone, is there pollution, and so on.

In this chapter, we shall review the different types of controversy, both within science and in the larger community, and also acquire some useful ideas which throw light on them. As part of this process, we shall look at two different controversies in some detail, examining the course they took, and the reasons why they worked out as they did. One of these controversies—continental drift—took place purely within science. The other—the New Zealand cervical cancer scandal—involved both science and medical technology, but took place primarily in the larger community.

Purely scientific controversies

The most straightforward type of controversy is the purely scientific one (Giere 1987).

The world of today is undergoing rapid changes, many of them driven by advances in science and technology. Our world has been shaped dramatically by new technology. Think of the impact of the car, of television or of the personal computer. Many people see the current rate of change as bewildering, even disorienting. There is no reason to suppose that the pace of change will ease. Indeed, there are two reasons for expecting change to be more rapid in the future. More scientists are working today than ever before, so the pace of scientific advance is greater than ever (Jones 1982:179–80). Additionally, the power of information technology means that new techniques move much more rapidly from one part of the world to another. So we must expect continued rapid technological change, and associated social, economic and political changes (Kennedy 1993:344–9).

It is a key point that the future is not pre-determined. Many people behave as if it were an unknown land which we discover one day at a time. Just as the world of today has been shaped by the decisions and actions of our forebears, the future is being formed all the time by what we do, what we say and what we think. Japan has changed in forty years from a middle-rank economic power with a reputation for shoddy workmanship to the world's dominant economy with a reputation for excellent design and quality manufacture (Kennedy 1993:150–4).

Michael Polanyi, a chemist turned sociologist of science, tells an interesting story. He recounts that he and the philosopher Bertrand Russell were on the radio in Britain and were asked what practical applications might result from the Einstein formula, E = mc2. Neither of these eminent gentlemen could think of any. The interesting thing about this tale is that it took place in April 1945, a bare three months before the first atomic bomb was dropped, but some forty years after the Einstein formula was discovered and expressed in the special theory of relativity. Polanyi told this story in an essay called ‘The Republic of Science’, first published in 1962, because he wanted to convince his audience that the practical outcomes of pure scientific research were often unforeseen, unforeseeable even, and certainly unintended (Polanyi 1969:58–9). If that were true, then it would not be possible to hold scientists accountable or responsible for their work outside the context of pure science. They would not be answerable in any way for where their work leads and what it enables others to do.

Would it not be better if the scientists were responsible for their work? Certainly, scientists like to claim credit when they do something which helps others. Medical research is one of the best examples. Gene therapy, for instance, is becoming widespread and effective, and it is now possible to treat a number of inherited genetic effects by introducing normal genes into the body (see Weatherall 1991 for many examples).

Introduction

Since the publication of Theory of Games and Economic Behavior by von Neumann and Morgenstern (1944), the study of coalition formation has been one of the central questions in game theory. In the words of its founders, one of the purposes of game theory is to ‘determine everything that can be said about coalitions between players, compensations between partners in every coalition, mergers or fights between coalitions…’ (von Neumann and Morgenstern (1944, p. 240)). This quotation clearly poses the three basic questions of endogenous coalition formation: Which coalitions will be formed? How will the coalitional worth be divided among coalition members? How does the presence of other coalitions affect the incentives to cooperate?

As noted by Maschler (1992) in his survey on bargaining sets, cooperative game theory has focused mostly on the second question – the division of the payoff between coalition members. In fact, it is even surprising to note that the first question has been assumed away in most cooperative game theory. Even the Aumann–Maschler (1964) bargaining set, which was specially designed to analyse the formation of coalitions, specifies an exogenous coalition structure and falls short of determining which coalition struture will form. Finally, the third question, dealing with competition between coalitions, is simply ignored in traditional cooperative game theory, since the coalitional function cannot take into account externalities among coalitions.

In recent years, the limitations of cooperative game theoretic solution concepts has led to the emergence of a new strand of the literature describing the formation of coalitions as a non-cooperative process.

Environmental economics was the subject of a comprehensive research programme in the 1960s and 1970s. This programme dealt with a wide range of issues and policy problems, such as the economics of natural resources, the methods and problems in the correction of externalities, the management of common property goods, the economics of nature preservation. Against this background, suitable analytical tools were provided by the theory of non-renewable and renewable resources; the theory of missing markets; Pigovian taxation and the theory of property rights; the economics of public goods; welfare economics. All in all, the research programme was very successful and in the following decade it gave rise to several textbooks, from Baumol and Oates (1975) to Siebert (1987), Pearce and Turner (1990). At the beginning of the 1990s, no less Partha Dasgupta (1990) was claiming that environmental issues were ‘very cold’ as topics for analytical investigation and ‘dead’ as research problems.

In recent years, however, scientists have highlighted a set of ‘new’ environmental phenomena, such as global warming, ozone layer depletion, acid rains, fresh water and ocean pollution, desertification, deforestation and the loss of bio-diversity (e.g., cf. UNEP (1991)). Some of the above phenomena, such as ozone layer depletion, were newly discovered; some others were known, but attracted new attention, due to their scale and socio-economic implications, such as global warming. In both cases, the new environmental problems entered the agenda of policy makers and became the centre of world-wide debate and a massive diplomatic effort, culminating in the UN Conference on Environment and Development, held in Rio de Janeiro in 1992 (for a discussion, see World Bank (1992), Siniscalco (1992), IPCC (1995)).

Introduction – the issues

There are three main factors linking environmental policies and international trade. First, to the extent that international trade affects both the extent and the pattern of production and consumption of goods in different countries, if these production and consumption activities have external, detrimental, effects on the environment of the countries where consumption and production take place then trade will affect the environment; policies which affect trade will affect the environment and policies which affect the environment will affect trade. Second, production and consumption activities in one country could have international spillover effects on the environment of other countries – as in the acid rain problems of Europe and North America, the problems of pollution of rivers such as the Rhine or global commons problems such as climate change. While such transboundary pollution problems could arise in the absence of any trade between countries, if there is trade between the affected countries, then, in the absence of any direct agreement between the countries to deal with transboundary environmental problems countries may use trade policies to affect the pattern of production or consumption in other countries, and hence the amount of transboundary pollution to which they are exposed. This is related to the third factor: international trade policies may be used to enforce international environmental agreements, not necessarily with a view to directly affecting the pollution generated by that country but simply as part of package of sanctions for failing to join or comply with an international environmental agreement.

Introduction

Politicians and others often argue that environmental policy, and in particular environmental taxes, ought to be coordinated across countries. Two types of arguments for the desirability of international coordination of environmental taxes are frequently given. The first argument states that uncoordinated tax policy will lead to unequal taxes across countries, with a corresponding distortion of the relative competitiveness of countries. Related to this argument is also the fear that when environmental taxes are set individually at the country level, each country's concern about its own competitiveness may imply that environmental taxes throughout are set too low. The starting point of the second type of argument is that several important environmental problems are characterised by international spillovers, i.e., that the environment in one country depends not only on emissions in this country, but also on emissions in one or more other countries. When the environmental problem is international in this sense, environmental policy must also be coordinated according to this type of argument.

This chapter makes a closer study of the arguments for an international coordination of environmental taxes. Section 2 covers the first type of argument, in the context of an environmental problem with no international spillovers. It is first shown that under ‘ideal conditions’ there is no need for international coordination of environmental taxes. ‘Ideal conditions’ include the following assumptions: (a) there are no market failures other than the environmental externality, (b) governments maximise the welfare of a representative household, (c) the environmental externality can be monitored at the micro level, e.g., emission levels from a firm or consumption levels of a good which has a negative impact on the environment.

Introduction

Exploitation of natural resources and environmental assets is a dynamic process, given that utilisation and (spontaneous or induced) regeneration flows affect the quantity and/or the quality of the stock. Optimal exploitation of natural and environmental resources has therefore to be forwardlooking, as economic agents need to take into account the consequences of economic activity on the future availability of resources. However, devising optimal exploitation plans is in practice an enormous challenge, due to incomplete information (e.g., about models of the interrelationships among economic and ecological subsystems), genuine uncertainty (e.g., about the possibility of a future climate change or about future environmental policies or technologies) and international links (in the case of uniformly mixing pollutants like CO2, policies decided by one country in isolation from the international community may not be effective).

Devising optimal exploitation plans is an enormous challenge also in theory. Of course, there are several reasons why it is important to perform a theoretical study of the relationship between economic activity and the use of resources: it may be a source of inspiration for empirical models aimed at building quantitative tools assisting policy makers in the creation of economic and environmental policies (many large-scale econometric models based on optimising agents for studying demand for resources are nowadays based on the assumptions of intertemporal maximisation); it may enlarge the range of phenomena considered by economists, for example to take into account variables that are fundamental to issues of sustainability of growth and its compatibility with the environment, like the laws of thermodynamics and population, and may motivate economists to devote more attention to the analysis of complex systems.

Introduction

In many social and economic situations individuals form groups rather than operate on their own. For example, individuals form communities in order to share the costs of production of local public goods, or workers join a labour union in order to attain a better working contract. In fact, firms are coalitions of owners of different factors of production, political life is conducted through a rather complicated structure of political parties and interest groups, and households are actually coalitions of individuals.

The reason for the existence of groups which contain more than one agent but less than the entire society lies in the conflict between increasing returns to scale provided by large groups, on the one hand, and heterogeneity of agents' preferences, on the other. Indeed, it is often the case that firms create joint research ventures rather than conducting R&D independently in order to extract the gains from cooperation and obtain access to a larger pool of resources. However, given the heterogeneity of agents' tastes, the decision-making process of a large group may lead to outcomes quite undesirable for some of its members. This observation supports the claim that, on many occasions, a decentralised organisation is superior to a large social structure. Instead of a grand coalition containing the entire population, we often observe the emergence of group structures which consist of groups smaller than the entire society. Another example is that of political games, where voters have preferences over the policies that will be chosen and parties pick their ‘ideological positions’ so as to attract voters.

Introduction

There has been a very considerable surge of interest in recent years on the question of how various types of environmental policy will affect incentives to innovate. There have been two main strands of concern underpinning this work.

The first is prompted by the concern that environmental policies operate by correcting the distortions introduced by having unpriced externalities. Since the major externalities of concern arise from pollution, this typically means that when goods and services are traded at their true price they become more expensive, leading to a reduction in output of those activities and a re-allocation to others. While this is precisely what these policies are intended to achieve, the question arises as to whether the amount of re-allocation might be reduced if the introduction of such policies spurred firms to innovate in order to discover new cleaner technologies which had lower levels of emissions. The question therefore arises as to just how effective environmental policies are in generating new innovation.

Early work on this question by, for example, Downing and White (1986) Magat (1979), Malueg (1989) and Milliman and Prince (1989), explored the effectiveness of a number of different environmental policies. However this literature suffered from a number of weaknesses. The focus was purely on the polluting activities of firms, and the interaction between this and the product market was poorly developed. Indeed the product market was typically taken to be perfectly competitive. Finally innovation was modelled as an activity taking place under perfect certainty and with full information.