I: The great question

THE TERM ‘RESEARCH’ is central to the discussion of higher education. There are research rankings, research-focused universities, research-funding bodies, research institutes, research students and research degrees. The idea of undertaking research is crucial to the professional self-conception of most academics.

But of course, research – understood broadly – is also a fundamental human and social need. At the grandest level, we do not know how to make societies that are stable, prosperous and just; we do not know how to build cities that are beautiful and convenient; we do not know how to ensure good relationships; we do not know how to use technology to make ourselves wiser, rather than merely busier; we do not know how to bring out the best in everyone. These are vast aspirations for knowledge. And the kind of knowledge at stake has many aspects: it is evaluative, practical, empirical and theoretical. We certainly know some things about some of these aspects, but we are still far short of the comprehensive, effective understanding that we need.

At a very slightly less imposing level, we do not fully understand how our brains work, we do not know enough about how the global economy is really structured, we do not know exactly what lessons we should learn from the past, we do not know how to prevent and cure all cancers; we do not know how, in practice, to prevent or mitigate climate change – or even how to assess the precise threat. These are slightly less grand (thought still incredibly important) because they are contributions to – but not guarantees of – healthy, wise and happy lives.

So, what expectations should we have for research in universities? In our world, universities are the single biggest concentration of research activity and the only institutions that undertake research in all its relevant aspects. The unwritten, but real, social contract for universities includes – as a crucial element – the idea that universities are organisations that deploy resources to conduct research on the big problems in such a way as to contribute to collective well-being.

Holding together the natural – if often inarticulate – aspiration for the most important knowledge and the role of the university as the key place where important knowledge is sought – raises a crucial issue: How to organise these efforts. This is the key question: How should we undertake research to create the kind of valuable knowledge that is needed and bring it powerfully to effect in the world?

We propose a radical answer to this question.

In this essay, we focus particularly on the humanities and economics – our own broad areas of research. These large fields ultimately address two of the most vital questions of these times: what should we care about and how are resources allocated. The world desperately needs the best thinking on these matters to guide individual and collective endeavours.

Strikingly, research in both these fields is financially precarious. This is masked by the fact that most university research in these areas in Australia is subsidised by windfall income from overseas students. Such income is likely to decline significantly as universities across Asia become more globally competitive. It is really shocking that core intellectual work in areas of such obvious relevance has had serious difficulty developing a realistic and sustainable financial platform.

In fact, as we shall show, this precarious situation is caused by flaws in the way research is conducted and organised. This is a symptom of a deeper problem. But the goal of improving the model of research is not that universities will benefit; the ultimate aim is that society should benefit.

II: The best model

THE BEST-DEVELOPED model of research is found in medical faculties. In recent times, medical faculties, have by far the largest research budgets. For instance, at the University of Melbourne almost half the research income comes from biomedical research. What are they getting right?

There are two key elements of medical research that explain its tremendous social impact and strong financial base. Medical research is mission driven. It establishes real goals. Medical research sets out to develop effective treatments for identified conditions – cardio-vascular diseases, cancer or mental illness (to start the list). These goals are widely shared. Everyone wants improvements in these areas.

The idea of mission-driven research can be easily stated. But its importance cannot be emphasised enough. Everything flows from it. Essentially, medical faculties are organisations devoted to fulfilling a great mission.

The second element is that medical research is vertically integrated. This is a somewhat technical way to describe the flow of information between different stages in a process. Imagine a dedicated athlete training for a competition. Everything she does – what she eats, how much she trains, what exercises she concentrates on, her mental preparation – is directed to a later stage: the actual performance on the day. But the preparation is only helpful if it is guided by insight into what it would actually take to perform well in the race. In other words, in a well-integrated process, the needs of the final stage dictate earlier efforts. Just as earlier efforts are directed to ensuring eventual success. This is the ideal. In practice such integration is not perfectly achieved. Nevertheless, it points to an important lesson that other fields of research could learn from.  

The idea of vertical integration is not new. Its classic formulation comes, in fact, from Aristotle and arises from his analysis of the relationship between means and ends. If you seek a particular end, you have to marshal adequate means. But the path to that end is governed by developments in the means available. In Aristotle’s example a bridle manufacturer has to take into account the needs of riders. But riders can enhance their skill by adopting fine innovations from the manufacturers.

In medical terms to be healthy demands organising the means of prevention and cure. But equally, understanding how to do this depends on the development of available techniques. Preventing or treating an illness alters with improvements in science and technology.

The process may be thought of as a ‘value-chain’ – with different stages adding value to the achievement of the end at which they are directed. Vertical integration, therefore, means oversight, engagement with or even control (sometimes through ownership) of the various stages of a process.

Medical faculties have pursued vertical integration to a remarkable degree. In order to carry out their mission, they need access to the people with the problems. So, they are closely involved in hospitals. Those in need come to them, so that their actual diseases and problems can be studied first hand, and the efficacy of treatment observed in action.

In order to make treatment more effective, new techniques and understanding is required so, of course, research is necessary. But that research is in constant contact with practice. Often the same people are involved in both. The consultant who diagnoses a rare eye disease in a particular patient in the morning, is in the afternoon conducting research. And later in the year will attend a conference
on laser technology and another on developments in anti-inflammatory pharmacology.

Information and insight flow relatively seamlessly between the different stages of the chain, from basic research to the patient and back, often within one institution. This means that the research is powerfully connected to critical sources of evidence: how things actually go with patients. So ‘blue sky’ fundamental research can over time connect in a powerful way with its final purpose – keeping people healthy. A key point, is that the problem is brought to the researchers. Patients come to the hospitals seeking diagnosis; drug companies seeking research output come to the university.

Vertical integration relies on good management. The medical education process helps with this because as individuals move through it, they are introduced in a gradual way to greater levels of administrative responsibility. Thus by the time someone is appointed to a senior role, they have already had experience managing people and resources, tried and tested in lesser leadership roles.

The effectiveness of the mission can be traced and analysed from laboratory bench to bedside to national statistics. This enables resources to be allocated in a principled way. Ultimately the aim of the people in the laboratory is to make a difference to the statistics. And it is possible to make an informed decision about the success, or otherwise, of their efforts. The people who have oversight of the whole chain have a good grounding in most of its parts. The character of medical training ensures that specialists have a working understanding of the whole.

The medical faculty manages the money flow and investment; some stages are costly, but the cost can be met because they are linked effectively to other stages that are income generating. The institution purses or has ownership (in some appropriate form) of all the key stages. In fact, there are many forms of vertical connection. Sometimes there is actual ownership: a medical faculty might own patents or sophisticated research facilities. Sometimes there is a market interface: independent institutions or corporations interact with the faculty. But in all cases there is strong mutual understanding of the purpose of the interaction and a powerful flow of information: ‘you need, we need…’

The medical model also exhibits a high degree of ‘horizontal integration’: research in one institution is integrated with that in others. In other words, researchers working on immunology in one institution are in close contact with, and learn from, those elsewhere working in the same field. They are all engaged in fundamentally the same project. They are all working, ultimately, to answer the same socially important questions. Therefore important research done anywhere is necessarily of value to researchers everywhere. But it is significant that this horizontal connectedness is embedded within a powerful vertical organisation. As a result the benefits that come from horizontal connections – many researchers in different institutions sharing their knowledge – end up directed towards social benefits.

In these ways, a medical faculty integrates all the activities needed to solve the problems. It pursues vertical integration, because you must, if you are serious about fulfilling a mission.

Because vertical integration has often been deployed in business practice it is worth spelling out the difference between the medical model and, for instance, a supermarket chain, which – in a commercial sense – might be a prime example of the phenomenon. The difference lies in the mission. Although the supermarket may keep an eye on the social good, and argue that providing low cost food is of collective benefit, its mission is bounded by its duty to provide financial returns to its shareholders. By contrast: although a medical faculty must keep an eye on finances and cannot function well unless it uses resources efficiently and operates in surplus, its mission is bounded by its duty to provide the best possible medical treatment, at an acceptable cost, to society. A healthy financial position is not a goal in itself but a necessary condition for the pursuit of the mission.

AN INTERESTING FEATURE of the medical model is that it draws the boundaries of the institution in a way that is, as yet at any rate, anomalous within universities. If you were to draw a map of the people and assets directed to medical research, it would include businesses, government and public infrastructure all operating in close connection with medical faculties. The faculty does not stop at the end of an office corridor or at the door of a laboratory. It extends, more or less explicitly into a wide range of institutions, corporations and organisations. But, of course, all this occurs for the sake of vertical integration: so that the required resources can be harnessed and directed to a great public end.

Beyond the medical field we actually see cases in which powerful agents in lower stages of the value-chain develop their own research entities. Thus Apple and Google, which are large consumers of research, have taken the view that it is more efficient for them to own their own research institutes. McKinsey and Co has vigorous in-house training that focuses on certain aspects of philosophy: the rigorous analysis critique, formulation and reformulation of arguments. These examples of vertical integration – successful businesses take ownership of a resource that otherwise they would have to purchase in the market – are reminders that research can be highly valued without universities. And although universities retain many advantages which derive from having been involved in research longer, and more widely than any new competitors, they are not guaranteed ‘first mover’ benefits forever. Increasingly, universities compete in the market place of ideas and, if research is to flourish, it must be organised on a more efficient and effective model.

The impressive cohesion and efficacy of the medical model is not an accident. If we scroll back a hundred years, this medical model did not exist. It is an achievement: the result of crucial strategic insights, decisions and the evolution of a culture over a long period of time.

III: Learning the lessons

OUR QUESTION IS how research should be organised and undertaken. The radical answer – drawn from study of the medical model – is that this should be done in the light of two great, interconnected principles – mission driven and vertically integrated.

By comparison with the medical model, research in economics and the humanities is radically under-developed. It’s not, of course, that research does not occur. Obviously it does, involving many hundreds of academics across Australia. Let’s consider how these disciplines might evolve if it were mission driven.

The mission-driven approach to research is not dominant outside medical faculties. In economics and the humanities, research is fundamentally conceived as ‘investigator driven’. That is, individuals or small teams decide what they would like to work on, seek funding, and pursue their interests.

The investigator-led strategy has deep roots in the history of universities. Academics in most fields have been incentivised as contributing to the advancement of a discipline – or, more recently, to the evolution of interdisciplinary research. This is not, in principle, opposed to the fulfillment of a social mission. It’s just that the mission is an object of distant and indirect hope. One undertakes research on Kant or the stockmarket in the belief that eventually this will benefit the wider community. The knowledge gained will trickle down or influence students who will perhaps later put it to work in the world.

Collectively, investigator-led research pursues many different topics. And while these have affinities and correlations, they are not organised around a clear, over-arching ambition. In fact, such an ambition would sound bizarre within the existing culture of the humanities or economics. It’s just not what the disciplines do, or how they are structured, or what people signed up for, or how the system works. You don’t go into economics or the humanities to undertake a specific mission, you become a researcher in these fields in order to pursue your own research interests, in the belief that indirectly and in the long-term this will turn out to be beneficial for society.

We believe, however, that these fields should take inspiration from the mission driven approach to research. Starting perhaps with pilot projects, economics and the humanities should evolve into mission driven endeavours.

What are the great ends that research in economics or the humanities should seek; what great societal problems should they set themselves to answering (or at least to contribute to answering)? To state this in term of our initial question: What valuable knowledge do they aim to create and bring to powerful effect in the world?

• Allocation of resources: How do we set incentive structures in society to ensure the provision of basic resources like food and water to everyone (e.g. to alleviate poverty)?

• Short- vs. long-term: How do we make sure that in our decisions we adequately take into account the long term? How do we avoid unwanted negative consequences of our actions on later stages of our lives (e.g. retirement savings, healthcare), and on the lives of future generations (government debt, pollution, running down infrastructure)?

• Innovation: How do we direct resources towards fundamental, long-term research as a basis for future technologies? How do we train enough scientists to address the undersupply of qualified workers in science and technology?

• Art: what is art, why does it matter – and if it does matter, how can we get the kind of art we need?

• Value: How do we quantify the economic and social value of cultural activities and engagements?

• Experience: How do we learn, individually and collectively from experience – our own and that of others (including the accumulated experience of the past)? Are there specific things that, in general, should be learned?

• The quality of relationships: how to we improve the quality of our relationships to people, ideas and objects?

• Psychological well-being: The causes, impact and resolution of issues caused by psychological unease?

Before examining two of these great projects in detail, we address the idea of vertical integration as it applies to economics and the humanities. Different academic disciplines vary greatly in the extent to which they control (or interact with) the value chain. As we described, medical research tends to control many stages of the chain all the way from basic research in molecular genetics, for example, to performing surgery in university-affiliated hospitals. While other disciplines, such as philosophy, cover only a narrow stage of the value chain, often only certain aspects of basic research.

So, what determines the ‘boundaries’? Medical faculties often control hospitals or parts thereof because this facilitates their ability to treat medical problems. The question is, why are other parts of the university less integrated with, and control, far fewer stages of the chain?

The fact is, researchers in many disciplines have no interest in or incentive to engage powerfully with the rest of the chain (or to then create a virtuous circle). And that is a serious problem because, as we have been arguing, it is through engagement with the chain that research becomes valuable to others. The whole point is that research, ultimately, needs to matter in the lives of others. And the value chain is sensitive and responsive to what other people happen to care about.

Superannuation is a good test case to study this value chain. Australia – like many other countries – faces a huge long-term economic problem caused by demographic changes. As the population as a whole ages, and as people on average live longer, and medical as well as living expenses increase, the question of how to provide adequate income post-work becomes more and more pressing. Can this problem be solved?

In pursuit of an actual solution, university based researchers would need much closer contact with superannuation funds. What problems do they take themselves to face? What problems could they most accurately be seen as facing? What kind of knowledge to they really need and how could relevant knowledge be created and brought to them in useable form?

Voluntary savings might be crucial. We need to understand much better how and why people save and (ideally) how to actually get more people in Australia to save more. For this to happen, we need empirical research on the causes of prudence. Or if mandatory saving is envisaged, how can this approach gain enough popular acceptance to be politically viable? This highly ‘practical’ issue dovetails with deep philosophical concerns about the relation between short-term and long-term concerns. Indeed the topic originates with Plato and Aristotle. Plato conceives of the problem in terms of ignorance: the imprudent person does not fully understand what is at stake. Aristotle tries to understand the psychology of discounting the future and under the moral concept of weakness of will – the individual does in some way understand what is at stake, but does not act upon that knowledge.

In other words, we begin to see how a mission driven research project would lead to vertical integration. It’s not that universities need to own superannuation funds – a literal extension of the medical model that would wrong. Rather, integration concerns the flow of information and the understanding of the needs of later stage users in a chain of value. For example, it’s not much use coming up with a strategy for superannuation-fund management that fails because it does not take into account the actual needs of managers, or because it is not properly directed to getting their attention.

Likewise, if the aim were to actually change the behaviour of individuals – and make more people save more – we have to know a great deal about the real causes of such behaviour and about channels of influence.

A related problem is intergenerational transfer of wealth. If people don’t save for their retirement, they will fall back on governments (social security). But this will likely be at the expense of future generations. The more the current generation relies on government, the less investment in the future the government will be able to make, in infrastructure, education, or research. And if the government raises more debt to finance social security expenses, there will be a higher debt burden on future generations.

Trading off short-term benefits or costs against future benefits or costs is a crucial decision that people individually and as a society make all the time, a decision that often seems to be poorly made and is yet very poorly understood scientifically.

THERE IS A fairly widespread assumption that art is a public good. In some way it benefits a whole society. There exist many institutions both public and private that trade on this assumption. Art schools and state galleries are supported by taxation; there are art classes in schools indeed it forms part of the national curriculum. Even auction houses – which are ferociously commercial entities – trade on the assumption that what is being bought and sold is of high cultural worth. And high prices play a part (for better or worse) in defining excellence. Tourism is quite often interwoven with the allure of visiting major galleries or exhibitions (or other cultural icons) around the world.

This great issue is curious because there is as yet little understanding of the underlying problem. We tend to assume that all we need is more. But this does not engage with the true question: are we getting the things we need? So there is a great deal of work to be done, in the first place, in terms of consciousness-raising. This task probably arises at various stages in relation to all the great issues, but here it comes right at the start.

In connection with art, we actually see a strange phenomenon. Universities already possess close contact with, or even ownership of many key resources: they own art schools and galleries, or are intimately involved in their running. But these resources are not, as yet, organised vertically nor are they devoted to a proper mission. Their overt ‘missions’ – train artists, get people in to enjoy art – are just tactical goals. They are like the missions of accountancy night schools or supermarkets – train more, get people in and sell more. These are not terrible goals by any means. It’s just that they are not like the pursuit of the great ends or societal goods addressed by the medical model.

Thinking through the value of art – which includes fostering creativity, conveying important insights and educating our emotions – one might come to the conclusion that these institutions and people work with many confused and inaccurate assumptions. But getting better ideas to be powerful is a collaborative enterprise, it cannot be done simply by producing some research and conveying it in specialist journals. The ambition is to get the best understanding to flow through the practice of institutions. In other words: vertical integration.

The economics professor is not likely to be a director of a merchant bank or the head of the research group in this bank – in fact, that might be regarded as a conflict of interest. Although it is not considered a conflict of interest if a medical professor is on the board of a hospital let alone a consultant in a hospital. A senior lecturer in philosophy is unlikely to work half-time for an advertising firm – although such firms have great need of expertise in defining ideas. These suggestions may sound fanciful and even offensive to the ideals of these disciplines. That’s not surprising, because given the current priorities academics have not been specially or extensively trained for these roles. That should alarm us. It’s not a sign of excellence that academics are unequipped by education and experience for such engagement. It is, rather, a sign that the education and experience is not what it should be (or that it is not valued by the potential employing organisation). This is not to assume that the external institutions are perfect and that all academics need to do is adapt themselves to their needs. It is part of our argument that such enterprises are often flawed in crucial ways.  

A natural worry occurs here. Surely, it will be said, a philosopher working part time for an advertising firm is radically unlike a medical consultant being both a practitioner and a professor. For a hospital is ultimately directed to the same ends as research – curing diseases, restoring people to health – whereas an advertising firm has a completely different (some might say opposed) agenda to that of an arts faculty.

Imagine an alternative world in which medical practice and medical science had developed at a distance from one another. The researchers did not get involved with hospital, and regarded it as dangerous to the purity of their enterprise to do so; hospitals would set up their own research and development units that took only occasional interest in what was happening in the universities. Both sides would be radically the poorer – and the world, to be sure, would be much less well served. But isn’t this a picture of where we are in the humanities and economics?

The medical model reveals that the pursuit of the public good is not at odds with integration with markets.

Medical faculties tend to be wealthy because they serve the public good so well – and because of the reverence that attaches to their life saving and enhancing raisen d’être. And it is a mistake to suppose that a school of philosophy, say, is short of funds because it is so devoted to public ends. Rather it is the perceived lack of contribution to the public good that explains why society does not more richly support and reward its academic philosophers.

The root of the confusion is this. The public good, as a real end, has to be enacted. People have to value the ideas promulgated by the professors; find them helpful able to be put to work in people’s lives and businesses and in the processes of state activity. And, in practice, success in these activities is tied up with money, our primary means of exchange. You may decide, for societal reasons, to make a service free – but if that service is truly valued, there will be political will to enable its free or at least subsidised provision. The problem with much research is not that it is too noble in purpose to be supported by any kind of market. Rather it is too disconnected, too remote from actual interests and needs to earn widespread devotion, love and (in the end) money.

Vertical-integration is a necessary – but difficult – requirement for a flourishing research culture in the humanities and economics. The traditions of academic life have, in effect, worked in the opposite direction. To pick up the earlier sporting metaphor: in these areas researchers are (frequently) like the training program for an athlete. The wider world is, in effect, the big event. But the training has become separated from competitive performance. It’s as if, in these fields, we have decided just to concentrate on preparation and have lost sight of what, in the end, the training is for.

For instance, a successful researcher in philosophy, working on Kant’s theory of beauty would (in the normal course of things) be deeply concerned to gain ‘horizontal’ impact: to be highly regarded by other researchers in the same field. But she might give only occasional thought to what these ideas need to do outside the academy, and how they would have to be shaped and conveyed in order to achieve this. Vertical integration, leads to both consequence and prosperity, whereas horizontal integration on its own leads to neither.

IV: Reforms for progress

WE HAVE ARGUED that research is a contribution to an end that lies outside and beyond itself. If the ‘end’ is benefit to society, what are the means to embrace it? What steps do universities need to take, with respect to research, to realise the task?

The analysis of mission-driven vertical integration sheds light on the difficult, but crucial issue of research assessment. It reveals what research assessment should try to measure – to quantify the value of the actual contribution to a significant end. The highest value research makes a necessary, major contribution to a very worthwhile end. In terms of the value-chain analysis: assessment should measure the value added by research at some point along the value-chain.

This point is extremely important for the relationship between universities and their societies (what we have called ‘the social contract of research’). Universities need to be very adept at making a contribution to society, and need to measure the quality and quantity of that contribution. The question is, what are the indicators of the value of the contribution?

One option is to look at demand. Someone further down the chain values knowledge – they want it, or need it for some reason. Hence, level of demand is an indicator of perceived value. But it is crucial to distinguish between demand at a further stage of the chain and demand within the same stage. There is horizontal, or internal, demand for research within the academic community. But this is not the same as external, or vertical, demand. While the quality of interaction amongst academics is obviously important, it does not directly address the fundamental issue behind research assessment, which is the contribution beyond the academy.

For example when the Australian Research Council gives a grant in exchange for research it is the expression of demand. But the ARC is not an actual user of research, it does not stand further down the value chain. It should be understood as a facilitator, not a user.

There is an unfortunate – but very understandable – tendency in the academy to regard winning grants as the objective. That’s because in practice, it is an institutional measure of success. It creates academic employment; it brings prestige within the peer group. This need not be a problem in itself. But it is a problem when getting grants is treated as the main game. Properly understood, the grant is only a facilitator, it provides an opportunity to create value for users beyond the academic system. In many subject areas, internal demand is in fact the basis of research assessment. Because, for the most part, it is journal publications that determine the outcome of the assessment.

We have identified six proxies for external demand: Evidence of external interest; readership; industry consultation; industry based grants; career paths of graduate students; extent of career cross-over and earnings from intellectual property. Demand is not a perfect measure of the value of a contribution. But if we measure demand that provides an incentive for a very important undertaking: the propagation of demand.

This is a really central point. Worries about market indicators are really worries about the quality of demand. To be a bit brutal: when academics decry the market, what they mean is that they think the market is not intelligent or sensitive enough to appreciate what they have to offer. This must sometimes be true. But it invites a mistaken response.

The temptation is to say that because the market is (in this instance) wrong, we should keep on producing the research that they should value, but actually don’t. Which is noble, but futile.

Rather we should take very seriously the underlying insight: they should value it, but don’t – the sign of an important opportunity. But to grasp and exploit the opportunity we would have to acquire new skills: precisely, those required to create demand.

Broadly speaking, research in universities was not developed with what might be a bit brutally called ‘selling’ in mind. The assumption seems to have been that either research would trickle down serendipitously (which turns out to be slow and random) or that ‘users’ would come to the university (which turns out to be over-optimistic). Those assumptions made more sense in the past when universities had greater cultural authority and when there was less of a competitive market for ideas. The fact is, that if we want the ideas we create to be powerful we have to reconstruct the university as an institution that ‘sells’, as well as creates, ideas.

The word ‘sells’ may be slightly misleading. We do not mean that the university has to set up a stall and put a price tag on intellectual content. Rather, they need to become agents that strive to create demand for products (that is, ideas) that they believe should be consumed because they are genuinely beneficial to society.

The quantification of internal demand is not a problem – so long as we recognise it for what it is. When the chain is operating well, then the level of internal demand is a sign of real achievement. But in the absence of external demand, the level of internal demand is actually a problem. For that is the situation in which a lot of academics are producing work, citing one another, reviewing and arguing – when there is no demand in the rest of society for what they do. In other words, high internal demand and low external demand is a sign that the system is broken – that academics are only talking to themselves. At the worst case, areas with low internal and external demand, suggests a marginal activity. On the other hand, high internal and external demand signals a vigorous intellectual culture, and the other permutation of high external demand and low internal signals an area ripe for development.

The assessment process allocates resources and operates as an incentive mechanism.

We want to move more research towards the quadrant of high internal and external demand. There is a need to measure the integration of internal and external demand. The first stage is to assess external demand; since this is our biggest problem we should use this as a multiplier. That’s because internal demand (the level of interaction amongst academics) is more important if it is more closely bound up with external demand.

There are particular problems that could arise with the model so far described. But these could be avoided by building in safeguards. The first is that it does not accommodate the long developmental trajectory of certain fields of research. It does not accommodate ‘blue sky’ or fundamental research. This may feed into the value chain, but it will feed into the academic level first. A researcher who embraced the idea of external demand might still be caught out by a long time-lag in the evolution of demand, which will be there one day.

The second is that demand may be a poor indication of public good. That’s because the ‘value to a later stage user’ is not necessarily the same as the ‘contribution towards a good end’; these two would only be the same if the later stage users were accurately pursuing good ends. The solution to both these worries lies in the role of the university as a research institution.

We have been arguing for mission-driven vertical integration. And within that framework, long evolution and fundamental research are not misunderstood or devalued; on the contrary, they are grasped as necessary features of a complex process – the medical model shows why this is the case.

The trouble for fundamental research and long time frames occurs – precisely – when they are disconnected from missions and from vertical integration. The time-frame and blue-sky problem is solved, commercially, by absorbing the lessons of experience. Car manufacturers, for example, know how long it takes to go from a new concept to sales. It might be five or ten years. Their blue-sky thinking is not expected to pay its way in the short term. Rather, it is funded because they have a system that enables insights to flow into later stages of development. So, people involved in later stages are brought into close and continued contact with those working on fundamental problems. This, obviously requires an organisation that is big enough to absorb costs in long-term projects that are, nevertheless, financially viable. And it requires an organisation that knows how to feed off fundamental work.

When research is integrated vertically, it is assessed by near stage users – so the assessment process is more accurate. This does not count against small areas of research, because these are integrated in bigger projects. If funding is directed to a mission, then it is allocated internally according to the judgment of those who understand the whole process. Thus, if the mission is to improve savings or transform the art world, there is an obvious place for high level, abstract research. That value does not initially have to be grasped by society as a whole – it has to be grasped by those responsible for the mission. And, ultimately – as with medical research – the public perception of fundamental research evolves. There is sympathy and funding for fundamental work in medical research because there is confidence that this is a crucial early stage in the delivery of things that are obviously of public value.

Rather than counting against fundamental research and long time-frames, the model of research we advocate would strengthen its position.

Another worry is that a business that pays for research might put pressure on researchers to arrive at favourable results. The wine industry might like the idea of research the shows that drinking more wine is good for life-expectancy. An internet games corporation might want to sponsor research on the expectation that it will show that playing lots of games makes you smart. But these contracts for research sound compromised because they do not simply search for the truth, but tend (one might readily think) to invite undue effort to ensure the desired results.

However, this real danger can be addressed. In the long-run it benefits an institution to maintain a high reputation for integrity. In the short-term there are commercial advantages to producing and selling one-sided research. But the great problems cannot be solved in this fashion. So, it would be in the interests of an institution to guard against its researchers undertaking such compromised work. In order to tread the narrow path of worldly impact and intellectual honour (and we have to have both) institutions will have to evolve effective methods of oversight that can keep the long-term advantages in view.

RECENTLY, A VERY high calibre student was talking through career options. ‘I’ve been thinking about doing a Ph.D,’ he said, ‘but I’ve decided I’d rather work in an investment bank where all the action is.’ It’s an instructive anecdote. Where does the fault lie? Is it that this very able student misunderstands that the Ph.D. is the road to the great arena? In which case, how did this misconception get entrenched in the mind of the kind of student we’d like to see continuing with higher education? Or is it that – in a rough and ready way – it picks up on an awkward truth: as things stand, academia (in crucial areas) is not ‘where the action is.’

The Ph.D. is essentially a research degree. It is designed to qualify an individual to undertake serious research. Therefore, as our conception of research evolves the requirements of the Ph.D. should develop accordingly. We need to refine our thinking about the kind of education and training involved in undertaking a doctoral degree.

Firstly, we need to ensure that candidates see the big picture. We need them to thinking of their research as part of a value chain. More than just ‘seeing’ this, they need to be equipped to fit their work into such a chain. This is especially true for those candidates who will go on to become leaders in their fields and take up responsibility for the futures of their disciplines.

Secondly, we need to broaden the experiential base of the degree. Ideally, candidates should have experience that brings them close to the needs of later-stage users. A Ph.D. student in literature might spend a year with an accounting firm; an economics Ph.D. might spend a year with an advertising firm.

Above all, we want to create an intellectual culture in which it is de rigeur to ask seriously about the value of research and in which that question is answered ambitiously and accurately, and in which the answers flow on to guide the practice of research.

Obviously, this would add to the time and cost of undertaking (and delivering) a doctoral education. We’d suggest – therefore – a pilot program, involving a small number of students. The aim is to show that the extra investment is well made. The later benefits – in terms of career advancement, personal income, improved focus of research, better understanding of the needs of later-stage users, improved relationship between the university and industry, will justify the greater initial cost. And that budgeted in an appropriate time frame this will prove to be a profitable exercise.

In this essay we suggest that universities reorganise their research activities in a new way. Research activities should be integrated vertically across different stages of the research chain, from very fundamental research to application. And research should be driven by missions, with the aim to solve the big problems society is facing. But ideally integration of universities with the rest of society would happen much more broadly. Teaching as well should be more closely connected with society, for society (e.g. businesses) to be able to communicate to universities their needs (e.g. the skill set graduates should have), and for universities to prepare students better for their lives outside of university.

The title of this essay – which comes from Bacon’s New Atlantis (1620), a fantasy about a whole society organised around a research institute – alludes to the twin concerns which a really successful research culture will have to integrate. Firstly, we must be merchants of light. That is, we must propagate the truth (as best we can grasp it); in particular, the truth that enlightens: that is, that guides of understanding of issues that are important to us.

And, secondly, we have to be merchants of light: we have to operate within a competitive market of ideas. In our society, markets are the primary mechanism through which we allocate our resources. Today, being able to exchange an idea for another is an important sign that the idea is important to someone else. It’s not so much that we have to make a profit by selling intellectual content – although that is an important signal. It’s rather that ideas become active and powerful through market structures. We want our best ideas to be important in the world. We have to achieve consequence in the form appropriate to our society. And that means internalising the idea that we are, in a noble sense, merchants of light.

This provocation is continued in The Conversation…