ful innovation are substantially greater in the Uni- 

 ted States. . The American system provides better the 

 opportunity, the capacity, and the pressure to inno- 

 vate than the Soviet system in which innovation con- 

 tinues to be looked on mostly as a burden or unneces- 

 sary nuisance. 



Each system, to be sure, offers certain intangible 

 benefits, but even in the USSR the terms of competi- 

 tion between innovational activity and other alterna- 

 tives are increasingly economic. Indeed, the share 

 of bonuses in managerial income has been steadily ri- 

 sing since the mid-1960s and are a stronger incentive 

 in decision making today than ever before. Differ- 

 ences in national attitudes towards property, however, 

 affect significantly the structure of economic rewards 

 for innovation in the two systems. In the United 

 States private ownership of the results of R&D — and 

 the associated opportunity for major economic gain — 

 creates a powerful incentive to the individual and to 

 the firm. The American patent system, moreover, con- 

 fers a temporary monopoly during which time the in- 

 ventor or innovator can exploit his ideas and protect 

 his competitive edge. Indeed without the protection 

 provided by patent rights many entrepreneurs and in- 

 dustrial firms will simply not take the risks involved 

 in innovation. By contrast proprietary rights over 

 all R&D results in the USSR are held by the State. The 

 inventor or innovator is compensated with a lump sum 

 payment which cannot exceed some fixed maximum. For 

 a single invention the upper limit is 20,000 rubles. 

 Statutory ceilings are also fixed on individual bonus 

 earnings of all kinds so that a person may not re- 

 ceive more than a certain percentage of his base sal- 

 ary. Nor can a person receive in innovation bonuses 

 in any one year more than 1200 rubles. Only planned 

 innovations, moreover, not unplanned ones, are eligi- 

 ble for bonus awards. Indeed there are upper limits 

 on virtually every part of the incentive structure in 

 the Soviet Union. Bonuses for innovation relative to 

 rewards for non- innovation alternatives are also not 

 sufficiently large to provide an effective incentive 

 for a high rate of technological change. In general, 



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