Abstract

The Space Age and the Stock Market: R&D Assetization and the Quest for Certainty

Observers of the late 1950s and 1960s “Space Age” have noted the ease with which new and fledgling firms amassed capital through stock markets. This was especially true for firms with high-tech sounding names, monikers that resonated with postwar enthusiasms for science and the belief in unbridled progress that marked a new generation of American investors, brokers, and analysts. For this generation, firms engaged in R&D were promising sources of capital gains, regardless of earnings history, and could hardly be overvalued. This was particularly the case for the glamorous aerospace and electronics industries, with one aerospace executive tapping into prevailing sentiments by identifying R&D expenditures as “the true capital of the Space Age.” Guided by a pragmatic understanding of inquiry, as articulated by early twentieth century philosopher John Dewey, this paper demonstrates how those closer to R&D activities learned through experience that no amount of spending could guarantee any specific, income-generating results. Once R&D is understood as an experimental response to specific uncertainties arising through the course of business, it becomes clear that R&D outcomes were not, and could not be, knowable in advance. Drawing from recent scholarship in economic sociology, this paper centers on the assetization of R&D, which renders expenditures themselves into capital assets, and argues it offered a new tool for managing earnings. More specifically, by switching financial accounting for R&D from current expensing to deferral, firms experiencing significant losses could maintain the appearance of profitability while, simultaneously, reinforcing public perceptions of R&D as a magic bullet for growth. The paper implores historians to discontinue interpreting R&D as capital and suggests the same for the epistemic categories of human or knowledge capital. Indeed, it is the very uncertainty of inquiry that makes it so valuable to society yet so untenable as capital.