Gresham’s Law of Programming

Here’s a slice from the excellent Mark Mandeles’ book, The Development of the B-52 and Jet Propulsion.

Between 1919 and 1926, the technical staff at McCook Field (after 1926, Wright Field) was heavily committed to “scientific investigation and fundamental research.” Procurement was handled separately in Washington. D.C. But in 1927, work on engine development was overtaken by Gresham’s Law of Programming which observes that programmed behavior will drive out unprogrammed behavior. In this matter, aviation procurement was moved to the newly established Materiel Division to improve coordination between development and procurement functions. The unintended consequence of this reorganization was that administrative and testing duties associated with procurement assumed ever greater amounts of time and effort. In other words, the need to deal with immediate problems and administrative duties related to the reorganization drove out long-term developmental work on new technologies.

Gresham’s Law in economics simply states that “bad money drives out good.” For example, people would shave the edges off of coins with precious metals. Over time, people with “full” coins would keep those out of circulation because they had intrinsically more value. That’s why coins today have serrated edges, itself an innovation in the world of money.

Though it’s not a clean analogy, Gresham’s Law of Programming makes a whole lot of sense in government acquisition. When you have a program requirement approved by all layers of the bureaucracy and appropriated to by Congress, the simple fact of its existence will drive out any novel or improved ideas.

The pre-World War II years did not actually have formal “Programs of Record” that exist today. Nor did budgets actually specify exact program requirements money was tied to. So the problem is likely worse today than in the past.

At that time, the problem stemmed not from budget policy but from organization. Mandeles points to the integration of S&T and Procurement activities as one that drove out the innovative activities from S&T. Keeping the communities distinct, however, creates its own problems as Xerox PARC demonstrated where of numerous breakthrough innovations that could have resulted in a personal computer, the east coast establishment could only put into production a laser printer — something the company already understood.