AMONG THE MANY explanations for the worldwide productivity slowdown in the 1970s, the exhaustion of inventive and technological opportunities remains a major suspect. This suspicion is fed by one of the more visible statistical facts: the total number of patents granted peaked in the United States about 1970 and then declined through most of the decade (figure 1). Similar trends can also be observed in patenting worldwide, except in Japan. These same kind of data also fed the idea that the United States had lost its competitive inventive edge. Patents granted to U.S. corporations peaked in the mid-1960s and have not really recovered since (figure 2). A related notion is diminishing returns to inventive activity, to investments in research and development. In figure 2 one notices the much more rapid rate of growth in national R&D expenditures than in total patenting and the implicit suggestion of diminishing returns.