Well, in a market with perfect information, enough people and organizations would organize to donate money to fund the innovations :) (actually, I think this could be a better model for funding certain types of innovation, e.g. drugs for particular diseases, than patents). Of course, the market doesn't have perfect information, so there is not a 100% certainty on the return on these potential innovations. We must therefore discount them. But they are still valuable; and companies still have R&D departments that do blue-sky research, and we also have government funded R&D. Which you could argue Sputnik and reaction was about. I think these are also market behaviours.

So why do you think there is still a shortage, when there is in fact funding for innovation? Do you think the returns would be worth more investment, diverted from other current investments? If so, you should be able to convince enough other people to fund it. If not, does that not prove the weakness of your argument? ;)

(I'm arguing this with a hat on. That is, I'm taking a position that's actually somewhat more extreme than my real position, to see how it feels. I'm actually opposed to the market in many cases, but not because of quibbling over supply and demand, but rather because it is amoral - not immoral, amoral - as in it has no moral content. There is no intrinsic fairness in it. It just is, a machine driven by people's consumption, without consideration for whether their tastes are right or wrong.)