Elgar original reference
Edited by Mark Setterfield
J. Stan Metcalfe and John Foster Our general conclusion must be that in the field of economic progress the notion of tendency towards equilibrium is definitely inapplicable to particular elements of growth and with reference to progress as a unitary process or system of interconnected changes is of such limited and partial application as to be misleading rather than useful. (Knight, 1935/1997, p. 176) 1 Introduction An evolutionary theory of economic growth is naturally designed to answer the allimportant question “How is wealth created from knowledge?” No serious economist doubts that the growth of per capita income and welfare is a consequence of the growth of understanding about the human built and natural worlds, but how useful knowledge is created and translated into economic development is a matter of great complexity. At the heart of this problem is the need for a disaggregated framework of understanding that explains much more than the rate of growth of aggregate economic activity and the evolution of broad macroeconomic ratios. Of course, many different theoretical frames can be consistent with the same broad aggregate facts, but they must also be consistent with many more disaggregated facts about the way a capitalist economy develops, particularly those facts that are ultimately traceable to the role of enterprise and creative thought in economic growth.1 Inventive creativity is part of this process, as is its relationship to the development of formal, general scientific and technological knowledge. But invention alone is insufficient; it must be translated into innovation, which...
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