Systemic Linkages Between Knowledge and the Market
New Horizons in the Economics of Innovation series
Edited by Blandine Laperche, Dimitri Uzunidis and G. N. von Tunzelmann
Chapter 1: Towards a Communicative Theory of Innovation
Stefan Kesting 1. INTRODUCTION The classical conceptualization and deﬁnition of innovation in economics originated in the works of Joseph Aloïs Schumpeter. Schumpeter emphasized that truly welfare-enhancing economic development is not based on a smooth adjustment from a slightly disturbed equilibrium to another, but is based on revolutionary innovations (Schumpeter  1934, p. 64). He deﬁned innovation as new combinations which lead to new products, new ways of production, discoveries of new resources, new organizational methods of running the business enterprise and entry into new markets (Schumpeter  1934, p. 66). In the process of innovation, path-breaking inventions and discoveries (technical, managerial or others) are picked up by radical individuals called entrepreneurs and turned into commercial successes. Schumpeter assumed the ‘new’ was somehow emerging out of the blue or ﬂoating around (ibid., p. 88). The distinctive role of the entrepreneur is radically turning away from traditions, customs and routines and committing herself/himself to push for change. One of the few neoclassical economists who take discourse seriously, is McCloskey. She calculates that about a quarter of national income is produced by ‘persuasive talk’ (including, for example, advertising, see McCloskey and Klamer 1995, p. 194). In her book, Knowledge and Persuasion in Economics, she collects a bulk of evidence for the economic signiﬁcance of persuasion under the heading ‘The economy as a conversation’. McCloskey (1994, p. 370) uses the example of Donald Trump to point to the power of persuasion and ‘the art of felicitous speech acts’ to close...