Cycles, Crises and Innovation

Cycles, Crises and Innovation

Path to Sustainable Development – a Kaleckian-Schumpeterian Synthesis

Jerry Courvisanos

Cycles, crises and innovation are the major economic forces that shape capitalist economies. Using a critical realist political economy approach, the analysis in this fine work is based on the works of Michał Kalecki and Joseph Schumpeter – both of whom identify these three dynamic forces as plotting the path of economic development. Jerry Courvisanos’ thought-provoking book examines how the rise of capital through investment enshrines innovation in profit and power which in turn determines the course of cycles and crises. The author concludes by arguing for strategic intervention by transformative eco-innovation as a public policy path to ecologically sustainable development.

Chapter 2: In the Pursuit of Novelty

Jerry Courvisanos

Subjects: economics and finance, economic psychology, economics of innovation, history of economic thought, innovation and technology, economics of innovation

Extract

… dynamic processes causing qualitative transformation of economies basically driven by the introduction of novelties in their various and multifaceted forms. By its very nature, innovation and, in particular, technological innovation is the most exponent and most visible form of novelty. (Hanusch and Pyka, 2007, p.275) Innovation as novelty Innovation has become an important word in the twenty-first century, reflecting all that is modern, progressive and exciting in a complex world. This is reflected in every phase of daily existence in modern capitalist economies. Firms are urged to be innovative to gain or sustain a ‘competitive edge’; consultants advertise their strategic advice as the essence of innovation; the survival of local organizations depends on the capacity building that comes from innovation; schools are exhorted to have innovation in their curriculum; and universities promote themselves as leaders in innovation. Politicians respond to the need to support all of the above through policies to enhance national or regional innovation. However, this is a Panglossian view of innovation. Not all innovation contributes to the progress of humanity or the economies that drive it. The world of innovation includes ‘bads’ as well as ‘goods’. ‘Bads’, like financial innovations destabilizing banking systems, internet pornography degrading vulnerable minors and fossil-fuel technologies desecrating the ecosystem, are examples of technical change which may produce greater economic growth measured by Gross Domestic Product (GDP) in the short period, but not technical progress. Given the wide use of this term, innovation as a process is poorly understood. Deeply rooted in the...

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