Show Less

On the Reappraisal of Microeconomics

Economic Growth and Change in a Material World

Robert U. Ayres and Katalin Martinás

The conventional utility-based approach to microeconomics is now nearly a century old and although frequently criticised, it has yet to be replaced. On the Reappraisal of Microeconomics offers an alternative approach that overcomes most of the objections to orthodox theory, whilst offering some unique additional advantages.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 8: The Drivers of Long-Term Growth: Knowledge, Technological Change and Radical Innovation

Robert U. Ayres and Katalin Martinás


8.1 INTRODUCTION In the previous chapters of this book we have articulated in some detail how individuals (and firms) belonging to the subspecies H. Economicus constantly try to increase their wealth, subject to the AAL rule. The last chapter discussed the problem of aggregation, and the transition from a microeconomic focus to a macroeconomic focus on the system as a whole. However, while technical progress is, in some sense, a reflection of additions to human knowledge, and while learning and adaptation, in particular, take place at the level of individual economic agents, it is not possible to treat technical progress at the system level as an aggregation of small increments to knowledge. The core problem is that, in fact, learning and incremental change do not explain radical innovations that change the structure of the economy. Improvements in gas light did not, and could not, explain the advent of electric light. Nor did Edison’s incandescent electric light with its DC generator necessarily bring forth Tesla’s inductive motor and the three-phase power distribution system, the Hall-Heroult electrolytic process for making aluminum, or Moissan’s electric furnace; nor did these breakthroughs necessitate Marconi’s radio-telegraph, the vacuum tube diode, the superheterodyne circuit, TV or the ENIAC electronic computer. These subsequent developments can be regarded, however, as ‘spillovers’ from Edison’s innovation. Similarly, the vacuum tube did not evolve into a transistor, nor did the abacus or the mechanical calculator morph into an electronic computer, and the applications that followed. But the latter are spillovers that...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.