Theory, Evidence, and Policy
Chapter 6: Schumpeterian Innovations Waves from a Classical Perspective by Reiner Franke
6. Schumpeterian Innovations Waves from a Classical Perspective Reiner Franke In this chapter1 we ﬁnally consider – in addition to the two preceding chapters on Marxian distributive cycles in a dynamic Keynesian framework and the role ﬁnancial markets play in the Keynesian view of the working of the economy – Schumpeterian long waves in processes of technological innovations and their diﬀusion as one further big challenge along the way from simple ELR systems of ‘full’ employment via the generation of institutions of the ﬂexicurity type towards the model of Social Capitalism which we will ﬁnally opt for in the next part of the book. We therefore here return to a supply side framework with Classical elements in the theory of income distribution and now focus on long waves in technological change, to be contrasted and combined with the long-phased distributive cycle of Chapter 4 in future research. 6.1 Introduction Classical and neoclassical theories of growth and income distribution have one thing in common: even in models with technical progress, both theories suppose that all ﬁrms have free access to the most eﬃcient technological knowledge, or that the competitive process works so fast as to drive old production methods out of the market immediately when a new and more proﬁtable technique enters the stage. Apart from the wide gap between this idealised world and the industrial structure to be observed in reality, the assumption raises a fundamental problem at the theoretical level, namely, that there would be no one within...
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