The Role of Demand and Supply in the Generation and Diffusion of Technical Change

V. Ruttan, C. Thirtle

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781136458644
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios en general

This book reviews and assesses the impact of economic forces on the rate and direction of technical change.

The Role of Demand and Supply in the Generation and Diffusion of Technical Change

COLIN G. THIRTLE and VERNON W. RUTTAN

University of Manchester and University of Minnesota

INTRODUCTION

The importance of both science and technology for modern economic growth has been accepted as almost self-evident since at least the middle of the nineteenth century [283, p. 355; 342]. But it was not until the mid-1950s that economists attempted to measure the contribution of technical change to economic growth [1, 444, 480, 506].

The primary focus of the early studies on technical change and productivity growth was simply to measure the contribution of technical change, relative to conventional resources, to growth in output. Technical change itself was treated as a response to the economic opportunities resulting from autonomous advances in scientific and technical knowledge.¹ By the mid-1960s, however, increasingly serous efforts were being made to explore the influence of economic forces on technical change.

In this paper we attempt to review and assess the literature on the impact of economic forces on the rate and direction of technical change. The paper begins by considering the impact of economic forces on invention and innovation. In Part 2 we examine the impact of factor endowments and prices on the direction of technical change, and in Part 3 we examine the process of the diffusion of technology.

1. SUPPLY AND DEMAND EXPLANATIONS OF INVENTION AND INNOVATION

Schumpter, whose writings have been exceptionally important in formulating the way economists think about technical change, made a sharp distinction between invention (and the inventor) and innovation (and the innovator): “Innovation is possible without anything we should identify as invention, and invention does not necessarily induce innovation but produces itself… no economically relevant effect at all” [487, Vol. 1, p. 84]. Rosenberg has argued that the effect has been to divert the attention of economists away from those activities that are most relevant to technical innovation and the diffusion or transfer of technology [432, pp. 66–68]. Other students of technical change have argued that the Schumpeterian distinction between invention and innovation is excessively artificial. For analytical purposes it is more useful to use the term innovation to designate any “new thing” in the area of science or technology and to reserve the term invention to refer to that subset of technical innovations that are patentable [263, p. 2; 351, p. 103; 445, p. 605].

1.1. Processes of invention

At the time economists first became interested in the economics of invention and innovation there were already well-defined traditions of scholarship in the literature on applied technology, sociology, and history. In his classic study, A History of Mechanical Inventions, Usher [547, pp. 56–83] identified three general approaches to the emergence of inventions. He termed these the transcendentalist approach, the mechanistic process approach, and the cumulative synthesis approach.

The transcendentalist approach attributes the emergence of invention to the inspiration of the occasional genius who from time to time achieves insight into essential truth through the exercise of personal energy, intuition, and skill. This heroic approach to the process of invention bears striking resemblance to the Schumpeterian view of the entrepreneur. The transcendentalist perspective dominated much of the early historical and biographical scholarship on technical change [234, 501].² Usher rejected the transcendentalist view as unhistorical. He argued that the act of insight was not the rare, unusual phenomenon assumed by the transcendentalists and further that the act of insight that results in the perception of new relationships requires a highly specific conditioning of the mind within the framework of the problem to be solved. It was not an accident that Henry Ford, a bicycle mechanic, contributed to the development of the automobile or that Harry Ferguson, a self-taught mechanic, was the first to apply basic physical principles to the integrated design of tractors and tractor equipment.

The mechanistic process theory viewed invention as proceeding under the stress of necessity with the individual inventor being an instrument of historical processes. This view emerged from the detailed investigations of invention sequences by the Chicago sociologists, Ogburn and Gilfillan.³ By demonstrating that the process of invention typically represented a new combination of a large number of individual elements accumulated over long periods of time, the sociologists erected an effective challenge to the claims of the transcendentalists. But Usher argued that the approach overlooked the significance of discontinuities inherent in the process of invention and insisted that the “acts of insight” required to bridge the discontinuities are possible for only a limited number of individuals operating under conditions that bring both an awareness of the problem and the elements of a solution within their frame of reference. And even under these conditions it is not certain that the specific act of insight required for a solution to the problem will occur.

Usher suggested a cumulative synthesis approach as an alternative to the transcendentalist and mechanistic process theories of invention. With this framework, which drew on Gestalt psychology, major inventions are visualized as emerging from the cumulative synthesis of relatively simple inventions, each of which requires an individual “act of insight.” A major or strategic invention, or advance in technology, represents the cumulative synthesis of many individual inventions. Many of the individual inventions do no more than set the stage for a major invention that then requires substantial critical revision to adapt it to a particular use. A schematic presentation of the elements of the individual act of insight and the cumulative synthesis as visualized by Usher are presented in Figures 1.1 and 1.2.

FIGURE 1.1 The emergence of novelty in the act of insight. Synthesis of familiar items: (1) perception of an incomplete pattern; (2) setting the stage; (3) the act of insight; and (4) critical revision and full mastery of the new pattern. (After Abbott P. Usher, A History of Mechanical Inventions [Cambridge, Mass.: Harvard University Press, 1954].)

FIGURE 1.2 The process of cumulative synthesis. A full cycle of strategic invention and part of a second cycle. Roman numerals I through IV represent steps in the development of a strategic invention. Small figures represent individual elements of novelty. Arrows represent familiar elements included in the new synthesis. (After Abbott P. Usher, A History of Mechanical Inventions [Cambridge, Mass.: Harvard University Press, 1954].)

Usher’s cumulative synthesis approach provides the element of a critical theory of the social process by which “new things” come into existence and are improved, a process that is broad enough to encompass the whole range of activities characterized by the terms science, invention, and innovation. One is no longer forced to maintain, as Schumpeter did, the increasingly artificial distinction between the processes of invention and innovation or to explain away the association between scientists, inventors, and entrepreneurs as merely a chance coincidence. But the Schumpeterian system has remained an obstacle to the efforts by economists to understand the processes of technical innovation [432, pp. 66–68].

A major contribution of Usher’s cumulative synthesis theory was that it clarified the points at which economic forces could be used to speed the rate or alter the direction of technical change. The possibility of allocating research resources to influence the rate or direction of technical change was obscured by the transcendentalist approach, with its dependence on the emergence of the hero inventor, and was denied by the mechanistic process approac...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Introduction to the Series
• Introduction
• 1. Supply and Demand Explanations of Invention and Innovation
• 2. Induced Innovation and Factor Biases
• 3. The Adoption and Diffusion of Innovations
• 4. Conclusion
• References
• Index