[OPE-L:2930] Continuous technical change?

rakesh bhandari (djones@uclink.berkeley.edu)
Fri, 30 Aug 1996 22:32:55 -0700 (PDT)

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A question for Andrew and Alan (asked unfortunately before I have really
mastered their most relevant contributions, hopefully there will be
somthing worthwhile in the question nonetheless):

Is technical change continuous as the flow of a river? Why not
continuous in the form of waves or successive swarms?

Michael Perelman's distinguished undergraduate professor, Wolfgang F.
Stolper has recently drawn from his own teacher Joseph Schumpeter to argue
that as the innovations, financed through inflation-inducing credit,
finally pour onto the market, this necessarily engenders "an
*Einordnungsprozess*--a pause-- that provides a natural negative feedback
to push the system back towards equilibrium." (*Joseph Alois Schumpeter: a
public life of a private man*. Princeton, 1994: 88)

Stolper asserts that this "pause" is what prevents the system from becoming

And indeed if it can be shown that new innovations will not be financed
during the *Einordnungsprozess* (presumably due to the deflation,
bankruptcies and general uncertainty associated with it), would this
"pause" not then provide the system with an ability to winnow out in a sort
of systematic destruction only those firms rendered uncompetitive by the
new techniques assimilation of which could well raise the average profit
rate? In short, could not this "pause" function as the system's
self-defense against such continuous revolutions in value that would indeed
blow the system up sky-high?

And...since we know that for the most part, the system has indeed been able
to reproduce itself, despite the value revolutions characteristic of this
mode of production, is it not plausible that Schumpeter may have discovered
an important mechanism by which capital protects itself from