Re: [OPE] Invention, Inventors, and the Productivity of Labor

Dave Z.: “There are two different processes: innovation and development/application. Innovations have a great degree of uncertainty and can arise from very unpredictable ways […] On the other hand if they already have an innovation there is still the issue of developing and applying it.”   The first kind of innovations, i.e. “technical innovations”, concern an uncertainty of different nature, an uncertainty technically handled. But the second kind of innovations, i.e. “applied innovations”, concern more the suitability of our institutions to deal with the inherited uncertainty in human preferences changeability, once we have overcome a threshold of economic development. I ’m talking about the nature of human needs in affluent societies.   Your accent upon the first kind of innovations, i.e. “technical innovations”, revels the bias of central planning socialists (CPS) toward institutional designs that encourage high degrees of risk averse.   For the design of social institutions the second kind of innovations, i.e. “applied innovations”, are more important if we agree on the appropriateness of high rates of technical change for affluent societies.     Dave Z.: “A systematic search for innovations however typically requires significant research costs that small workers' co-ops cannot undertake. […] the issue of developing and applying it. This typically also requires huge amounts of capital that cannot be borrowed from scratch.”   When we find both virtues in an innovator, “entrepreneurship” and “technical competence”, it is usual that they borrow capital from scratch. Co-ops could do this under the appropriate institutional design.   Regards,A. Agafonow ________________________________ De: Dave Zachariah <davez@kth.se> Para: Outline on Political Economy mailing list <ope@lists.csuchico.edu> Enviado: domingo, 2 de noviembre, 2008 12:38:27 Asunto: Re: [OPE] Invention, Inventors, and the Productivity of Labor on 2008-11-02 11:27 Alejandro Agafonow wrote: > > Why these salaried workers don’t produce these inventions by their own? > >  > The lack of capital is not enough, since it is possible to borrow this capital. > >  > I think the answer comes from more subtle phenomena coming from the degree of risk averse of entrepreneurs. A low degree of risk averse is needed to embark on risky projects. > >  > We can’t neglect this soft side of the problem if we want a socialist institutional design able to reach the rate of technological change of capitalism. > > By the way, most socialist institutional designs encourage a high degree of risk averse. That’s why socialism has been so vulnerable to criticisms that remark it is unable to cope with high rates of technological change. > >  > Overcoming this has maybe been the main goal of Market Socialism. > >  I agree that this issue is central to the debate between market socialism and CPE. However, I think you are grossly oversimplifying the process of technical change in modern economies. There are two different processes: innovation and development/application. Innovations have a great degree of uncertainty and can arise from very unpredictable ways. A systematic search for innovations however typically requires significant research costs that small workers' co-ops cannot undertake. On the other hand if they already have an innovation there is still the issue of developing and applying it. This typically also requires huge amounts of capital that cannot be borrowed from scratch. Rather small firms tend to sell such innovations off to larger ones that have the resources to materialize them. So the question is what types of economic organisations can search the space of technologies efficiently? I think it is clear that autonomous or independent research as well as production activities with a significant degrees of freedom are important factors for this search. But it does not follow that it is done most efficiently under "risk-taking entrepreneurs", indeed many successfully applied innovations during the last century did not come about this way. //Dave Z _______________________________________________ ope mailing list ope@lists.csuchico.edu https://lists.csuchico.edu/mailman/listinfo/ope

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Received on Sun Nov 2 07:25:40 2008