Technical Change and Economic Theory – A great book find in September 113.0

The past week was busy and eventful. Forgive the hiatus in my posts.

Firstly, I won two game-nights with my poker friends after four weeks of no contests. Great!

Secondly, I finally acquired my copy of a second-hand book, Technical Change and Economic Theory also called IFIAS 6. Better!!

Thirdly, I found and proved a way to buy hard-to-find books in the U.S. for quick delivery into the Philippines at reasonable cost.

Finally, I taught my first session for the MBA elective on New Product and Service Development (NPSD) at the Asian Institute of Management.

They provide satisfaction for the animal spirits, for the brain, for the hands, and for the heart.

Poker is a game of skill. I play the variant called “dealer’s choice” with two separate groups of friends when we can get together a quorum. It hones a killer instinct, quick and discovery-driven information processing, and risk management. And it is all good fun especially when I win. To win at both groups in one week is real fun!

Getting a copy of IFIAS 6 is more exciting – like securing an artifact. It was published in 1988 and is out–of-print.

IFIAS 6 is the sixth in a series of research books and is titled, “Technical Change and Economic Theory.” It was compiled by the Maastricht Economic Research Institute on Innovation and Technology (MERIT) and issued by the International Federation of Institutes for Advanced Study (IFIAS).

Its editors – Giovanni Dosi, Christopher Freeman, Richard Nelson, Gerald Silverberg and Luc Soete – stand at the base of the firmament on research to an alternative economic theory than the neo-classical – both the saltwater and seawater varieties – that is resident and mainstream with the Americans. This alternative theory stems from classical economics and path-creates from Joseph Schumpeter into evolutionary (also labeled neo-Schumpeterian) economics.

The book’s Preface starts:

“This book emerged out of the growing dissatisfaction felt by a number of economists and non-economists alike with the way technical change has been and continues to be treated in mainstream economics. …. “

“The time seemed ripe to bring together in a coherent framework a number of authors working in related directions to formulate a systematic critique of orthodox economic theory on the role of technical change in microeconomic behaviour, processes of structural change and macroeconomic transformation of the economic system. This book presents such a first attempt.”

Note that the book was written after Solow (1957) on growth accounting and technical change as residual and before Romer (1990) on endogenous technological change.

IFIAS 6 contains landmark papers on National Innovation Systems like:

• Japan: a new national system of innovation (Freeman, 1988) was the first modern use of the phrase. Freeman and Lundvall later fleshed out NIS in a later paper.
• Innovation as an interactive process: from user-producer interaction to the national system of innovation (Lundvall, 1988) where he defines Interaction as a source of learning. Later, the good Professor developed the concept of ‘competence-building’ where he added Interaction to Kenneth Arrow’s Learning by Doing, Nathan Rosenberg’s Learning by Using to become DUI-Learning as I wrote about in more detail in Post #103. In the NIS, DUI- and STI-learning in complementary interaction is the prime driver of innovation for nations.

The papers in IFIAS 6 have been so influential that the whole compilation has been cited in addition to the individual papers it contains.

Reading these papers along with others just as pioneering and insightful is exciting. It occupied most of my time this week.

Trying to resolve contrasts and contradictions between orthodox and evolutionary, or neo-classical with neo-Schumpeterian, – under the lens of the old Chinese saying, “fish for subtlety from opposition – is very instructive.

I bought the IFIAS 6 as a secondhand book through an innovative scheme by Johnny Air. Second hand bookstores in the U.S. do not ship directly to the Philippines. Johnny Air received the book in New York in my behalf and ships to their office in the Philippines. I received the book ten days after ordering from the bookstore in Los Angeles.

My first AIM-NPSD was on product portfolio planning. I used a learning case on an Estonian brewery. Fourteen out of 19 students were from overseas including eight from Europe. While teaching the course, it was interesting to learn from the interactions in the class itself especially where the students are starting from based on their questions and participation.

While two out of the five editors of IFIAS 6 are Americans, it is essentially about European ideas. The Americans took the mainstream of economics from Europe in the 1930s, note Bretton Woods and the ascendancy of America as the world economic power.

Many of the successful emerging countries like China, Brazil and India are taking off from the European way. It is interesting to see, if the financial troubles in America today heralds the reduction of her [economists's] influence in the idea world. As it is, we do hear some disdain for the American way in the floors of commerce in Asia.

I do not think it would be long when ideas other than neo-classical will emerge with success elsewhere. It may be noted that these new ideas had the IFIAS 6 as their embryo and the publication of Christopher Freeman’s (Freeman, Technology Policy and Economic Performane, Lessons from Japan, 1987) as the date of its conception in idea-space.