Abstract
In modern industrial societies innovativeness is seen as a source of economic growth and welfare increases. Following this assessment economic research presently focusses almost exclusively on the question of how to elicit innovations. Yet innovative economic activities have always also meant losses, sometimes even hardship, to some members of society, and incalculable risks. The present paper tries to develop a more balanced picture by acknowledging these less pleasant implications. Whether, and under what conditions, the permissive regime which modern societies have adopted towards innovations can be justified is discussed within the framework of a contractarian approach.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Arrow, K.J. (1962). Economic welfare and the allocation of resources for invention. In The rate and direction of inventive activity, NBER conference report. Princeton: Princeton University Press, 619–625.
Buchanan, J.M. (1977). A contractarian paradigm for applying economic theory. In J.M. Buchanan, Freedom and constitutional contract. College Station: Texas A&M University Press, 235–242.
Coase, R.H. (1960). The problem of social cost. Journal of Law and Economics 3: 1–44.
Ekelund, R.B., Jr. and Tollison, R.D. (1981). Mercantilism as a rent-seeking society: Economic regulation in historical perspective. College Station: Texas A&M University Press.
Engels, F. (1968). The condition of the working class in England. Stanford: Stanford University Press.
Georgescu-Roegen, N. (1976). Energy and economic myths. New York: Pergamon Press.
Jones, E.L. (1988). Growth recurring — economic change in world history. Oxford: Clarendon.
Kerber, W. (1993). Rights, innovations and evolution: The distributional effects of different rights to innovate. Review of Political Economy 5: 427–452.
Mumey, G.A. (1971). The ‘Coase theorem’: A reexamination. Quarterly Journal of Economics 85: 718–723.
North, D.C. (1981). Structure and change in economic history. New York: Norton.
Reinganum, J.F. (1989). The timing of innovation: Research, development, and diffusion. In R. Schmalensee and R.D. Willig (Eds.), Handbook of industrial organization Vol. I, Amsterdam: North-Holland, 849–908.
Say, J.B. (1834). A treatise on political economy. Philadelphia.
Scherer, F.M. (1984). Innovation and growth — Schumpeterian perspectives. Cambridge, Mass.: MIT Press.
Schumpeter, J.A. (1942). Capitalism, socialism, and democracy. New York: Harper.
Shackle, G.L.S. (1983). The bounds of unknowledge. In J. Wiseman (Ed.), Beyond positive economics? London: MacMillan, 28–37.
Usher, A.P. (1954). A history of mechanical inventions. Revised edition, Cambridge, Mass.: Harvard University Press.
Vanberg, V. (1992). Innovation, cultural evolution and economic growth. In U. Witt (Ed.), Explaining process and change — approaches to evolutionary economics. Ann Arbor: Michigan University Press, 105–121.
von Wangenheim, G. (1993). The evolution of judge-made law. International Review of Law and Economics. 13: 381–411.
Witt, U. (1987). How transaction rights are shaped to channel innovativeness. Journal of Institutional and Theoretical Economics. 143: 180–195.
Witt, U. (1993). Emergence and dissemination of innovations — some problems and principles of evolutionary economics. In R.H. Day and P. Chen (Eds.), Nonlinear Dynamics and Evolutionary Economics. Oxford: Oxford University Press, 91–100.
Author information
Authors and Affiliations
Additional information
I am indebted to J. Irving-Lessmann, W. Kerber, M. Leder, M. Lehmann-Waffenschmidt, G. von Wangenheim, and an anonymous referee of this journal for helpful comments. An earlier version of paper has been presented at the Public Choice Society Meeting 1992 in New Orleans and has been awarded the William-Kapp-Prize 1992 by the European Association for Evolutionary Political Economy.
Rights and permissions
About this article
Cite this article
Witt, U. Innovations, externalities and the problem of economic progress. Public Choice 89, 113–130 (1996). https://doi.org/10.1007/BF00114282
Accepted:
Issue Date:
DOI: https://doi.org/10.1007/BF00114282