Theme 3

The evolution of the INNOVATION's theory

theme 3

Innovation is mostly an economic category. As such, it represents the most general and essential characteristics, attributes, links and relations of creation and realization of innovations.

The terms "invention" and "innovation" are often identified, although there are differences between them. Today, an invention is understood as a new method, a new solution to a technical problem. From the moment an invention is accepted for diffusion, it obtains a new quality and becomes an innovation. The period of time between the appearance of an invention and its realization into an innovation is called the innovation lag. Thus, we can say that invention is the creation of a new concept, and innovation is the separation of the practical value of the invention and its transformation into a successfully sold product.

In the economic theories of the early schools, the term innovation was identified with industrial and agricultural inventions.

Let's look at the process of development and formation of the innovation's theory.

Mercantilism (XV - XVII cc.); A. Serra, I. Pososhkov; The development of craft production was accompanied by encouragement of inventiveness. The first steps were made to protect inventions; Propaganda of the idea to develop industry at the expense of the state and then transfer the objects of industry into private property; Lagging socio-economic development of countries Physiocratic direction (18th century); Kenet; Physiocrats for the first time singled out representatives of the innovation process in a separate group - "barren class", including, in their opinion, representatives of industry, commerce, liberal professions. The first attempts were made to protect property; Based on the created classification of society, the physiocrats determined that the "barren class" charged 2/5 of the national income, than putting it above the owners; Imagining wealth only in material form, they could not realize that already the creation of a single utility can be qualified as productive. Physiocratic trend (18th century); Walras, Mercier de la Rivière, Condillac; Freedom labor and trade promotion developed craft and manufactory production. The principle "the value of things rises with rarity and falls with profusion" encouraged the creation of innovations; The "barren class" was exempted from paying taxes on the net product, which led to the development of manufactory and handicraft; The opposition between the productivity of agriculture and the barrenness of industry Classical political economy (late 17th century - 30s of the 19th century.); A.Smith; Innovation is the result of division of labor: Inventions and improvements brought into production by a worker who is absorbed in one particular operation and performs it daily; Development of the theory of adaptation to demand, through which only those objects are invented that are in actual demand; Inventions could only arise in the sphere of productive labor, which does not correspond to the modern theory of innovation Classical political economy (late 17th century - 30s of the 19th century.); J.B. Say; From the view that every labor is productive, the concept of "intangible products" emerged, which have value and utility like material products. The beginning of the development of the inventor's private property right; The main agent of economic progress was named the entrepreneur, who could be an industrialist, inventor or farmer; Crises are dismissed, which modern economists interpret as the ability of society to renew itself, i.e. the emergence of innovations Classical political economy (late 17th century to the 1930s.); D. Ricardo, McCulloch, D. Mill, Nassau Seniors; Exchange value depends not only on the quantity and quality of labor, but also on the rarity of goods; Progressive production leads to higher prices, reflecting the profitability of inventions to the producer; An attempt is made to restrain the progressive development of machinery, especially in agriculture, in order to preserve the income of landlords Utopian socialism (16th - 18th centuries); S. De Sismondi. De Sismondi; Attempt to explain crises, which contributes to the development of modern theory of crises and innovation; Sismondi approached the modern definition of innovativeness, according to which innovation today is not associated with the benefit of the organizer of innovation; Technological innovation leads to increased unemployment, increases competition, lowers wages. The state should restrain progressive inventions Utopian socialism (16th - 18th centuries); Saint-Simon; The development of innovation is inextricably linked to the development of industry; Development of industrial-scientific state Criticism of private property Utopian socialism (XVI - XVIII centuries); R. Owen; Development of crisis and industry theory. Primary principles and elements of innovation infrastructure created; Development of factory legislation; Creation of a system of unity and cooperation does not promote individual creativity Marxist political economy (XIX -XX cc.); K. Marx, F. Engels; Allocation of capital-saving and labor-saving innovations; Influence of innovations on the development of productive forces; Innovative entrepreneurs go bankrupt, only followers of the idea get income Marxist political economy (XIX -XX cc.); K. Marx, F. Engels; Allocation of capital-saving and labor-saving innovations; Influence of innovations on the development of productive forces; Innovative entrepreneurs go bankrupt, only followers of the idea get income Marginalism (XIX -XX cc.); K. Menger; Development of the concept of economic good and subjective value; Innovation is an economic good valuable for society; The problem of economic good is considered only at the level of an individual, which reflects too subjective approach to the definition of innovations School of Russian cyclism (20th century); N.D. Kondratiev; N.D. Kondratiev linked the waves of inventions and innovations with the transition to a new cycle; N.D. Kondratiev's wave theory became the main forecasting basis for the 6th innovative technological mode of the future economy - the life cycle of NBIC-convergence (convergence of nano-, bio-, information and cognitive technologies); The factors of innovation accumulation between recession and upswing are not explained Austrian School (XX c.); J. Schumpeter, G. Mensch J. Schumpeter. Schumpeter, G. Mensch; J. Schumpeter introduced the concepts of "innovation", "innovator". Schumpeter introduced the concepts of "innovation" and "innovator". G. Mensch supplemented Schumpeter's theory with the theory of product cycles; Economic development is nothing but a transition from one equilibrium state to another under the influence of technical progress. The main role in economic development belongs to the entrepreneur; Banks are intermediaries between the innovator and innovation, which in the current crisis conditions of the banking system is a great risk Austrian school (XX century); L.F. Mises; Described prerequisites and incentives for the creation of innovations; Creation of innovations is a dynamic factor in the development of production, which is determined by progressive innovations that gradually improve the standard of living of all segments of the population; Restraining role of the state is unacceptable for the innovative development of society Austrian School (20th century); Friedrich von Hayek; Creation of the concept of dispersed knowledge; The market is a special information device that, through prices, identifies, utilizes and coordinates the knowledge of millions of independent people. Therefore, innovation emerges inevitably; Price is not the only means of determining innovation Modern Russian School of Innovations (XX - XXI c.); Y.V. Yakovets, B.N. Kuzyk, A.I. Ageev, V.I. Kushlin, A.N. Folomiev; A unified theory of cycles, crises and innovations is formed. The classification of innovations is supplemented. The categories of innovation rent and quasi-rent as the main incentive of innovations are considered. The methodology of long-term macroforecasting of innovations is developed; The importance of epochal and basic innovations as the main way out of the crisis is revealed; The possibility of development of anti-innovations in the process of development of the world community blocking the innovation cycle is substantiated Harvard School, Chicago School (XX - XXI century); Robert Solow, Paul Romer; Developed models of economic growth with endogenous and exogenous technical progress; Justification of innovation as the main engine of the future economy; Insufficient government involvement in supporting and regulating national innovation systems

More about the school of Russian cyclism

The school of Russian cyclism has gained world recognition in the development of innovation theory. Followers of the school are such world-famous scientists as A.L. Chizhevsky, V.I. Vernadsky, M.I. Tugan-Baranovsky, A.A. Bogdanov, P. Sorokin, N.D. Kondratiev.

The definition of the role of innovations in the technical sphere in the cyclical nature of changes in macroeconomic indicators of business activity was formulated by N.D. Kondratiev. The author developed in the 20s of XX century the first concept of long-term fluctuations in the economy, which were named as Kondratiev's long waves.

N.D.Kondratiev connected the transition from cycle to cycle with the wave of inventions and innovations. Before the beginning of a big cycle at the very beginning of the cycle one can see significant changes in the life of society.
Kondratiev's cycles (K-cycles or K-waves) are periodic cycles of 45-60 years, showing regular periods of rise and fall of the world economic system.

More about J.A. Schumpeter's theory of innovation

The follower of N.D. Kondratiev was J.A. Schumpeter, a representative of the Austrian school, who introduced the term "innovation" (from Latin Innovatio - introduction of something new) as a new economic category. According to J. Schumpeter, the subject of innovation can be a product, production process, as well as an organization, provided that they are new and introduced.

It should be pointed out, Schumpeter defines entrepreneurship as a property independent of social or class identity, and the entrepreneur is the most prominent subject of innovation and is called an innovator.

In order for innovative entrepreneurs to get the means of production at their disposal, they must utilize bank credit. Thus banks, according to Schumpeter, are a special phenomenon of development which, acting on the name of the national economy, authorize the implementation of new production combinations. They act as the necessary mediators between the desire to innovate and the ability to do so.

Task. Which of the theories of innovation seemed most interesting to you? Write a short report on this theory. Record the result in the document by link.

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