Some notes about what previous thinkers have said about innovations and the evolution of technology. We’ll begin by notes I made from Ruttan’s classic 1959 article, “Usher and Schumpeter on invention, innovation, and technological change.” As the title says, it’s a comparison of Schumpeter’s (known to most students of economics) and Usher’s (known mostly to students of technological change) views on the subject.
Notably, Usher’s theory of “cumulative synthesis” is a remarkably successful theory explaining how inventions and innovations occur. It’s the basis of much of the work I’m currently doing, as it has greatly informed Arthur’s thesis of combinatorial evolution of technology (Arthur 2009).
Schumpeter and Usher on innovations (From Ruttan 1959)
Schumpeter’s discussion of the role of innovation in economic growth is stated in its most developed form in Chapters III and IV of Business Cycles (Schumpeter 1939). Schumpeter identified innovation as the essential function of the entrepreneur. He made the innovator and the process of innovation one of the three elements (along with credit and profit maximization) of a theory of economic development.
To Schumpeter, innovation and the innovator were quite distinct from invention and the inventor. In his opinion, innovation is possible without anything we should identify as invention, and the social process which produces innovations is distinctly different “economically and sociologically” from the social process which produces inventions.
Schumpeter’s “rigorous” definition of innovation is a change in the form of the production function:
“This function describes the way in which quantity of products varies if quantity of factors vary. If, instead of quantities of factors we vary the form of the function, we have an innovation.” (Schumpeter 1939:87-88)
The inputs were only labor and land – this differs from the neoclassical formulation in that capital is excluded. However, in Schumpeter’s view, innovations cannot be measured through changes in production function, as price changes and non-neutrality of innovation would effectively limit the possibilities of measurement.
NOTE: Schumpeter’s definition is quite close to the definition of technological change as used by economists. See e.g. Solow’s work.
According to Ruttan (1959:599), who was a colleague of Schumpeter, he was “primarily interested in changes in the production functions of the technological leaders – the innovating firms – because of the growth forces which adoption of new methods of production set in motion.” This contrasts to many other economists who have concentrated their attention to the production function, which describes the average performance of the economy or industry.
NOTE: Many computer models of technological evolution, such as NK models, calculate average performance. In a sense, it might be thought of as the production function.
Schumpeter did not give explicit attention to the process by which innovation is generated. There is nothing in Schumpeter’s works that can be identified as a theory of innovation. Although the business cycle is a direct consequence of the appearance of clusters of innovations, no real explanation for the clusters is given and a theoretical basis is explicitly eschewed. However, three cycles – Kitchen (40 months), Juglar (10 years) and Kondratieff (60 years) – are observed.
Usher (on the emergence of strategic inventions)
Usher’s thesis is most fully presented in Chapter IV of the revised edition of History of Mechanical Inventions (Usher 1954). According to Ruttan (1959), Usher forms the basis of a theory of innovation that is lacking from Schumpeter’s works.
One problem faced by economists is that “invention” is difficult to define. Usher defines inventions as the emergence of “new things” which require an “act of insight” going beyond the normal exercise of technical or professional skills.
“Acts of skill include all learned activities whether the process of learning is an achievement of an isolated adult individual or a response to instructions by other individuals. Inventive acts of insight are unlearned activities that result in new organizations of prior knowledge and experience…” (Usher 1954:526)
“Such acts of insight frequently emerge in the course of performing acts of skill, though characteristically the act of insight is induced by the conscious perception of an unsatisfactory gap in knowledge or mode of action.” (Usher 1954:523)
Usher identifies three general approaches to the problem of explaining the emergence of inventions in contrast with the performance of acts of skill. These are the transcendentalist, the mechanistic process, and the cumulative synthesis.
The transcendentalist approach attributes the emergence of invention to the inspiration of the occasional genius who from time to time achieves a direct knowledge of essential truth through the exercise of intuition. This Usher rejects as unhistorical: acts of insight have not been the rare, unusual phenomenon, and they are not accidents but require a highly specific conditioning of the mind – think Pasteur’s “fortune favours the prepared mind.”
Usher also rejects the mechanistic process, which was espoused by Chicago sociologists such as Ogburn (1922) and Gilfillan (1935). However, he stresses that their empirical results are important. These sociologists demonstrated that the process of invention typically represents a new combination of a relatively large number of indiidual elements accumulated over long periods of time. However, Usher thinks that this process is not merely an instrument of historical necessity: discontinuities cannot, in his opinion, be explained by the mechanistic approach, but require aforementioned acts of insight. Only a limited number of individuals are operating under conditions which bring both an awareness of the problem and the elements of a solution within their frame of reference. Even then, it is not certain that the specific act of insight required for a solution will occur.
Usher’s alternative is the cumulative synthesis approach. Drawing on the insights into metnal and social processes provided by Gestalt psychology, major inventions are visualized as emerging from the cumulative synthesis of relatively simple inventions, each of which requires an individual “act of insight.”
Individual invention comprises of four steps:
1. Perception of the problem, in which an incomplete or unsatisfactory pattern or method of satisfying a want is perceived.
2. Setting the stage, in which the elements or data necessary for a solution are brought together through some particular configuration of events or thought. Among the elements of the solution is an individual who possesses sufficient skill in manipulating the other elements.
3. The act of insight, in which the essential solution of the problem is found. Usher stresses that large uncertainties surround the act of insight. This uncertainty makes it impossible to predict the timing or the precise configuration of a solution in advance.
4. Critical revision, in which the newly perceived relations become fully understood and effectively worked into the entire context to which they belong, possibly calling for new acts of insight.
A major or strategic invention represents the cumulative synthesis of many individual inventions, and will usually involve all the separate steps that may be found in individual inventions.
According to Ruttan (1959:602), Usher’s cumulative synthesis theory provides a unified theory of the social processes by which “new things” Come into existence, and is broad enough to encompass the whole range of activities characterized by the terms science, invention, and innovation. The artificial distinction between the processes of invention and innovation is no longer required.
Usher’s theory also clarifies the points at which conscious efforts to speed the rate or alter the direction of innovation can be effective. The conscious effort is useful around the second and fourth steps in the aforementioned process – in setting the stage and in critical revision. An appropriate research environment which consciously brings together the elements of a solution can set the stage so that fewer elements are left to chance. In the critical revision stage, many of the elements required – testing, for example – are “acts of skill” rather than “acts of insight.” (“Applied research” or R&D is concerned with this critical revision stage, mostly.)
Transcendentalist approach obscures these possibilities with its dependence of the “great man;” mechanistic process denies the possibility altogether.
A limitation of Usher’s theory, according to Ruttan (1959:605), is that it is not a predictive theory – as Usher himself asserts (Usher 1954:66). However, Ruttan notes that since Usher predicts that focus on the two stages of “setting the stage” and “critical revision” should make inventions more likely, the effective institutionalization of applied research and the growing interest in the problem of creating an institutional environment favorable to “basic research” do provide an operational test that is consistent with Usher’s theory (Ruttan 1959:605).
Arthur, B.W., 2009. The Nature of Technology: What it is and how it evolves. Free Press, New York.
Gilfillan, S.C. 1935. The Sociology of Invention. Chicago: Follett Publishing.
Ogburn, William F. 1922. Social Change. New York: Viking Press.
Ruttan, V.W., 1959. Usher and Schumpeter on invention, innovation, and technological change. The Quarterly Journal of Economics 596–606.
Schumpeter, J. A. 1939. Business Cycles, vol. I. New York: McGraw-Hill.
Usher, A. P., 1954. A History of Mechanical Inventions. Cambridge, Harvard University Press.