In search of New Atlantis : What can HET on innovation reveal about the path out of the 2009 great recession?

In: Paper presented at 22nd Conference of the History of Economic Thought Society of Australia, University of Notre Dame, Fremantle, Western Australia : 14th-17th July 2009

Abstract

The 2009 "Great Recession" has created a severe collapse of business expectations to coincide with severe financial overexposure. In this economic climate there is the tendency for the private sector to withdraw from investing in the future and for the public sector to seek to protect the major institutions of capitalism. Both lead to the exclusion of innovation and the concomitant deterioration of the accumulation process. In this context, there have been calls by some prescient economists and politicians to recognise this severe downturn as the opportunity for the generation and implementation of new knowledge. Innovation needs to be generated - particularly eco-innovation into sustainable development - and supported with a large public and private accumulation programme. In about 1623, Francis Bacon wrote a fable about a secret undiscovered island, Bensalem, in which scientific progress through innovation (Bacon's "instauration") created an idyllic economy where humanity was in concert with nature. This Bacon juxtaposed with another island, Atlantis, which gained wealth and prominence through its domination over nature, until nature took its revenge. From Adam Smith onwards writings on economics have recognised the power of innovation to drive an economy. Using Bensalem as the ideal, this paper appraises visions of innovation and accumulation from various HET schools (especially Neoclassical, Austrian, Schumpeterian, Post-Keynesian, Ecological) to assess what these schools can contribute to development of an ecologically sustainable economic trajectory out of the 2009 Great Recession.