Life and Death of Innovation–what's next? · Life and Death of Innovation–what’s next? Hardy Hanappi Gizem Yildirim [email protected] [email protected] Department of Economics

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life and Death of Innovation–what’s next?

Hardy Hanappi Gizem [email protected] [email protected]

Department of EconomicsVienna University of Technology

16th Conference of the Research NetworkMacroeconomics and Macroeconomic Policies (FMM)

The State of Economics after the Crisis25 - 27 October 2012, Berlin

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Outline

1 Endogenous Needs, Values and TechnologyLife of Innovations

Accounting of ExchangeEvolution of Growth

Death of Innovations

2 What is next?European Economic Policy for the Short-run

3 New European Economy

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Endogenous Needs, Values and Technology

Exogenously given fixedpreferences andproduction functionIdentical marketmechanisms

Preferences structure andproduction in permanentfluxDiversifying marketmechanisms

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Life of Innovations

A new mode of production: the growth of labour productivity asa systematic force that permanently leads to new forms ofsocial relationships.

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Accounting of Exchange

A simple society with three economic sectors: farmers (f ),manufacturers (m) and state (s)

F =

d1 fm fsmf d2 mssf sm d3

E =

e1,1 e1,2 . . e1,ne2,1 . . . .. . . . .. . . . .

en,1 . . . en,n

Input–Output Flow Matrix Transfers between Enterprises

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Evolution of Growth

How do different species effect each others growth rates?Lotka–Volterra Two Species ModelDynamic Exploitation

Marx, Schumpeter:Dynamic exploitation of nature and working class→ profit→ technical and social innovation→ labour productivity

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Growth

New products and services create new utility dimensionsDiversity, complicated networks of interdependent andheterogeneous agents, entry and exitProblem of determining social value

Aggregation of individuals’ utility vector

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Aggregation

No interaction programs and use IO formalism to describesocial value

λ1

λ2

...λn

a11 a12 · · · a1na21 a22 · · · a2n

......

. . ....

an1 an2 · · · ann

λ1

λ2

...λn

`1

`2

...`n

The total value of net outputs YThe sum of direct labour time inputs L

Implies constant productivity of average individual YL

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Open Questions

Evolution of Growth – Heterogeneous agents’ approachAggregation: Technical coefficient matrix in permanentchange

a11 a12 · · · a1ma21 a22 · · · a2m

......

. . ....

am1 am2 · · · amm

b11 b12 · · · b1n

b21 b22 · · · b2n

......

. . ....

bn1 bn2 · · · bnn

process innovation

productinnovation

Innovation

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Death of InnovationSource: http://stat.oecd.org/

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Death of InnovationSource: http://stat.oecd.org/

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Life of InnovationsDeath of Innovations

Death of InnovationSource: http://stat.oecd.org/

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

European Economic Policy for the Short-run

Europe at the Crossroads

1 What are the choices for Europe?

Break-up or full-fledged2 Why should the Euro survive?

Economic decline, wider political diversity3 How can Europe survive?

Europe needs a plan

4 Will Europe survive?

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

European Economic Policy for the Short-run

European Economic Policy for the Short-run

Time is running short!!!

1 Debt2 Interest rates3 Banks4 Unemployment5 Social innovation

6 SMEs7 Devaluation of the Euro8 Wages9 Fiscal Authority

10 Education

Hanappi H., 2012, Can Europe Survive? Ten Commandments forEurope’s Next Ten Years, Papers for Evolutionary Political Economics(PEPE), No 9 (2012)

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

European Economic Policy for the Short-run

Innovation policy in Europe focuses on socialinnovation

How to increase utilities of Europe’s citizensStimulate participation in democratic processExport globally

Innovation policy in Europe focuses on social innovationDemocratic mechanisms for governance within Europe arepreferred to solely technological advances.

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

New European Economy

Game theoretic approachof Europe’s political economyDynamics of monetary andfiscal policies

MONETARY UNION

Unemployment

Interest rate

Banks Debt

Innovations

Devaluation Wages SMEs Education

National Governments

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

New European Economy

Game theoretic approachof Europe’s political economyDynamics of monetary andfiscal policies

MONETARY UNION

Unemployment

Interest rate

Banks Debt

Innovations

Devaluation Wages SMEs Education

National Governments

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?

Endogenous Needs, Values and TechnologyWhat is next?

New European EconomySummary

Summary

A better understanding – Heterogeneous agent basedapproachFiniteness of capitalisms – focus on social innovationNew European economy – democratic control on monetaryand fiscal policies in the EU

Hardy Hanappi, Gizem Yildirim Life and Death of Innovation–what’s next?