Full text: Stagnation theory in the light of recent history. (Fassung 1)

This case of an overstrained growth was perhaps realised 
in the early 1950'ies in several countries where labour 
was rather scarce and investment large, and utilization 
of capacity very high. It did not lead to any very 
serious demand inflation, probably because the influence 
of the bottlenecks on the investment activity by itself 
served to restrain the rate of growth. 
It will be observed that in the above the point of 
departure was a given rate of growth. How can this be 
motivated? We can regard this rate of growth as 
exogenously determined,produced by the stream of inno 
vations, which results from the new technological 
capabilities and from the economic conditions of the 
preceding long period i.e. over the time of the last 
trade cycle. This given rate of growth is then being 
modified by the influence of the degree of utilization 
(and the profit rate) on investment. In this way an 
interaction between the development of technology and 
the economic mechanism is introduced. 
This leads us naturally to the subject of long waves; 
into this in the course of time new ideas 
have been introduced which make it look more serious 
than it did originally. In the view of Christopher Freeman 
the two effects of innovations: Creation of additional 
investment and subsequent displacement of labour are

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