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2) The other question I want to deal with is the role of
technology. Was not, quite simply, the gradual exhaustion
of the railway boom the reason for the decline of accumulation
in the 1890s? The role of the railways in the accumulation
was no doubt considerable. I cannot of course, uphold the
view expressed in my book, that technical progress does
not affect the volume of investment. I recanted loruj ago
and maintain now, with Kalecki, that technical progress is
indeed a stimulant to investment. It would be equally wrong,
however, to explain accumulation entirely by the purely
exogenous determinant of the rate at which new know how
becomes available. The economic climate, created by the
■Mi
expansion in the recent past, is of decisive importance
for the transformation of know how into innovation.
The technological explanation is speciously simple
and plausible. There had to be saturation in the case of
railways just as there had to be saturation with motor cars
more recently, because the high expansion rates of the
"build up" period cannot be continued indefinitely.
But the question is why other innovations have not been
appearing on the scene to take the place of the now saturated
one? The technological % or "long wave" see Chris^Freeman^ )
explanations implicitly assume that the dominant innovation
( here the railways ) somehow absorbs so much interest and
r
resources in capital and management that the alternative
opportunities for innovation are neglected. Now it has to be
noted that the dominant innovation railroad implied an
outstanding development of capital market and organisation,
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leading to the megacorporation ( &^e- Chandler,—Xho vis-iblfc^hand )
in the 1880s, by far the largest business organisations
then existing, an oligopolistic organisation designed to
protect the industry's profit against ruinous competition.