Technology, its Innovation and Diffusion as the Motor of Capitalism

Technology is the motor of capitalist development, the mechanism Schumpeter described that creates gales of creative destruction in the capitalist world system, but that allows capitalism to restore profitability through new investment, be selfreplicating, and thus not be subject to Marx's Law of the Tendency of the Rate of Profit to Fall. Such creative destruction occurs cyclically, as suggested by Kondratiev. Innovation, denovation, and the diffusion of both are central processes to both Kondratiev and hegemonic or world leadership cycles, which extend over two Kondratiev cycles. Innovation occurs in innovation milieus, usually very complex urban regions, and is rare and difficult to manage. Some innovations are shown to drive Kondratiev upswings and hegemonic cycles much more than others. Denovation and the deindustrialization attendant on this part of the process of creative destruction is much less studied. The diffusion of innovation is more than innovation, but is controlled by adoption environment and the status of the sender, or geltung. Two types of technology transfer are examined—hardware and software—within two geopolitical arenas—trading polities and territorial polities. Hardware technologies that deal with material production are distinguished from those that deal with cultural production.