Technological or Strategic Change?

Most economists today take it for granted that technological change is the key to the dynamics of human society. Innovation is usually treated as a spontaneous outcome of either structural or institutional change. Recently considerable effort has been devoted by different schools to developing ‘endogenous’ and evolutionary models to suggest that this is an automatic and irreversible process. In this chapter the orthodoxy is challenged on two grounds: first, that technological change is not the key to the dynamic process but merely a major strategic instrument; and, secondly, that it is not part of an evolutionary or automatic process but is a response to changing strategic demand. The central dynamic mechanism in human society, I will argue, is not technological change but strategic change. The belated conversion of neoclassical economists to faith in technology is, therefore, ironical.