Economic crises like the current one have devastating economic and
social costs, but they also give rise to major rounds of technological
innovation. That’s why I call them Great Resets. There was a significant spike in patents in the wake of the Panic and Long Depression of 1873 — and subsequent decades
saw the rise of major new innovations from the light bulb, phonograph,
and telephones to systems innovations like electric power, telephone
systems, and urban transit (i.e. street cars, cable cars, and subway
systems). The Great Depression was far and away the most
“technologically progressive decade of the 20th century,” according to
the detailed research of economic historian Alexander Field, outpacing the high-tech boom of the late 20th century by a considerable margin.
Joseph Schumpeter
long ago showed how economic crises give rise to the gales of creative
destruction — as new entrepreneurial individuals and enterprises seize
the opportunity to forge new business models, and new industries
revolutionize and transform the economy. The British economist of
innovation, Christopher Freeman,
found evidence that innovations not only accelerate but bunch up during
economic downturns only to be unleashed as the economy begins to
recover, ushering in powerful new waves of technological change.
A study
released today by the Kauffman Foundation (h/t: Ian Swain) provides
additional evidence that our current crisis takes the form of a Great
Reset. According to the study, 2009 was a banner year for new business
start-ups. As the graph above shows, more than 550,000 new businesses
were started over the course of the year. The report found that “the
340 out of 100,000 adults who started businesses each month represent a
4 percent increase over 2008, or 27,000 more starts per month than in
2008 and 60,000 more starts per month than in 2007.” This represents
the highest rate of new business start-ups in 14 years. The start-up rate
for African Americans also surged to record levels, according to the
study.
Joseph Schumpeter – Business – Great Depression – Innovation – Economic history
