Innovative Activity as Factor of Instability in a Monetary Production Economy
In order to clarify the dynamics of a monetary production economy, the author presents a scheme of technological diffusion of a tech-taker industry with three available groups of technologies. Moreover, the author shows the fundamental role that the firm's financial structure plays in determining innovative strategies and the characteristics of the diffusion patterns. The starting point is a critique of the traditional diffusion models, with respect to the logistic representation of diffusion patterns. The simulation dynamic process points out the existence of technological feedbacks that lead to phenomena of non-saturation in logistic curves of diffusion. In this case, the canonical logistic curve with saturation condition is not the most appropriate way to describe diffusion patterns. Furthermore, the monetary constraint on innovative strategies, given by an exogenous variable in the simulation scheme, gives rise to two important consequences: it partially explains the existence of technological feedbacks, and highlights the unstable character of technological diffusion patterns. The same technology properties lead to asymmetric and unstable paths of economic growth, according to the assumptions on the evaluation of the parameters. This endogenous instability might be further increased by the existence of restrictive changes in monetary price constraints. If technological progress is an endogenous source of disequilibrium and instability in the evolution of an industry, the financial constraints increase its destabilizing power.
Monetary Production Economy, Technological Feedbacks, Technological Diffusion Patterns, Instability