Innovations Lead to Economic Crises

Innovations Lead to Economic Crises

Jon-Arild Johannessen Innovations Lead to Economic Crises Explaining the Bubble Economy

Jon-Arild Johannessen Kristiania University College and Nord University Oslo/Bodø, Norway ISBN 978-3-319-41792-9 DOI 10.1007/978-3-319-41793-6 ISBN 978-3-319-41793-6 (ebook) Library of Congress Control Number: 2016957739 The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Th e use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Th e publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Cover illustration: Andrew Paterson / Alamy Stock Photo Printed on acid-free paper Th is Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface Th e investigation between innovation and economic crises is here based upon a systemic philosophy of history. A systemic philosophy of history, not systems philosophy, is to my knowledge new in the study of economic history. 1 As such, this is an innovation into the study of history. In the systemic philosophy of history, we try to uncover patterns and patterns which connect in the long run. Six economic crises are investigated in order to find a pattern between innovation and economic crises. 1 Johannessen (2012) v

Acknowledgements I want to thank Assistant Professor Siri Hopland, Kristiania University College, Norway, who helped me structure the book. You made the book more readable than I could have done. Thanks Siri for more than helping me with the book. I also want to thank the two reviewers who made a helpful feedback, which resulted in a new conclusion. I also want to thank Associate Professor Arnulf Hauan, Nord University, for useful discussions on systemic thinking and taking the long view on history. I have never met anyone who has read and understood what is being read better than Arnulf. Thanks Arnulf for our discussions on Skype every week. I would also like to thank Professor (full) Erik Steenfeldt Reinert ved Tallinn University of Technology. He used his time to read and comment upon some of my thoughts. He also showed me that Carlota Perez worked with some of the same problems as I did. This gave me knowledge I would not have got, if it had not been for Reinert. Thanks Reinert, you made my research more valuable, anyhow for myself, and it is my hope for someone else. I also thank my nearest leader at Kristiania University College, Associate Professor Helene Sætersdal, and the President of Kristiania University College, Professor Trond Blindheim and Managing Director Solfrid Lind, who let me use my time researching this topic. vii

viii Acknowledgements I also thank the librarian Live Vikøren at Kristiania University College for helping me when I needed it. Last but not least, I want to thank the editors at Palgrave, especially Rachel Sangster and Tamsine O Riordan.

Contents 1 Introduction 1 2 The Long Economic Crisis of the Third Century 9 3 The Tulip Crisis of 1637 35 4 The South Sea and Mississippi Bubbles of 1720 59 5 The Long Depression: 1873 1893 89 6 The Great Depression of the 1930s 111 7 The Long Recession 2008? 125 8 Conclusion: Innovation Policy 155 References 163 Index 173 ix

List of Figures Fig. 2.1 The Long Crisis of the third century 34 Fig. 3.1 The Tulip Crisis in 1637 57 Fig. 4.1 The South sea bubble of 1720 87 Fig. 5.1 The Long Depression 109 Fig. 6.1 The Great Depression of the 1930s 124 Fig. 7.1 Modular flexibility 141 Fig. 7.2 The Long Recession from 2008 to? 153 Fig. 8.1 The emergence of new innovations 157 xi