Parable of the New Combination and the Surface of the Water

2017-10-25

• Schumpeter, who coined the term innovation, also called innovation a new combination. However, many people do not have a physical image of what kind of new combination is not useful, so I compare it to water's surface. #physical analogy

• The basic premise Schumpeter. believed that "if new combinations do not occur, the economy will move toward balance."

  • This corresponds to a flattening of the water surface.

• He also believed that "when the economy is in equilibrium, profit disappears and recession sets in."

  • This corresponds to the loss of flow when the water surface is flattened.

• The new union is a hole in the wall, connecting two previously unconnected areas.

  • With the new union, the water that was in equilibrium begins to flow again.
  • Then a new equilibrium is reached

• Effective new bonds are under pressure at both ends.
  • So when they join, water begins to flow through it.
  • The water flow itself can widen the hole and further increase the flow.
• On the other hand, water will not flow if you do new combinations that are not effective.
  • No flowing water, no difference in pressure, trying to flow against gravity, these new bonds are not valid.

#Parable

This page is auto-translated from /nishio/新結合と水面のたとえ using DeepL. If you looks something interesting but the auto-translated English is not good enough to understand it, feel free to let me know at @nishio_en. I'm very happy to spread my thought to non-Japanese readers.