CARDWELL LAW AND THE POLITICAL-ECONOMY OF TECHNOLOGICAL-PROGRESS

This paper concerns the interaction between technological creativity a nd political competition. The paper is based on the observation that t echnological progress encounters resistance from various groups that b elieve they stand to lose from innovation. These pressure groups will try to manipulate the political system to suppress successful innovati on. Modelling this political struggle as a stochastic process with end ogenous institutional adaptation is attempted using a simulation based on urn models. Under fairly general conditions, it can be shown that the single economy will move inexorably to an absorbing barrier of tec hnological stagnation. This process is referred to as Cardwell's Law. The paper then proceeds to show whether Cardwell's Law also holds in a world in which a number of separate economies compete with each other . It is shown that in a world with multiple economies Cardwell's Law d oes not hold even if it holds for each economy separately. This is con sistent with the historical observation that political competition may be conducive to technological progress.