Energy, urbanization, and complexity: Towards a multi-scale ecological economic theory of innovation

Abstract

The concept of innovation is at the core of any attempt to draft a meaningful theory of economic change. Whether by reducing innovations to the “myth of the sole inventor” or by adopting technological determinism, dominant narratives ignore the complexity of the socio-ecological relations underpinning patterns of societal transformation. This article proposes a framework grounded in critical realism and ecological economics to characterise innovations as elements endogenous to historical patterns of socio-ecological reproduction. Departing from Schumpeter's definition of creative response and Georgescu-Roegen's concept of exosomatic evolution, I discuss three main arguments: first, the relation between innovations and socio-economic change is impredicative, because the direction of causality cannot be clearly established; second, the emergence of innovations is bounded by declining marginal returns to economic complexity. Third, economic change has to be contextualised in relation to historical cycles of energy use and economic complexification. These arguments corroborate the hypothesis that a long-lasting S-shaped wave of innovation took place in capitalist economies over the past two centuries. This article has several implications for the study of both innovation waves and economic growth, in particular, by proposing a new framework to conceptualise productivity, energy, and labour as cornerstones of a multi-scale theory of innovation.