I picked up a free copy of the FT (Financial Times) yesterday. Its not normally a paper I read, but tucked in the middle was a book review of “Knowledge & the Wealth of Nations”, by David Warsh, the editor of Economic Principals. The book examines the development of economic theory in the light of the central contradiction in Adam Smith’s insights, that specialisation creates increasing returns of scale, but the increasing returns mitigate against the required competitive processes. Without competition, the value of the economies of scale accrue to the monopolist not the consuming market. Warsh also reviews more recent contributions to economic growth theory in the light of the role of knowledge and technology change to the economic innovation process. The review talks about both IT and pharmaceuticals so it should be relevant to us. I think I need to read this.
Originally posted on my sun/oracle blog, republished here in March 2016.