European technology policy and global schumpeter dynamics: A social science perspective

NORTH- HOLLAND

European Technology Policy and Global Schumpeter Dynamics: A Social Science Perspective HELMAR KRUPP

ABSTRACT A model of the development of contemporary industrialized societies is presented. It amalgamates Luhmann's theory of systems with that of Schumpeterian innovation. The theory shows that all political and other societal operations are severely constrained by what, in this paper, is called globalizing Schumpeter Dynamics. This evolutionary and expansionist development conflicts with the limited capabilities of the Earth. It is shown that all present policies of resource saving, recycling, material substitution, renewable resource development, ecoengineering and so on seem inadequate to cope with the ecological problems of the next century. This is the background against which European technology policy is analyzed. As with the policies of other industrial nations and economic blocs, it obviously provides no way out of the dilemmas: growth and employment versus ecological destruction and North-South disparities. Even according to more restricted cost-benefit criteria, it seems to be deficient (nuclear energy, manned space flight, genetic engineering, and so on). But, in the light of the proposed theory of Schumpeter Dynamics, European technology policy cannot be basically different from what it is because it is constrained by the growing global uniformity. The further evolution of Schumpeter Dynamics, in particular that induced by more severe ecological disasters in the next century and their consequences (wars, epidemics, migrations, crime and so on), may open entirely new vistas and policies.

Introduction All discussions of global and particularly European techno-economic policies are confronted with the following fundamental dilemmas: HELMAR KRUPP has a doctorate in engineering physics and is a professor at the Technical University of Karlsruhe (Germany). During the period 1972-1989 he served as founding director of the Institute of Systems and Innovation Research at the Fraunhofer Gesellschaft. From 1990 to 1992 he was a guest professor at The University of Tokyo. Address reprint requests to Prof. Dr. Helmar Krupp, Burgunderweg 7, D-76356 Weingarten, Germany. Thoroughly revised English translation by Prof. Dr. Walter H. Goldberg with permission of the publisher from "Europdische Technologiepolitik in der globalen Schumpeter-Dynamik--gesellschvftstheoretische Grundlagen;" originally published in Si113, Werner, and G. Becher, eds., Politik und Technikentwicklung in Europa, Berlin: Duncker & Humblot 1993. Technological Forecasting and Social Change 48, 7-26 (1995) © 1995 Elsevier Science Inc. 655 Avenue of the Americas, New York, NY 10010

0040-1625/95/$9.50 SSDI 0040-1625(94)00038-X

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H. KRUPP • by and large, the p r o m o t i o n of economic growth and technological competitiveness conflicts with environmental protection; • technological competition tends to increase labor productivity, which conflicts with rising unemployment; • the p r o m o t i o n of the European Union, as with other international bloc formations, tends to aggravate the global disparity between rich and poor countries.

One basic discrepancy underlying these dilemmas is the gap between short time horizons in dally economic and political action on the one hand, and long-term effects on the environment on the other. With this in mind, this article attempts to develop more general perspectives for European technology policy, beyond the short-term operative and semantic levels. The focus chosen highlights more basic structural and global issues, rather than specific technologies, products or user and support networks. A most concise picture of the global situation has been provided by Esser: "all countries subscribing to capitalism, and the global capitalist system as a whole, are facing socio-politicalconditions forcing them into a crisis.., caused by a specifictype of societal structure characterized by the specificcombination of an economicaccumulation system(Taylorism,mass production), of a socio-politicalpattern of control and regulations(corporatism, large integrativemass parties, welfarestate) as wellas of a hegemonicpolicy (Pax Americana), and consequently must shape a 'new order,' including new control institutions and regulatory mechanisms,to fit a new 'Post-Fordian Era', the contours of which are rather amorphous as yet. This new order is still in the making, and--history being an open process-it is by no means clear yet, whether world capitalism will be able to construct it after its alleged victory over socialism." [1] F A S T (the Task Force on Forecasting and Assessment o f Science and Technology o f the European Union) provides another clue. This think tank o f the European Union, after decades o f redundant worldwide discussions, has produced a long list o f technologyrelated targets [2]. However, it fails to explore the preconditions o f possible European action and its possible effectiveness. It reviews neither the merits o f the European technology policy o f the past nor its counterproductive consequences (such as environmental decay and unemployment). Instead it only enumerates obstacles to action in a similarly redundant and ad hoc manner. With an appropriate theory as a guideline, one may be able to analyze the preconditions that led up to the indicated dilemmas, the obvious failure o f wishful projects (the "green" or environmental agenda, h u m a n rights) as well as perspectives for the future. Action theories are blind if they do not reflect the systemic constraints within which they are supposed to work [3]. Against this background, this article tries to answer the following questions: 1. All O E C D countries seem to follow the same technological trajectories. Why should this be so? W h y do all o f them specialize in the same products, processes, and services? W h y do the former communist as well as the less-industrialized countries want to follow the same pattern? 2. H o w would one assess this development after 200 years o f industrialization in hindsight? Should it be continued into the future? Today, its rather dramatic consequences are no longer being denied: for example mass unemployment, environmental decay, global disparities, future mass migration.

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3. Although a great variety of programs of action are being proposed, they either do not get started or they tend to converge globally. How can this be explained? 4. Is self-reflective auto-control possible so as to lead the world out of this stalemate?

Old Complexity, New Simplicity During the past decades, the technology policies of the industrialized countries at national, European, or global levels, appeared to be rather diverse and complex ones. Programs of government departments as well as those submitted by their clientele used to contain a host of different scenarios, objectives, and measures. At the semantic level, various grand themes have been launched, such as closing the technology gap with respect to the USA, improving the quality of life, modernizing the economy, or even reconstructing industrial society. Given the wide variety of institutions and interactions in which technological change is manifesting itself, not surprisingly, highly diverse policy approaches have been implemented at the pragmatic level, aiming at differing • types of research, such as basic, strategic [4], applied, development • institutions such as universities, extramural institutes, industry (large, medium or small enterprises), individual inventors, and so on • promotional philosophies, namely supply push or demand pull, for example. Evaluation techniques have been applied to determine to which extent political targets, the instruments employed, and the results eventually achieved, have been consistent. The lack of theoretical foundations is reflected in the failure to come up with convincing measurements of costs and benefits. The lists of criteria to be employed seem to be growing longer and longer [5]. In the meantime, however, the historical variety of technology policies seems to have resulted in a new universal simplicity or, at least, uniformity. Worldwide, it is based on the following major assumptions: 1. The economy is by far the most important actor. With a view to following the Japanese example, the industrialized countries tend therefore toward minimizing the public share of total research and development (R&D) spending. 2. Despite the dominance of large enterprises, both in markets and with respect to major innovations, policies also want to enhance the vitality of small and medium-sized ones, as networks between large and small firms seem to generate synergy effects (networks of delivery, innovative start-ups). 3. Thepublic role is perceived as threefold: (a) it provides the infrastructure in fields like education, basic research, technology transfer, inventor greenhousing, and so on; (b) it acts as a large-scale buyer of innovative products and services in the public sector (energy, water supply, traffic systems, waste disposal, city renewal, health care, defense); (c) it promotes prestigious projects like high-energy and astro-physics, manned space flight, geological deep-drilling, and so on. 4. Several decades of controversial research on how to promote innovation have eventually shown that technological change takes place in a highly complex web of interactions. Consequently a well-balanced holisticpromotionalpolicy seems to be the most promising option; the relations between political objectives, program implementation and the overall results achieved are of such an indirect nature that more often than not, these cannot be isolated from what is going on elsewhere in society.

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H. KRUPP 5. The objects of innovation are converging worldwide [6]. In sequence, although overlapping, they fall under categories such as utilization of nuclear energy, flexible automation, micro- and opto-electronics, lasers, automatic information processing and transmission, superconductivity, and gene technology. The next stage may carry the label of eco-engineering [7].

Objects and functions of technology basically being contingent societal constructs [8], the sequence of the clusters of innovations mentioned correlates with the development in the natural sciences, from mechanics via thermodynamics, electricity, optics, nuclear physics, solid state physics to molecular biology [9], comprising their respective interrelations and amalgamations. 6. The basic knowledge in the natural sciences as well as in technology is generally available worldwide [10]. Here as a rule, there is no reason for a competitive race. Competition may, however, be economically justified in the development of specific products and processes as well as their embedding in particular technical systems, markets, and societal sectors [11]. All this requires specific knowhow. The global homogeneity of technological development may therefore become blurred by concerns about the obvious multiplicity at the level of detail. 7. The industrialization of developing countries, that is their adaption to the general pace of global technical development, occurs by processes like technology transfer, joint ventures in cooperation with foreign enterprises, import substitution for industrial goods and services, development of indigenous pragmatic knowhow on sheltered domestic markets, development of infrastructure in education and research, policies and measures imposed by institutions of foreign financial aid (the World Bank, for example), or the development of internationally compatible organizations and institutes. 8. The general pace of industrial development is supported by transnational networking between financial, commercial, political, and scientific institutions. In contrast to the patterns projected above, Max Weber might have expected different paths of development to emerge in different geographic regions and countries because of geographic, climatic, historical, cultural, and demographic differences. In contrast to this, one observes, at least at higher levels of aggregation, a worldwide uniformity in or increasing similarities of the paths of development between the industrializing countries. How may this phenomenon be explained? Are we faced with a universal type of evolution that leaves only marginal alternative options to both actors and politics? It is a central claim of this article that the societal model of Schumpeter Dynamics [12] seems capable of depicting the development of this global situation. The presentation of the model here is necessarily a rather condensed one, due to the space available. For theoretical details, the reader should consult the literature quoted. The model aims at providing a framework for the discussion of the present role as well as of the future of European technology policy. Schumpeter Dynamics: Outlines of a Model of Industrial Societies The model is presented in three steps. These involve the functional differentiation of modern society into subsystems [13]. Of particular importance in this context are the subsystems economy, politics, technology, and world of consumption; the development of synergistic interactions between these subsystems by means of structural coupling among them; the dynamization of this synergism by means of competitive innovation [ 14].

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Regarding Step 1: The systems theory of Luhmann describes functional systems of communication with their specific encodings and programs, as they develop in human societies, permitting high performance and flexibility due to specialization and routine formation. • The economic subsystem develops by means of both institutional differentiation and "rationalized" interaction, based on competition. Its internal operations are encoded according to binary criteria such as gains/losses or payment/nonpayment. It also manages human resources according to economic criteria. Measured in its own terms, it gives proof of high effectiveness, eventually at the expense of functions and performance in other subsystems (environment, external costs, exploitation of developing countries); • the political subsystem pursues its own internal rationality, aiming at maintenance and expansion of power. Its internal code of communication is power/opposition, its societal function is power management; • the technological subsystem deals with functioning or nonfunctioning knowhow, which is being gained as well as used in a variety of institutions, under conditions of both specialization and competition. The outcomes are the artifacts of the technosphere, which interact with the litho-, atmo-, hydro-, and biospheres. It is capable of both dominating as well as penetrating and eventually destroying them. Technology has the societal function of tool provision. • A most influential-and in theories-often underestimated subsystem in modern society is the world o f consumption. Its function, much beyond satisfying basic human needs, is to manage experience according to a binary code such as wellbeing/ill-being or pleasure/displeasure-at least of the relatively wealthy people [15]. Costs to external systems stand against inwards-oriented benefit maximization: All costs include environmental decay as well as global apartheid between rich and the poor countries. Modern society exhibits further functional subsystems of communication, like law, religion, sports, medicine, and science. One of their salient features is the development and exchange of rather specialized internal communication. The internal communication and coupling of a system is more intense than structural coupling to its environment. Regarding Step 2: Although their internal communication is autonomous, the subsystems are open ones. A few typical examples of their mutual structural coupling to the other subsystems may be given: In our modern world a political party or administration will not enjoy the voters' support if it cannot demonstrate competence in economic affairs. Disregarding nationalist themes, as a rule economic issues dominate election campaigns. A flourishing economy means, for example, job s, personal income, taxes, preelection presents, and foreign prestige. Conversely, politics provides a variety of "goods" for the economy: infrastructure, orders, reliable framework conditions (legislation, regional monopolies to suppliers of electricity~and so on), socialization of risks or losses (social insurance), favorable credit and taxation rules (inventory, depreciation), etc. In view of the distinctly different and specific encodings, structural coupling between different subsystems can only occur "indirectly" by mutual irritations, which may cause pertinent expectations in the irritated systems. They cannot cause, but may eventually induce, particular developments in the affected

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H. KRUPP system, for example, higher private investments on the basis of an anticipated public contract or, conversely, favorable comments on public policies published by industrial associations [16]; • Most consumers are voters. Seen from this point of view, they contribute significantly to shaping the economic and political foundations of society. The economy provides jobs, income, goods, and services on the one side, politics, on the other, takes care of infrastructure, social services, national prestige, internal and external security. Also in this case, mutual expectations will develop. If disappointed, the world of consumption becomes irritated and starts to irritate politics in turn (the former Soviet Union and East Germany provide examples); • Technology is nurtured both by the economy and politics. It is the primary motor of profits and growth to the economy, hereby indirectly serving the political administration. Direct service to the state is rendered in building and maintaining the infrastructure, and by contributing prestigious projects, including armaments.

Regarding Step 3: Innovation acts as the essential motor that drives the evolution of this synergistic system of the economy, politics, technology, and the world of consumption [17]. Innovation affects different levels of society, namely: • the level of products and services rendered. It is the most tangible one to the consumer. Product innovations accelerate their obsolescence and promote the providers' turnover. They trigger as well as satisfy needs. • the levels of production and organization of work. They are subject to booming innovation: automation of manufacturing, formation of networks linking manufacturing, control, and management, thus reducing both the amount of human input and the cost per unit produced. • the level of societal issues and paradigms. The examples chosen here relate to the technological sphere. They include the permanent transformation of the context of technical artifacts (world of work, traffic, consumption), changes in ethical drugs (including psychiatric ones), a n d - l a s t but not l e a s t - t h e intensification of the media world as part of man's living sphere and conditions. All these phenomena have tremendous impact on human minds and behavior. Conversely, they induce innovations in technology and also in the subjects dealt with in the media. In feedback cycles, virtual realities merge with the reality ordinarily perceived. Media generated values of communication merge with education and other sources of an individual's perception; • gene technology. In all probability, nature, that is, all flora and fauna, will be subject to commercial exploitation, including the potential of the manipulation of human genomes. This is the physical equivalent of the self-production, the boot-strapping of society. The essential point is that both human and biological reproduction will be increasingly governed by economic biases, to the detriment of humanistic ideals for example (human dignity, culture, aesthetics, and so on). After Marx, it has been Schumpeter in particular who emphasized the fundamental importance of innovations and their feedback, in technology, economics, politics, and society as a whole, as well as society's fundamentally systemic character. Thus, it seems justified to use the term Schumpeter Dynamics to denotc this model of prcsent societal development. No other type of society seems to have or to have had a similar synergistic motivation for competition and growth, equally based on profitmaking in the economy,

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political power play in politics, innovation in technology, and consumer pleasure. This is a much more pervasive societal co-motivation than provided by, for example, feudal or military models in the past. A m o n g the O E C D - t y p e societies, national differences are now to be found merely in ideological nuances, in particular as to the degree o f societal "cushioning." It is stronger in large parts of Europe, on the one hand, and weakest in the USA, on the other, whereas Japan falls somewhere in between. ~ Entirely different models of development would encounter problems in shielding themselves from the outside, problems o f increased transaction costs, and economic as well as political instability (Nicaragua, Cuba). The global spreading o f the Schumpeter Dynamics model is supported by economies of scale and advantages from transnational networking. Even suppliers and subsuppliers may profit, as large firms develop comprehensive networks and markets, into which small, both upstream and downstream firms may become integrated. Conversely, small suppliers will hardly find themselves in a position to develop and maintain separate distribution networks. Some developing countries, like Japan in the past, or more recently Brazil, have occasionally attempted to follow a protectionist route in order to nurture the development of domestic infant i n d u s t r i e s but only temporarily. In summary, Schumpeter Dynamics moves toward development and growth. It integrates ever more parts of the world into its networks. The likelihood o f the success o f separate national approaches seems to be diminishing. In retrospect, Schumpeter Dynamics appears as the engine o f the industrial revolution's globalization. Its rationale seems to have invaded all spheres o f society. But by the same token, it will eventually come to its limits. As Schumpeter said in 1936: "It is very important, I say, t o take account o f the fact that no social system is ever going to survive when allowed to work out according to its own logic [18]." In conclusion, m a j o r examples o f the heuristic power o f the model o f Schumpeter Dynamics are enumerated below:

1. short time horizons of decision making in the four subsystems o f Schumpeter Dynamics (high discount rates o f the economy, frequent election campaigns o f politics, high obsolescence rates o f technology, and high discounting o f the future in consumption) are in conflict with large time constants in ecological systems. 2. Schumpeter Dynamics evolve because of the absence of any central political control, the lack o f reflective self-control of Schumpeter Dynamics, and fundamental dissent in a world o f collateral self-centered systems of enlightened selfishness. 3. the futures o f Schumpeter Dynamics are unpredictable because o f their innovative contingencies; Large-scaleglobal convergenceand uniformity do not exclude local or regional specifics.A case in point are Japanese successesin catching up technicallyand economicallywith other OECD countries in the 70s and now occupyinga leadingposition in global SchumpeterDynamics. In addition to the generalevolutionarypower of SchumpeterDynamics,this may be explainedby particular national virtues, rangingfrom individualmotivation and intelligenceto sensitiveinterpersonal relationships, and finally to national coherence. The result is a high saving rate, high domestic prices, large domestic and foreign investments, long-term orientation as well as particularly strong consumerism still fascinated by technologicaland commercialnovelties. On the other hand, in spite of a deep-rooted indigenous culture, Western trash has quickly become imitated all over Japan. Thus Schumpeter Dynamics acts as a strong global integrator, although all sorts of local, national, and regional idiosyncrasiesand cultures may survive. But overall, basic economic, political, technological,and consumption patterns are becoming increasinglyalike.

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4. as a consequence of its systemic symbiosis and competitive efficiency, the performance of Schumpeter Dynamics (in its own terms) may be perceived as superior to other types of society, for example, communist, feudal, military. 5. As with all biological and societal systems, Schumpeter Dynamics may develop immune responses in reaction to irritations from the outside, for example, to the perception of ecological threats. This is the subject of the next section. Ecological Communication Irritated by its perception of ecological threats, global society has developed ecological communication [19]. In turn, this irritates its Schumpeter Dynamics, which reacts by immune responses like • playing down perceived ecological damage, spreading disinformation, polishing up corporate identities by "green-wash," and eco-business (advertising and selling allegedly or truly ecologically safer products); • innovations in products and services to improve the productivity of energy and other natural resources as well as innovations in the use of renewable sources of energy; • structural change as, for example, the development of industries to recycle waste as well as the establishment of public-sector environmental agencies; • intensifying ethical semantics, business ethics, for example.

Boundary Conditions of Possible Futures Schumpeter Dynamics seems to be confronted with the following conditions: (1) in the first place, the economic growth of less-industrialized countries has become so rapid in the meantime that the formerly poor countries will overtake the rich ones in harmful emissions within a few decades [20]. "The roles to be played by Asian developing countries in the future will be crucial" [21]; (2) the total growth of damage to the environment is so intensive that the per capita consumption of energy and raw materials would have to be reduced to one-tenth or one-twentieth in order not to overtax the ecological capacity of Earth [22]. The present growth potential of Schumpeter Dynamics, and, consequently, of the damage threatening the Earth, 2 may roughly be estimated to increase within the coming 2 German politicians are presently trying to convince the public that this country has reached a state in which economic growth and environmental damage are becoming uncoupled. As a major example, they point to stagnating energy consumption and decreased CO2 emissions. As a matter of fact, Germany recently enjoyed unusually mild winters. At the same time, East German industry has broken down. Therefore, the effects on energy consumption and CO2 emission cannot be attributed to the uncoupling from energy use or even less the effectiveness of German measures for CO2 emission reduction. Indeed some progress has been achieved, for example, in heavy metal and other emissions into rivers and soils. But the Umweltgutachten 1994 des Rates yon Sachverstiindigen fiir Umweltfragen, Bonn 1994, an official government-sponsoreddocument, shows that by and large environmental destruction is proceeding, and increases in energy and material productivity tend to become overcompensated by increases in volume of techno-economic activities. This will affect East Germany more than West Germany because of West-East financial transfers and the projected reconstruction of East German housing, cities, and industries. On a global scale, the formation of the European Union, new GATT regulations, and the formation of major industrial blocs in Asia and on the American continent point to strong growth promotion. There is no indication that this can be made compatible with the reduction of energy and materials use as required by the postulate of "sustalnability."

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decades by factors of two, because of population growth, and another factor of four, because of some disparity reduction due to the accelerated growth in the poorer parts of the world. To this we must add the increasing burden due to further economic growth in the affluent part of the world. Altogether this leads to intensified environmental damage by a factor of well above 10. In contrast, the productivity of energy and other natural resources consumed in the long term m a y - b y present s t a n d a r d s - a t best grow by 1°70 per year, thus not nearly meeting the growth of environmental burdens. To couch it in the discreet language of the United Nations, the German version runs like this: "population growth, ways of producing, and patterns of consumption are increasingly getting off balance, thus jeopardizing the foundations of human life." In his Foreword, the German Federal Minister of the Environment concludes: "Solving the problems also requires a change in our ways of living and of the economic s y s t e m . . . Without restrictions imposed upon the industrialized countries, the global ecological system will not, in the long run, be able to cope with the consequences of the necessary economic growth of the South on top of the burdens caused by the North [23]." In brief, thus, what is needed is growth reduction, a taboo in all countries. What is the answer from Schumpeter Dynamics when faced with these challenges? Self-transformation is the only choice, according to the Schumpeter Dynamics model, because there can be no particular internal or external agent to effect this.

Self-Transformation of Global Schumpeter Dynamics Luhmann's systems theory tells us that ecological communication may irritate the present type of Schumpeter Dynamics because the ecological messages are incompatible with its profit and growth ideology. But there are a great many ways Schumpeter Dynamics can cope with these irritations. Some types of immune responses have been described above. Compared with daily losses of hundreds of thousands of people in the various ongoing wars, well covered by the media, the annual losses of about 700,000 (in 1992) people in automobile accidents are hardly noticed by the public. Daily reports on the hazardous potential of one or another toxic substance in the environment are being noted, but mostly not for long, and the reduction of the per capita use of cigarettes and alcohol is very slow. These examples are to show that the perception and processing of external signals within Schumpeter Dynamics, their irritating effects, and finally the immune response triggered vary greatly. A major criterion is the time horizon. Action in Schumpeter Dynamics is mostly short-term oriented (less than 10 years), whereas most environmental threats have much longer time constants (global warming, radioactivity, waste leakage, and so on). But the example of the infamous environmental tragedies in Japan shows that major immune responses do occur if the irritation reaches critical levels) Minamata disease (mercury poisoning) led to a few thousand casualities. Not much later, the emissions from chemical plants in Yokkaichi caused almost 100,000 Japanese to become officially designated asthma victims, entitled to indemnity payments. As a repercussion and on the basis of their own experience, one after the other of the OECD countries followed the Japanese example and adopted more or less ambitious emission targets with respect to the two most prominent air pollutants, SO2 and NOx. 3 The operational definition of critical is that the irritation is strong enough to elicit a substantial immune response, whatever its "sustainability" may be.

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At the present time however, as an example, NOx from automobile exhausts is being tolerated at a toxic level because the benefit of excessive automobile use is considered to be very high. This is to show the unstable and volatile coupling between signals from the environment, their processing and perception in ecological communication and in Schumpeter Dynamics, and the subsequent immune responses. There is a far from causal relationship between the information about scientific indicators of the state of the environment and the related responses by one or the other subsystem of Schumpeter Dynamics. Only when the irritations become strong enough to result in a perceived crisis, does some response occur, although often quite evanescent as shown by the fragile situation of "green" movements all over the world. Over the last few years, for example, the environmental irritation of German Schumpeter Dynamics has been in a slump. The probable main reason is that in the perceived dilemma between environmental protection, on the one hand, and employment and growth-related investments on the other, the short-range mentality of society prefers the latter. Nevertheless Schumpeter Dyne.mics has responded and continues to respond, however inadequately. Here are major examples. 1. Some thresholds or levels o f tolerance are changing. Society is accepting less favorable properties of air, surface, and drinking waters, food, noise, etc., possibly because they are felt to be offset by improvements in convenience in other spheres of life. 2. In the course of industrialization, the productivity of natural resources has been changing. Typically, it decreases in early phases of development, then increases in later ones. The productivity of energy in developing countries, to take one example, decreased until 1987, henceforth to increase. These turning points occurred in England in 1880, in the USA in 1920, in Japan only in 1970 [22]. Ayres [24] and J~inicke [25] report similar observations on the productivity of materials. The changes result from changing quantitative needs in different phases of development (high input quota for raw materials in early stages; high per-capita consumption, but also high productivity of energy during late stages), substitution of materials (e.g., synthetics in lieu of metals), changes in the technology of production (e.g., increasing efficiency of power plants, machinery, waste reduction), and finally organizational change (increasing productivities, e.g., of human resources, transport performance, re-utilization of parts or materials, etc). 3. Inferior living conditions may reduce the population. Crowded cities, difficult living conditions for couples, in conjunction with liberal abortion legislation and practice may to some extent explain declining birth rates in Japan. But it is a main assumption of this article that this evolution is far too slow to cope with the rate of environmental destruction. Let us therefore use the framework developed here to review briefly the usual ecological debate and the prospects of the solutions offered. As most of the conventional debate is action-oriented, the subsequent section also reviews examples of the relationship between action and systems theory. The Conventional Debate: Action and Systems Environmental decay is often exposed as political (or state) failure [26], which might be corrected by better politicians and politics. Implicitly this ascribes decisive controlling

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authority to politics. In contrast, the decentralization inherent in Schumpeter Dynamics does not permit centralized control, in particular not by the state [27], because of its being embroiled in too many "negotiation systems" [28] to be capable of superimposing itself over and above the comprehensive Schumpeter Dynamics' system. But even if national consensus were achieved and self-control by politics were attempted, major changes of direction would be thwarted by international networking and competition forcing individual countries to align themselves more or less with the general evolution. The evolutionary uniformity of the world discussed above testifies to this. In terms of action theory, only action that is compatible with the general direction tends to be successful. Therefore we observe convergence towards hardly distinguishable mass parties, as, for example, in the USA and presently in Germany. On the other hand, politics can be innovative "if the time is right", as shown by the emergence of ecological communication and green movements all over the world. Schumpeter Dynamics therefore not only appears as progress in societies "marching in step", but to some extent also as permanent evolutionary change. Still, systemic constraints make some types of change more likely to be successful than others. In the case of environmental communication, as long as the environmental situation is not in a perceived crisis, which it is not, it hurts itself by the basic short-sightedness of decision m a k i n g : The majority of political and economic scientists points to the market as being capable of signalling even ecological scarcities by means of prices, as well as of solving the related problems by substitution or reallocations. The environmental decay proceeding in our times casts doubts on this claim. There are many reasons for this, both ones of principle and pragmatic ones. More often than not, markets are a theoretical construct, but do not exist in reality. Take the case of oil. The oil market is subject to massive financial and even military intervention, and is determined by the short time horizons of selfish oil producers at the same time. Market corrections by political intervention using economic instruments, such as emission certificates, have been proposed. They may work locally. But the debates before and at the Rio Conference in 1992 demonstrate the difficulties met when they are challenged to award such certificates on a global scale [29]. The globalization o f Schumpeter Dynamics would require national resources and ecological capacities to be treated as global commons [30], the utilization of which require global solidarity pacts. Those will, as a rule, have to run counter to the principle o f markets, namely, competition and individualistic rational choice. Particularly in Japan, it is claimed that new technologies are able to solve global energy and environment problems. For quantification in the case of energy, as an example, reference is made to the long-range projections of Ohno [22], Starr et al. [32], and Kuwano [33]. Ohno claims the productivity of energy (primary consumption of energy related to gross national product) would have to be raised by a factor o f 10 in order to limit the rate of global warming to an average o f one centigrade per 100 years. According to Starr et al., however, a factor of only 2 would permit Schumpeter Dynamics to be unimperilled by energy constraints. In contrast to those two investigations, Kuwano projects much higher increases of primary energy consumption by a factor of 25 for the next century. 4 The short time horizonsof action in the economy,in politics, and in the world of consumptionare systemic properties and cannot be attributed to unethical behavior of individuals. Business managers and politicians a r e under competitive pressure, and the world of consumption is turned to its media world advertising for more and better, at least compared with one's friend and neighbors.

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Everybody seems to agree that this increase cannot be balanced by energy productivity growth, so that major increases in environmental damage would occur. It must be noted that the major relevant new technologies proposed have not yet been subjected to either large-scale testing or even theoretical technology assessment. This applies in particular to options propagated in Japan, but also in the USA [7], like nuclear fusion, satellite-borne photovoltaic energy conversion, CO2 waste management by means of fertilizing the oceans or by submerging dry ice, as well as large area greening of deserts with genetically engineered monocultures. The related risks seem to be rather high, ranging - in the order of the examples g i v e n - from radioactivity, 5strong microwave radiation and ionization in the atmosphere and on Earth, and ecologic damage to the oceans to biological catastrophes. It is a prominent immune response of Schumpeter Dynamics to point to new technology as a future omnipotent panacea, in order to be able to continue "business as usual" [7]. New technology is indeed an indispensable element of Schumpeter Dynamics, but it may also contribute in a major way to its self-destruction. It appears certain that it does not suffice to solve the ecological problems of the future. Finally, in accordance with rational choice theory consumers prefer short-term targets [34]. The evolution of Schumpeter Dynamics, its inertia and immune responses constitute severe constraints on political, economic, and technological actors as well as on consumption. It establishes a filter that punishes action that is not co-evolutionary with the system. But at the same time, Schumpeter Dynamics is highly innovative, as discussed previously. It is this dialectic between individual actions and systemic constraints that stimulates a perennial discussion between different schools of thought as well as, on an emotional level, between optimists and pessimists, or wishful thinking and historical experience. The limited acceptance of Luhmann's research in particular is due to the fact that most public actors have to demonstrate "optimistic hopes" and make unfulfillable promises in order to further their particular business, whether political, economic, or other. Election campaigns and advertising methods testify to this. The above discussion may be summarized by claiming that all presently working

mechanisms to further the self-transformation of Schumpeter Dynamics seem insufficient. Only major future crises, as expected to appear later in the next century, may induce strong enough responses. Triggering factors may include severe accumulations of harmful substances, global greenhouse warming, mass-migration as well as wars about scarce and dwindling resources. The German parliamentary commission on "Precautions to Protect the Earth's Atmosphere" provides an impressive overview on these issues [35]. There is too little factual evidence to speculate further on the transformation of Schumpeter Dynamics into a new state of self-restraint or, alternatively, on its disruption into antagonistic entities fighting for scarce resources and survival under entirely different regimes. This is supposed to provide a background against which, in particular, basic, more long-term issues of European technology policy are discussed below.

European Technology Policy The preceding treatment may explain why European technology policy presently is as it is, that is, an instrument promoting mainly economic growth and consumers' wellbeing in accordance with Schumpeter Dynamics [36]. To some extent the remainder of 5The risks of nuclear fusion are roughlyspeaking equivalent to those of fission.

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this article suspends the systems view taken, moving to normative argumentation, having predominantly the long-term perspective o f ecological communication in mind. In general terms, the rather cost-intensive technology programs of the European C o m m u n i t y (now called European Union) may be viewed skeptically6 either because questionable technical objectives have been pursued, as in the cases of nuclear energy and manned space flight or because they ought to be left to unsubsidized industry. This, in principle, also holds for programs directed t o w a r d improved resource efficiency, in h a r m o n y with the desirable transformation of Schumpeter Dynamics. As a primary task, the European Union ought to stimulate appropriate research and development programs in industry itself, for example, by means o f an annually progressing tax on energy consumption. Governments may be capable of some regulatory control of context conditions, but not o f industrial targeting. There are several reasons why the R&D programs o f the European C o m m u n i t y have met with general acceptance: • relative to the core of European policies, technology policy has, so far, been rather marginal in visibility and size; • R&D policies are more easily designed than agricultural or environmental ones for example, and they are less controversial; • the side effect o f European integration is appreciated; • there are vociferous lobbies which profit from the European subsidies. References to triadic ( U S A - J a p a n - E u r o p e ) competition are not particularly convincing. If one accepts the proposition of rather negligible technology transfer f r o m military to civilian research (not inversely!), 7and consequently corrects public research for military projects, E u r o p e is spending more on public research per capita than the USA. Japan has long been known for its small share o f public spending in industry; it is roughly one half o f that in Europe [37]. If, in the face o f triadic competition, Europe wants to imitate Japanese export performance, an attempt might be made to copy Japanese structural advantages, such as individual motivation of the people, qualified dialogue- and grouporiented management, quality (self-)control, qualified product-related services and high investment rates. Research is certainly an important factor, but far from sufficient, unless the contextual parameters can be appropriately adjusted. O f course, as already mentioned above, the European promotion o f short-term growth of Schumpeter Dynamics is counter-productive in the long run, as it tends to amplify the manifold environmental problems. Therefore, with a longer perspective in mind, it would be appropriate to restructure thoroughly its aims as well as its instruments. As the trendy short-term European support policy is not particularly cost-effective, other 6 Large-scalepublic-financedprojects as a rule gain lowercost-effectivenessthan projects initiated by business closeto its own market. Examplesfrom the USA are, for example,the 5 billiondollar New TechnologyOpportunities Program during the Nixon presidency,the several hundred billion SynfuelProgram during the Carter presidency, or the $1 billion Very High Speed Integrated Circuit Project; a Japanese example is the Fifth Generation Large Scale Computer Program, cf Technology boosting: a checkered history, Science. 259, March 26, 1993, p. 1817. 7 The dual use discussion is complex. Still it appears that quite unambiguous conclusions can be drawn, see for example Schmoch, Ulrich, and Norbert Kirsch: Analyse der Raumfahrtforschung und ihrer technischen Ausstrahlungseffekte mit Hilfe yon Patentindikatoren, FhG-ISI, Karlsruhe 1992. The authors state: "It can be concluded that-compared with other research-intensivefields- space research, at least.., from 1975 onward, is showing subproportional diffusion rates (p 6)".

H. KRUPP criteria of evaluation might be used when choosing a longer time horizon. To take an example, precompetitive projects, jointly supported by industry and the European Union, aiming at thermal solar energy or photovoltaics would have to be integrated in an economic framework of a new holistic environmental and energy policy. In their present form, they constitute a cost-ineffective patchwork, not even integrated into the pertinent national programs. Admittedly, it would be hard to coordinate such programs on a European scale so that, on the one hand, they focus on the most promising long-range targets, whereas on the other, offering the flexibility to incorporate major innovations still in the wind. National and even institutional competition and selfishness would prove too strong. In this context it might be mentioned that public European support for developing fast-growing plants for large-scale energy conversion appears to be counter-productive. Thorough technology assessment by the German parliament has demonstrated disadvantageous cost-effectiveness and high external costs related to the environment [38]. A grave problem is European support for gene technology. Any pertinent discussion will have to distinguish between medical and nonmedical applications. The specific threats of nonmedical applications comprise the absolute irreversibility of genetically engineered vectors, no matter whether there is accidental uncontrolled release or not; the selfmanipulation of humankind and of the global genetic pool of flora and fauna from predominantly commercial viewpoints. In contrast, European cultural tradition might have been inclined to control such fundamental self-adjustments of the Earth by, say, humanistic criteria. From the perspective of the present Schumpeter Dynamics, this is of course utopian. A few remarks on the promotion of telecommunication may conclude this critical review of present European technology policy. The main market addressed by this technology is mass communication. Its harm to children and adolescents is by now evident from sufficiently validated research and daily observations. It may also explain some of the impressive differences in school performance and crime rates between the USA and East Asia, however multifactorial the cause-effect relationships involved may be. More generally, there seems to be growing agreement on the adverse influence of most of the mass media on a great variety of cultural aspects (universal commercialization, destruction of cultural diversity). Another pervasive and still growing field of application is manufacturing and office automation. The resulting growth of unemployment in the OECD countries seems to be sufficiently significant by n o w : Service-sector automation, to judge by initial productivity gains achieved, will most likely result in considerable lay-offs during the coming years, mainly in banking, insurance, and administration. If imitated by developing countries, those developments would add societal self-destruction on top of environmental d e c a y an unbearable consequence at least from a normative "humanistic" point of view. As a side remark: there is an old institutional relic of the nuclear energy program of the European Community, the joint research centers. The discussion on their costeffectiveness and reprogramming has been going on for several decades, but has apparently 8 There were 11.3 milfion unemployed persons in 1973, compared to 33.8 million in 1993, according to O E C D statistics.In the European Union the rate of increase is the same. The stillmuch lower unemployment in Japan may be attributed to several factors: the average labor productivity in Japan is lower than that of other O E C D countries because of a stillstronger low-productivity service sector and high social barriers to dismissal of people; Japan has an excessively small percentage of foreign labor and relatively high acceptance of lowstandard jobs by Japanese; low and flexibleretirement ages as well as sociallyaccepted personnel transfer among keiretsu (network-connected) companies make it easier to adjust labor supply and demand; Japan is stillin an, although late stage of a catch-up process with the West, which leads to relatively higher growth rates of G N P .

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not been particularly successful. One reason, in addition to European inertia, is that a strong nuclear lobby still expects a major revival of nuclear energy so that the appropriate scientific capacity ought to be kept in shape. If nuclear energy is to make an impact on the global scale, the dilemma of world-wide diffusion versus proliferation of nuclear weaponry would be hard to solve-quite apart from the ecological hazards. The points made demonstrate the need for European technology policy to transform itself, in the light of ecological communication as well as of the likely self-transformation of Schumpeter Dynamics. In practice, however, caught by the dilemma between short-term competition between individual countries and among global trade blocs on the one hand, and long-term ecological threats on the other hand, European technology policy seems to have no other choice but to continue its slalom along the dividing line between particularly conservative Schumpeter Dynamics and less short-sighted projects nucleating in various countries (renewable energy in California, heat insulation standards in Scandinavia, citizen movements to resist a variety of low cost-effective or hazardous investment projects). Let me add a note on the political dogma of European technology policy, which claims that the European bloc is needed in order to cope with competition, in particular that of the USA and Japan, including their regional blocs. The exmaple of microelectronics shows that the main market players are forming networks quite independent of the triadic blocs. Their rationale is technological competence and compatibility, regional market potentials, availability of financial and human resources. Nations or political blocs are relevant to them only to the extent that they provide the infrastructure and subsidies in order to generate major new technological trajectories nationally, as first steps in further global networking. Multimedia telecommunication is a case in point.

Categorization of Potential European Action The proposed model of Schumpeter Dynamics, irritated by ecological communication, implies that actions compatible with this evolutionary model enjoy better chances than others. Actions may be classified in principle in three dimensions. 1. The first is time. For simplicity, let us distinguish between short- and long-term aspects. As already stated, the shorter view is that of the span of life of economic plans and investment cycles, political election periods, rates of technical obsolescence, and so on, amounting to less than ten years. The longer view, as in ecological communication, may be measured in units of human generations [39] for example, the time constant of COs exchange between oceans and the atmosphere is of the order of magnitude of 30 generations. 2. The second dimension is space or location. In the affluent countries of the OECD, ecological communication has greater chances of response than in southern Europe. In south and central Asia today, growth orientation cannot be challenged by ecological communication at all. Even in an affluent country like Germany, small slumps in the GNP (as caused by reunification and a cyclical recession) will as a rule suffice to more or less suppress ecological communication. 3. The third one is the social dimension. Ecological problems are perceived differently depending on social stratum and financial status. Wealthy people can escape from ecological hazards more easily than poor ones. That is the reason why rich living quarters are generally found in western parts of cities rather than in the east because western wind tends to prevail. For the same reason, Japan cannot ignore the type of industrialization in, and emissions from, China.

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As a result, as a function of these and, of course, other dimensions, people will perceive ecological risks and threats [40] quite differently. The technological risks taken by a courageous investor may constitute deadly threats to a citizen who happens to live close to his project. There can never be widespread consensus, only compromising on, or ignoring of, problems. For global Schumpeter Dynamics to be irritated to a higher degree the perceived environmental decay must grow much stronger so that these dO~erences in ecological affliction o f world society are levelled out. Supportive, if not indispensable preconditions for the transformation of Schumpeter Dynamics so that it could cope with the ecological limitation of the Earth would be, in ascending order, transition to a new transformation-oriented rhetoric and public relations policy of the European Union, possibly as a leader in the global debate, considerable gains in strength of opposition-minded, predominantly "green" movements in the member countries, with strong reverberations to be felt in the European Commission and the European Parliament, and growing externally induced threats, such as immigration and violence from poor countries, economic collapse of larger countries or regions, establishment of new monopolistic policies of important raw-material suppliers. Without such developments and shocks, proposals for "ecological" actions would at best produce new entries in the many available lists of wishful thinking and pious hopes. The structural change of Schumpeter Dynamics would have to include growth reduction in the wealthy countries, major resource transfer to the poor ones, and determined policies of population reduction. A fundamental problem for Schumpeter Dynamics would occur if the competitive nation- or bloc-oriented "enlightened selfishness" [41] would have to be converted into a compromising management o f the global commons. So far, none of the available instruments and networking, those of the United Nations included, appear to be capable of achieving this. It is with these ultimate dimensions in mind that European technology policy might be redesigned-a utopian idea in the face of the present global Schumpeter Dynamics. Conclusion The main driving force toward European Union has been the post-war economic expansionism against competition from the USA and nowadays from Japan. Logically, the first step has been to form a European economic community. It became amalgamated with military and, for the general public, with cultural criteria. Only now a discussion is developing which recognizes that a more integrated Europe threatens to bring about major cultural losses. At the same time, the globalizing Schumpeter Dynamics of the European Union, because of the failure of the communist alternative, is becoming a great attractor to its neighbors. It does not come as a surprise that European technology policy is having trouble developing an authentic profile of its own. The main reasons are: • the globalization of its Schumpeter Dynamics, • the constrained capacity for self-control of subunits of global Schumpeter Dynamics, either national or subsystemic, • conflicting planning procedures and technology assessment due to the fundamental discrepancies between the subsystemic rationalities, • stress emerging from unemployment, immigration, environmental problems, unstable interior politics, power of consumerism, national as well as triadic conditions of competition, and high bills drawn against the future in all subsystemic calculations.

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Under these conditions, political projects that do not converge with global Schumpeter Dynamics are confronted with the unsolvable societal dilemmas discussed. In the forthcoming century, global society will have to transform itself from a growth machine to one that is able to cope with the limitations of the Earth. This criterion will have to be held against politics or social theories proposed in the future. In the future, the present European technology policy will be seen as the fulfillment of an outdated paradigm. It is that of Schumpeter Dynamics in a phase of exponential development, characterized by innovation-based profit and mass consumption, on the basis of a limitless exploitation of the natural, animal, and human resources of the Earth. Among them is man, serving as a consumer of a stream of new and ever-newer products, and, although to a declining degree, as a resource, as labor. To the input consumed in the wealthy countries we must add that of the poorer ones, populated at the present by 80070, within a few decades by 90°70, of the world's population. They provide raw materials, to a limited extent semi-finished or finished products, most recently also capital-the repayments of the monetary credits originally granted have gradually turned the vector of total capital flows from South to North. In the longer run, it is hoped that the South will serve as a profitable growth market for northern capital. The Earth thus resembles a giant exploitation machine, to start with in the interest and to the benefit of a billion people converting all natural resources to trash. Its probable last steps will be genetic and eco-engineering; as an ultimate consequence, the term nature will have entirely lost its original meaning and ethical sense. The final step might be the self-extinction of humankind. If this is to be avoided, the distant future would have to belong to a resource saving, cyclically operating, ecologically, and consequently, also in its political economy, selfconstraining technology and economy. Its contours are not yet discernible, nor is one capable of predicting to what extent Schumpeter Dynamics will be able to restructure itself sufficiently with regard to the ecology it has to fit into. The interventions into present-day societal structures would have to be rather fundamental ones. It could hit their very nerve, if entrepreneurial freedom for growth and profits had to be drastically restrained. There is no convincing model at hand yet, the application of which would produce a sufficiently comprehensive and tight network of rules and regulations to keep growth under control without destroying the foundation of Schumpeter Dynamics. In the interest of taking care of limited global resources, an international constitution of compromising solidarity would be needed, which, as of today, appears incompatible with the western individualistic mentalities of consumers, entrepreneurs, and politicians. As traditional (feudal, religious, military, meritocratic or technocratic) systems of rule seem to have worn themselves out, a final route to survival may be sought in broadly designed self-control in open societies that exposes and digests available societal issues and consequences in an open democratic marketplace. Compromises will have to be found among innumerable conflicts. Their chances of success and the potential for survival will probably grow with the amount of societal stress accumulated from sufferings for many people. One would want to wish that the Schumpeter Dynamics of Europe, which harbors the richest cultures on Earth, be among the first ones to change direction. In utopian terms, a European technology policy is called for that is capable of merging its actionist projects with the required transformation of its Schumpeter Dynamics, before it is too late. Proposals regarding their contents are at hand. FAST has carefully taken stock of them.

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References 1. Esser, J., Technologieentwicklung in der Triade. Folgen fiir die europiiische Technologiegemeinschaft, in Politik und Technikentwicklung in Europa, SiiB, Werner, and Gerhard Becher, eds., Duncker & Humblot, Berlin, 1993, 34-35. 2. Whiston, T., Global Perspective 2010: Tasks for Science and Technology. Forecasting and Assessment in Science and Technology (FAST) FOP 320, European Community Brussels, 1992. 3. Luhmann, N., and Scharpf, F., Polltische Steuerung: Ein Diskussionsbeitrag as well as Politische Steuerung und politische Institutionen, Politische Vierteljahreszeitschrift, 30, 5-21 (1989). 4. Grupp, H., and Schmoch, U., Wissenschaftsbindung der Technik-Panorama der internationalen Entwicklung und sektorales Tableau fiir Deutschland, Physica-Verlag, Heidelberg; 1992, p. 35. 5. Meyer-Krahmer, F., Evaluation der Wirksamkeit yon lnstrumenten der Forschungs- und Technologiepolitik, as well as Geoghiou, Luke, Evaluation of Research and Technology-Some Broader Considerations, in Technologiepolitik angesichts der Umweltkatastrophe, H. Krupp, ed., Physica-Verlag Heidelberg; 1990. 6. Meyer-Krahmer, F., Strategische Industrien im internationalen Vergleich-Arbeitsteilung und politische Instrumente, in Jahrbuch Arbeit und Technik, W. Fricke, ed., Dietz-Verlag, Bonn., 1992. Legler, H., Grupp, H., Gehrke, B., and Schasse, U., lnnovationspotential und Hochtechnologie- TechnoIogische Position Deutschlands im internationalen Wettbewerb, Physica-Verlag Heidelberg; 1992. For a comparison of science and technology in the USA and Japan see, as an example Arrison, T. S., C. F. Bergsten, E. M. Graham, and M. Caldwell Harris, eds., Japan's Growing Technological CapabilityImplications for the U. S. Economy, National Academy Press, Washington, DC; 1992. 7. On global eco-engineering see (1) Okamatsu, Sozahuro: MITI'S Centennual Vision of Global Environment and Technology and the Response to Global Warming: Concerning New Earth 21, in H. Krupp, ed., Energy Politics and Schumpeter Dynamics-Japan's Policy Between Short-Term Wealth and Long-Term Global Welfare, Springer Verlag, Tokyo, 1992, pp 335-348; (2) National Academy of Sciences: Policy Implications of Greenhouse Warming, National Academy Press, Washington, DC, 1991, p 58; (3) Takeuchi, Kei, and Noya, Tetsuo, A new global strategy to cope with global warming; preliminary manuscript in German available from the author of this article. The a u t h o r s - b o t h at Tokyo University-propose, e.g., a parasol that would be 45 million square kilometres in size (about 17 million square miles, "somewhat" larger than present-day A s i a - t h e continent, the islands as well as the waters between the islands and the continent) when unfolded in space. Its purpose is to control the insolation of the Earth according to need. An extended version of the paper will reportedly become available as a book. Basically, the authors suggest taking offensive measures against "greenhousing" by means of physical giga-investments, instead of constraining economic growth. 8. Bijker, W. E., Hughes, T. P., and Pinch, T. J., eds., The Social Construction of Technological Systems. New Directions in the Sociology and History of Technology, MIT Press, Cambridge, MA; 1987. Rip, A., Societal Construction of Research and Technology, in H. Krupp (1990), pp. 84-94. Rip, A., Between Innovation and Evaluation: Sociology of Technology Applied to Technology Policy and Technology Assessment, in H. Krupp (1990), pp 49-68. Rip, A., A Quasi-evolutionary Model of Technological Development and a Cognitive Approach to Technology Policy. RISESST 2; Turin: La Rosa Editriee 1992, pp 69-102. 9. Natural scientists claim that this sequence reflects a continuous analytical broadening as well as deepening of theory development. It is both historically contingent and internally stringent. 10. Grupp, H., Schmoch, U., Wissenschafts bindung der Technik-Panorama derinternationalen Entwicklung und sectorales Tableau fiir Deutschland, Physica-Verlag, Heidelberg, 1992, pp. 54, 55. 11. Hughes, T. P., The Evolution of Large Technological Systems, in W. E. Bijker, T. P. Hughes, and T. J. Pinch, eds., The Social Construction of Technological Systems. New Directions in the Sociology and History of Technology, MIT Press, Cambridge, MA, 1987. 12. Krupp, H., ed., Energy Politics and Schumpeter Dynamics-Japan's Policy Between Short-Term Wealth and Long-Term Global Welfare, Springer-Verlag, 1992, pp. 28-33. 13. Luhmann, N., Operational Closure and Structural Coupling. Cardozo Law Review, 3 (5), pp 1419-1441 (1992). In greater depth Luhmann, N., Soziale Systeme-GrundriB einer A llgemeinen Theorie, Suhrkamp, Frankfurt; 1984. In Luhmann's theory, these societal subsystems are systems of communication, they are "Sinn-Systeme" (sense-making systems). Physical operations such as manufacturing and transportation of goods, passing a law in parliament, designing a machine, and actual consumption are events that form the environment of these systems, but do not "belong" to them. Luhmann's theory is the most sophisticated and stringent variant of sociological systems theory. It is modeled after physio-neuronal systems, for example, and is capable of accounting for the historical variations and interactions in societies as well as their autopoietic (boot-strapping) evolution.

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14. Schumpeter, J. A., Capitalism, Socialism and Democracy, Harper & Brothers, New York; 1942. 15. Schulze, G., DieErlebnisgesellschaft, 3rd ed., Campus Verlag, Frankfurt; 1993. Luhmann does not explicitly use the subsystems technology and world of consumption. But the classifications above seem to be consistent with his theory. A more detailed explanation is forthcoming in H. Krupp, Japan-Entwick-Lungsland und Weltmacht, Werden und Wandel der globalen Schumpeter-Dynamik, Wissenschaft-Liche Buchgeselischaft, Darmstadt, 1995, to be published. In terms of the model of Schumpeter Dynamics, people living under the poverty line, whether in rich countries or in poor ones, form the environment of the world of consumption which the system of Schumpeter Dynamics may attempt to integrate or at least colonize. 16. A detailed account of politics-industry interaction has been provided in the classic by Galbralth, J. K., The New Industrial State, Penguin, London, 1967/1991. 17. Nelson, R. R., Capitalism as an Engine of Progress, Research Policy, 19, 193-214 (1990). 18. Swedberg, R., ed., Joseph A. Schumpeter, The Economics and Sociology of Capitalism, Princeton University Press, Princeton, NJ; 1991, p. 301. 19. Luhmann, N., Okologische Kommunikation, Westdeutscher Verlag, Opladen; 1988. As well as Luhmann, N., Soziologie des Risikos, de Gruyter, Berlin; 1991. From the point of view of systems theory, ecological communication and Schumpeter Dynamics are positioned at the same level. Both of them are communication and "sense making" systems. They are precarious by nature; intersystemic interactions are subject to the law of double contingencies (mutual unpredictability, blind spots); the balance within systemic synergisms is unstable at all times (in the past, e.g., feudal instead of economic dominance): it might at any time be otherwise. Luhmann's approach allows the investigator to depict Schumpeter Dynamics' attempts towards self-correction by means of ecological communication. 20. Okamatsu, S., MITI's Centennial Vision of Global Environment and Technology and The Response to Global Warming: Concerning New Earth 21, in H. Krupp, ed., Energy Politics and Schumpeter Dynamics Japan's Policy Between Short-Term Wealth and Long-Term Global Welfare, Springer-Verlag, Tokyo, pp. 344-347. 21. Ogawa, Y., Global Warming Problem and Developing Countries, Energy in Japan 108, 35-55 (1991). 22. Ohno, Y., Greenhouse Gas Emission, Control and Sustainable Development. Energy in Japan, 110, 24-33 (1991). Weterings, R. A. P. M., and Opschoor, J. B., The ecocapacity as a challenge to technological development; manuscript submitted to a workshop of the Dutch Committee for Long-Term Environmental Policy, March 22-24, 1993, at Zeist. 23. Bundesumweltministerium: Umweltpolitik- Bericht der Bundesregierung iiber die Konferenz der Vereinten Nationen flJr Umwelt und Entwicklung im Juni 1992 in Rio de Janeiro. Bonn 1993 p. 3. 24. Ayres, R. U., Materials~energy Flows and Balances of Environmental Statistics. Proceedings ARIW special conference, Baden Austria, 1991. 25. J~inicke, M., M6nch, H., Ranneherg, T., and Simonis, U. E., Structural Change and Environmental Impact. Empirical Evidence on 31 Countries in East and West. Intereconomics 24, 24-34 (1989). 26. J~.nicke, M., Staatsversagen-Die Ohnmacht der Politik in der Industriegesellschaft, Miinchen 1986. 27. Wilike, H., Ironie des Staates-Grundlinien einer Staatstheorie polyzentrischer Gesellschaft, Suhrkamp, Frankfurt; 1992. 28. Scharpf, F., Die Handlungsf~ihigkeit des Staates am Ende des 20. Jahrhunderts. Politische Vierteljahreszeitschrift 31 (4), 93-115 (1991). 29. Davis, K., Changing World Political and Economic Situations and their Impact on the World and the Pacific Energy Market, Energy in Japan, Bimonthly Report No. 110, 5-13, The Institute of Energy Economics, Japan. Tokyo (1991) 13. 30. Hardin, G., The Tragedy of the Commons, Science 162:1243-1248 (1968). 31. Funabashi, H., Social Mechanisms of Environmental Destruction, in H. Krupp, ed., Energy, Politics and Schumpeter Dynamics-Japan's Policy Between Short-Term Wealth and Long-Term Global Welfare, Springer-Verlag, Tokyo, 1992, 265-275. 32. Starr, C., Scads, M. E., Alpert, S., Energy Sources-a Realistic Outlook, Science 256, 981-987 (1992). 33. Kuwano, Y., Phntovoltalc Electricity: An Industrial Perspective, in H. Krupp, ed., Energy Politics and Schumpeter Dynamics-Japan's Policy Between Short-Term Wealth and Long-Term Global Welfare, Springer, Verlag, Tokyo, 1992. 34. Esser, H., Von der subjektiven Vernunft der Menschen und von den Problemen der Kritischen Theorie Damit, Soziale Welt '94, 1, 16-32 (1994). 35. Enqu~te Kommission VorsorgezumSchutzderErdatmosphiire, 3rdreport, document ll/8030oftheGerman Parliament 1990, pp. 155-198. 36. Macioti, M., Europe on the m o v e - Gaining a Competitive Edge through Science and Technology. European Business Journal, 2 (2), 15-21 (1990).

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37. Watanabe, C., Energy Crisis as a Springboard for Japanese Technological Innovation, in H. Krupp, Energy Politics and Schumpeter Dynamics--Japan's Policy Between Short-Term Wealth and Long-Term Global Welfare, Springer-Verlag, Tokyo, 1992, p. 243. 38. This agrees with a very carefully worded summary of a major investigation of Winzer, D., and six co-authors that has been published in KfK-Nachrichten, 24 (4), 245-253 (1992). Its title is Zusammenfassung der Ergebnisse der TA-Studie nachwachsende Rohstoffe. Extensive material on this subject, which supports these conclusions, is available from the Enquire Commission Technology Assessment of the German parliament, Nachwachsende Rohstoffe. Deutscher Bundestag Bonn: Ref. 0ffentlichkeitsarbeit-Zur Sache 23/90. 1990. A summary is provided also by Deutscher Bundestag Umweltgutachten 1994 des Rates von Sachverstiindigen fiir Umweltfragen. Bonn: Bundesanzeiger Verlagsgesellschaft, 1994, pp. 307-308. 39. Krupp, H., Conjectures about the Chances of Ultimate Global Sustainability, in K. Takeuchi, and M. Yoshino, eds., The Global Environment, Springer Verlag, Tokyo; 1991, pp. 162-170. 40. Luhmann, N., Soziologische Aufkliirung 5: Risiko und Gefahr, Opladen: Westdeutscher Verlag 1990. 41. Yokobori, K., Global Environmental Problems and Japan's Responses, Energy in Japan, Bimonthly Report no. 114 (1992) The Institute of Energy Economics, pp. 55-69. Received 28 July 1994; accepted I August 1994