Coordinated state-bank linkages produced incremental innovation without firm destruction

Evidence

Unlike in Schumpeter’s world of entrepreneurs and competitive small firms, these companies in many cases started as large-scale concerns made possible by the complex state and banking linkages typical of late-industrializing states. These firms innovate incrementally, improving their dedicated product lines one step at a time using specialist engineers and scientists. Most of them haven’t seen an entrepreneur in a century. There has been plenty of creativity, but very little destruction—at least of firms—in Germany. — Mark Blyth, Austerity, 354

Categorization

• XREF: Echoes the ‘grafted economy’ theme of the trees-as-infrastructure essay — slow incremental growth built by relationships rather than disruption.
• QUESTION: Worth chasing: what does this imply for whether austerity ‘works’ in coordinated vs liberal market economies, a taxonomy from varieties-of-capitalism literature.