Socio-economic Tension versus Fishing-out effect: A law for endogenous long-waves

Standard growth theory considers steady state equilibriums with a constant growth rate. Yet, a long tradition of long-term cyclical movements remains intolerable. Existing literature on "long waves" show tendencies toward monocausality, as well as cause-effect confusions. The present paper provides a reasonable framework for “scientific revolutions” and endogenous long-run cyclical development of applied knowledge and thereby of labour’s productivity.Based on the tradition of “scientific revolutions” (Kuhn, 1962), we set forward from Romer’s hypotheses (1990) and we distinguish two different types of “ideas”: first, the revolutionary, fundamental concepts that form the basic scientific environment; second, the specific R&D-applications that arises on the basis of these fundamental concepts. As the limited set of applications is being exhausted, given by the existing fundamental concepts, anxiety accumulates gradually in the researchers’ community. Sooner or later, this tension will be released, leading to new, revolutionary developments of society’s basic knowledge, setting up a new period, where new, previously unthinkable applications can be developed. We provide an analytical framework that simulates long-run cyclical development of applied knowledge. Thereby, we introduce longer lasting cyclical dynamic in the notion of steady state and we simulate endogenously determined long-waves of economic growth. Duration and intensity of each wave depends first, on how late the last “scientific revolution” occurred, and second, on various systemic characteristics, like researchers’ marginal productivity, significance of “standing on shoulder’s” and “fishing-out effects”, etc.