Innovation And The Conditions of Economic Progress*

The lecture explores some connecting principles that link Colin Clark's Conditions of Economic Progress to modern capitalism in which innovation continually transforms the system from within. My exploration touches on the meaning of economic progress, the difficulties of treating the tertiary sector as a residual after accounting for the primary and secondary sectors, and some aspects of innovation in the service economy. The lesson is that policy focusing on manufacturing innovation ignores Colin Clark's insight that we live in the tertiary sector and that innovations in service activities are the key to further advances in our standards of life.