Standards Mark the Course of Economic Progress

Ken Krechmer, FellowInternational Center for Standards Research

10/23/2005
(Original Publish Date: 8/4/2005)

The transformation from fixed communications systems such as railroads and telephony to adaptive communications systems such as the Internet is evidence of a paradigm shift. This paradigm shift is made possible using new innovations (programmable computers) and new forms of credit creation. Using J. A. Schumpeter's economic analysis as a basis, this paper explores how technical standards form the linkage between innovation and credit creation. A five succession taxonomy is developed which identifies the paradigm shifts in technology, technical standards, credit creation and innovation in five eras. In the current era, the ability of the Internet to electronically transfer brand names, trademarks and proprietary interfaces, using a new succession of standards called adaptability standards, represents an emerging form of credit creation. [This paper is a revised version of a paper presented at the International J.A. Schumpeter Society Economics Conference, June 28 - July 1, 2000, Manchester, England, which may also be accessed through the MetaLibrary]