The purpose of this paper is to examine how economics has conceptualized the process of technological innovation. The issues involved are, clearly, very substantial, since there is widespread (although by no means universal) agreement that this process is the primary cause of long-term economic development. Yet, with a few exceptions, it is only in the past twenty years or so that economists have attempted to relate the subject in a systematic way to their analysis of long-term development. Some significant progress has been made. However, I will argue that our cognitive framework causes us to misconceive the process and, as a result, to ignore or to understate drastically the importance of many forms of technological change. I will argue, in particular, that our reasoning on these matters has been seriously flawed by a strong prejudice against recognizing the full economic importance of many forms of valuable knowledge which are intrinsic to activities of a technological nature.

Where this prejudice came from is a matter of interesting speculation. Indeed, its subtle intrusion into our thinking might form a fascinating chapter in the history of economic thought. I suspect it has been related to the status anxieties of the economist and his determination to associate his activities with the high prestige of the scientist rather than the much more modest prestige of the engineer. For my immediate purposes, however, its origins are not nearly so urgent or important as its existence and its consequences in shaping our thinking on matters technological.

The prejudice with which I am concerned may be simply stated.