Fifty years ago, in 1925, I published an essay outlining the stages and patterns characteristic for the process of industrialization. This investigation, my first contact with the problem of economic growth, served as the starting point for an ambitious research program concerned with World Industrialization and International Business Cycles, which I conducted during the subsequent quinquennium under the auspices of the Institute of World Economics at the University of Kiel, Germany. Among the studies that issued from this enterprise, the best known are F. A. Burchardt's work on the industrial structure of production, and Walter G. Hoffmann's elaboration and testing of my original hypothesis.

The search for a verifiable model of “cyclical growth” has remained at the center of my own writings as well as of my former activity as Director of Research of the Institute of World Affairs in New York City. All of these partly theoretical, partly historical-descriptive studies fall into the category of ‘positive’ economics. However, increasing doubts as to the practical applicability of the results obtained gradually convinced me that analytical progress in this field was conditional on a fundamental revision of the method of research.

A different approach was first outlined in my book On Economic Knowledge. There, in the eleventh chapter, the reader will find a literary sketch of the manner in which the problem of economic growth can be treated with the help of this particular technique of analysis.