Innovation Economics · Quadrant
Schumpeter Mark I and Mark II.
The young Schumpeter saw innovation as the work of entrepreneurial outsiders disrupting established markets. The older Schumpeter saw it as the systematised output of large corporate R&D laboratories. Both are right, in different sectors and different decades. Mistaking the regime is a category error. Pharmaceuticals, semiconductors and frontier AI are Mark II. SaaS, fintech and consumer apps are Mark I. South African fintech is mostly Mark I. Frontier-model AI is Mark II globally and, for now, almost entirely outside Africa.
The thesis
Mark II regimes concentrate gains in capital and high-skill labour, with thin pathways for outsiders to capture rents. Mark I regimes are more permeable but more volatile — the median entrepreneur fails. The inequality consequences of an economy depend on the mix; an economy that is Mark II at the frontier and informal at the base, with a thin Mark I middle, looks a lot like South Africa.