Makhov’s Hypothesis: The Four-Leaf Clover

October 15, 2018

Studying epochs and industrial revolutions, and giving lectures on innovation to business people, I noticed some common traits that distinguished successful societies and states form unsuccessful ones. This observation fascinated me and inspired me to conduct a more detailed investigation. Further examination showed that in all historical periods the differences manifested themselves in four integrated elements: knowledge, systems for ‘embedding’ the knowledge into society, labour management, and money circulation.

The more I pondered, the more closely I studied the various remarkable historical facts and analysed the ideas of prominent scientists, the more question arose. How did we happen to come here, to our planet Earth, at all? At what point of our development are we now? In the process of gathering information, accumulating and analysing knowledge, and correlating scientific and historical facts with hypotheses and ideas put forward by philosophers of both antiquity and modernity, a unified logical system was gradually forming in my mind, which I have set out on the pages of Humanity’s Lucky Clover. On the basis of the system lies a model for assessing the success of development of this or that society based on analysis of the four above-mentioned elements: knowledge, society, business and wealth. I called it a Lucky Clover model.

Our Lucky Clover model is based on innovation cycles that rest on four elements that can be compared with the four leaves, because it is growing and evolving.

  • Science as a source of discoveries and inventions;
  • Society as the recipient and custodian of newly created goods; changing society determines the content and form of wealth at any given moment;
  • Business practices (entrepreneurs who set up ‘innovative charges’);
  • Wealth (capital, the material basis).

To have a successful innovation cycle, it is required that all four of its key elements – knowledge, society, business, and finance – successfully interact with each other and develop consistently. In other words, just as in nature, a plant can be considered health if the development of all of its leaves match each other agreeably. A healthy organism of this sort is a ‘lucky clover’.

However, any organism must fade after the flowering phase. This means that a new lucky clover must take root and emerge somewhere else.

The first leaf, knowledge, enables us to understand how the world works, and helps us to get new knowledge. Innovations are needed to ensure that new scientific knowledge is converted into production opportunities and brings commercial profit. With the arrival of profit, production grows, and as a consequence, so does people’s wellbeing. Innovation is closely associated with invention, with new ideas or methods, because it implies their practical application.

But knowledge alone is not enough, since it does not work on its own. To make proper use of it, high-quality human resources are needed, created in the presence of developed and well-functioning social institutions in society. Therefore, society is the second leaf of the lucky clover.

Human society is characterised by interaction between its individual members and group within social institutions. As it has been observed, there is a stable relationship between the density of settlements and the intensity of innovation-based growth. A greater population concentration expands the boundaries of the possible for brilliant minds that are able to generate remarkable ideas. The interaction between such minds increases the probability of useful discoveries being made and disseminated among the general public. It is exactly this that makes modern global market society valuable.

An invention is the creation or realization of an idea. Inventions are always plentiful, but not all of them come to be used in practice, and not all of them produce surplus product in the economy and provide added value. Some people must take this risk of implementing innovation. These people are entrepreneurs, people who form a special class, without whom the scheme does not work, and the clover does not blossom. Business is another leaf of the lucky clover.

The fourth leaf of the lucky clover is wealth or money, an element that brings into focus the interesting question about the measure to be used to evaluate the success of innovation. In modern economic theory, this measure is economic benefit, which performs the function of maximizing shareholder’s means, and also serves to achieve a satisfactory level of economic development (featuring sustainable annual growth, an acceptable level of unemployment, etc.) on the macroeconomic level. Different organisms have different survival strategies, but the main result must be continuation of life in a particular environment. If you want to survive, you will have to adapt. In the Lucky Clover model, money works as a kind of ‘amplifier’ by making it possible to obtain and combine resources to produce new knowledge and successfully take commercialized inventions to the next development cycle.

But not only the Lucky Clover model helps us to analyse the past, it gives us an opportunity to try to look ahead and think about what awaits us in the future, what our society will be like, what will surround us and make part of our everyday life, what will the next innovation cycle be about, and where mankind’s demographic development curve will go. It could be a link that gives us a hand to generalize our ideas about the past and take a look beyond the horizon.

Vadim Makhov has a PhD in Economics, and is a well-known entrepreneur and expert innovator. He has taken an active part in many innovative projects carried out by various Russian and foreign companies, and initiated the development of many new products. He founded the Bard Worldwide Investment Fund, which is concerned with the development of future technologies.

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