It is always worth listening to Josh Lerner, professor at Harvard Business School when he emails: “If innovation is going to happen, it is going to need to be the entrepreneurial firms that do it.”

Smart asset managers, such as Ray Dalio, who set up the $150bn Bridgewater Associates and sets out his admirably clear Economic Principles, and Howard Marks, co-founder of Oaktree, through his memos have recognised the three drivers of economic returns have come from the interplay between productivity, short- and long-run debt cycles.

The incendiary consequences over the 20 years of Alan Greenspan’s reign as head of the US central bank, the Federal Reserve, up until 2006 has been compounded since the global financial crisis he sparked with asset acquisitions to boost financial assets for the rich and other fiscal spending allied to interest rate cuts and tax breaks for the rich through inheritance and capital gains tax cuts.

The coronavirus is expanding the scope of the monetary and fiscal policies being used to underpin demand and asset valuations, according to Deloitte in its updates on Covid-19 economic impact and policy responses.

While states are directing some attention to startups, such as Germany’s $2.2bn scheme to buy venture capitalists’ stakes in startups and fund public investors to close rounds, puts a bandage on the issue for some investors and entrepreneurs there are bigger forces at play.

We are now at the potential turn of the long-run debt cycle and the start of a lost decade similar to the 1930s and even a transfer of geopolitical power from the US to China.

The remaining hope is a deleveraging after the current recessionary conditions caused by the coronavirus’ impact on demand through inflationary income increases for those at the base of the pyramid.

The expected bail out and effective nationalisation of large swathes of the economy would support demand but also create conditions for state-led support for innovation tools, including research and development, corporate venturing and true open innovation, at large and small enterprises. This would be more effective than spending almost or more money than companies earn to carry out stock buybacks and fund dividends – funded by borrowing more and tax cuts, according to Harvard Business Review at the start of the year.

This would also return attention to productivity to drive growth through a combination of innovation and regulation.

The UK central bank, the Bank of England’s, estimate of productivity growth in January – before the coronavirus – for the past decade was less than 0.5% per year judging by a nice Financial Times chart.

The two percentage point average annual growth in productivity from the late 1990s was driven by wider and increased use of technology. With 85% of S&P 500 share price values driven by intangibles rather than fixed assets, improving returns from managing intellectual property (IP) is increasingly important for creating jobs and wealth to improve incomes.

About 95% of the existing European patents may be dormant, according to estimations conducted by IESE and the European Patent Office in a report, Technology Transfer: Commercializing Discoveries at Research Centers [sic] Through Linked Innovation (summarypdf).

At the same time, Oxford Innovation data suggest that the remaining 5% of the patents contributes around 40% to the European gross domestic product. “In other words, European institutions conduct extensive research but they are a long way from translating their inventions into tangible economic benefits to the society,” the report continued.

Imagine the benefit from a one percentage point increase in patents or IP even if this harder to deliver given reported declining research productivity. For this to happen requires a close examination of how to achieve this and Global University Venturing’s report this month on the University of Oxford’s 60-year track record on spinouts will help shine a light alongside work being started by the European Commission.

According to Charlie Munger, co-founder and chief investment officer at Berkshire Hathaway, there are only a few forces more powerful than incentives. “Sometimes the solution to a behaviour problem is simply to revisit incentives and make sure they align with the desired goal.”

It is no coincidence that the UK’s spinouts and commercialisation of research has taken off since David Willetts changed university payment structures in the past decade while innovation minister as he laid out in a keynote at the GCV Symposium in 2012.

In this the hope for the next generation. The solution is in our hands.