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In the 1930s the idea of industrial growth was explored extensively by many economists in particular by Simon Kuznets and Arthur Burns. In their detailed empirical studies they identified diversity of industry growth rates and retardation of industry growth rates as a central feature of capitalist economic development. Yet the theory of growth rate diversity and retardation has only recently begun to be explored in detail by evolutionary economists. This paper is written in recognition of the contribution of Richard Nelson and Sidney Winter to this enterprise. It develops a model of industrial growth with endogenous technical progress in which the conditions for retardation are identified and explored. The paper has wider connections with the Austrian emphasis on economic activity as a discovery process in which innovation creates new market niches that are subsequently explored and further developed.