The Positive Sum Strategy Harnessing Technology for Economic Growth (1986) / Chapter Skim
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The Impact of Techological Innovation: A Historical View
The Impact of Techological Innovation: A Historical View
Pages 17-32
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From page 17... ...
It is reasonable to assume that readers of this volume believe, at the very least, that technological change plays a major role in shaping our economy and society generally. I had originally intended to devote this chapter to a historical look at technological change, but the more I thought about it, the more intrigued I became by a different but closely related question, a question that ought to be an urgent and persistent concern to precisely such an audience.
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From page 18... ...
For many decades, as far back as the writing of Malthus and Ricardo at the beginning of the nineteenth century, it almost seemed that economists had a stranglehold on the expression of deeply pessimistic views of the future. Malthus, in particular, made clear in the very title of the first edition of his essay, first published in 1798, his intention of rejecting naive Enlightenment views on the future prospects for improvement in the human condition.
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From page 19... ...
Classical economics, the economics of Malthus and Ricardo, was very much concerned with the long-tenn prospects for economic growth. Nevertheless, classical economists devoted their main energies to demonstrating the limitations on such growth prospects that were imposed by the niggardliness of nature and the inevitably diminishing returns to capital and labor when the supply of land is fixed.
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From page 20... ...
The neoclassical tradition in economics, beginning in the late nineteenth century, turned away from the classical concern with long-term economic grown prospects and concentrated instead on examining the implications of maximizing behavior in a static framework. A main concern, which has dominated this tradition up to the present day, is to analyze how a market economy generates forces bringing about a return to equilibrium after some force has disturbed that equilibrium.
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From page 21... ...
Their conclusions were that diminishing returns would swamp the growth in productivity resulting from technological change. Neoclassical economists, on the other hand, focused on short-run problems of optimal resource allocation within a static framework, from which technological change had usually been explicitly excluded.
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From page 22... ...
Eventually, the perfection of a technique for producing high-pressure pipelines transformed natural gas from a waste product into our most attractive household fuel a fuel that currently plays a major role in many industrial markets and constitutes a large fraction of total energy supplies. Thus, the point has been systematically ignored, or systematically underappreciated since the time of Malthus, that natural resources possess economic significance only as a function of technological knowledge, and that increases in such knowledge are fully equivalent to an expansion of the resource base of the economy.
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From page 23... ...
Technological innovation has been a method for overcoming specific natural resource scarcities by vastly expanding the number and the quality of resources that are capable of being economically exploited. In this sense, technological innovation has been the most efficient of all adjustment mechanisms for dealing with growing natural resource scarcity.
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From page 24... ...
Manufacturers of steam turbines already possessed designing and manufacturing skills Mat gave them a great comparative advantage in the exploitation of the new aircraft power plant. Thus, it is not surpnsing that General Electric, Amenca's largest manufacturer of steam turbines, entered the business of making aircraft engines when jet propulsion was introduced.
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From page 25... ...
As a result, a major economic benefit of jet engines their much greater reliability and durability and, consequently, lower maintenance requirements—was nowhere near fully exploited. It was only after some years that airlines extended the time between overhaul of jet engines to intervals that reflected the performance characteristics of the new power plant.
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From page 26... ...
Finally, the steam turbine displaced the steam engine in the generation of electric power, and the special features of electricity its ease of transmission over long distances, the capacity for making power available in "fractionalized'' units, and the far greater flexibility of electacity-powered equipment- spelled the eventual demise of the steam engine Thus, the life history of the steam engine was shaped by forces that could hardly have been foreseen by inventors who were working on ways of removing water from increasingly flooded coal mines. Its subsequent history was shaped by unanticipated applications to industry and transportation and eventually by the systematic exploitation of new technologies that were 1lndreamed of at the time the steam engine itself was invented, such as elec
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From page 27... ...
At the same time, the problems encountered by sophisticated industrial technologies, and the anomalous observations or unexpected difficulties they produced, have served as powerful stimuli to scientific research, in the academic community as well as the industrial research lab. In these ways the responsiveness of scientific research to economic needs and opportunities has been powerfully reinforced.
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From page 28... ...
That is He concern Hat He primary impact of technological change will be increased levels of unemployment. There was and there remains a widespread tendency to attribute the higher unemployment levels that emerged during the 1970s to the in~oduchon of new technologies, especially electronic technologies, Hat purportedly had a strong labor-saving bias.
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From page 29... ...
The reductions in cost and price associated win labor-saving innovations may bring in their wake vast increases in specific kinds of employment, and in fact have often done so. When Henry Ford introduced the progressive assembly line into the American automobile industry in 1914, the result was a huge reduction in the number of labor hours required to produce a car.
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From page 30... ...
A distinctive feature of western capitalism seems to have been the ability to produce very cheap variants of products that, in an earlier age, were consumed only by a small elite nylon stockings for sink ones, ballpoint pens for Parker 51s, recorded stereophonic music for court musicians. In fact, we are still insufficiently aware of the extent to which sustained high rates of aggregate economic grown have depended on He continual introduction of new products to offset He retardation resulting from He slower rates of grown of older industries.
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From page 31... ...
(There are more musicians in the American labor force than coal miners, and several times as many real estate agents.) Although certain aspects of the service sector have received a great deal of attention, e.g., the apparently much slower growth of productivity, far less attention has been given to the connections between technological change and service employment.
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From page 32... ...
And, if a certain infusion of attractive exterior qualities is held necessary to allure us to our food, there is no reason to suppose that the most agreeable colours and scents and flavours may not be imparted to it, at a very small expense of vegetable substance. Thus it appears that, wherever Earth, and water, and the other original chemical substances may be found, there human art may hereafter produce nourishment: and thus we are presented with a real infinite series of increase of Be means of subsistence, to match Mr.
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