River rushing underneath the canal - an essential conduit of business.
An End to
Innovation? Not Likely.
Philip
Auerswald
The Great Age of Innovation has come to an end!
At least that is what Robert Gordon and Paul Krugman, among others, would have us
believe.
This isn't the first time we have heard that an end to innovation
is near,
and it won't be the last. Techno-Pessimists were wrong in the
past and they're wrong today.
An end to technological evolution is no more likely than an end to
biological evolution.
The underlying reason is the same in both cases:
the nearly unbounded power of combinatorial possibilities.
The Great
Stagnation
The latest round of techno-pessimism got going in the
spring of 2011,
when my George Mason University colleague Tyler Cowen
published a widely read treatise
titled The Great Stagnation arguing
that the good ideas, that is to say, the best ideas,
for moving human societies forward have already been
discovered and put into practice.
While the economic crisis, fiscal irresponsibility, and
other transient factors
may have contributed to the “Great Recession” in the
United States, Cowen argued
that the roots of America’s economic slowdown are deeper:
we have picked the “low-hanging fruit” of technological
progress, and as a consequence,
further economic advance will be slower and less dramatic
than it was the past.
If prosperity feeds at the banquet table of knowledge,
then we’re down to the leftovers.
In Cowen’s words,
The American economy has enjoyed lots of low-hanging
fruit since at least the seventeenth century, whether it be free land, lots of
immigrant labor, or powerful new technologies.
Yet during the last forty years, that low-hanging
fruit started disappearing,
and we started pretending it was still there. We have
failed to recognize
that we are at a technological plateau and the trees
are more bare than we would like to think. That’s it.
That is what has gone wrong.
Cowen substantiated his claim with a carefully
constructed fact-based argument,
but his strongest points are still the intuitive ones.
Think of a person born in the United States
in 1891 or thereabouts (my paternal grandmother, for
example) who looked out at the world
on her sixtieth birthday, in 1951. The reality before her
would have been
almost wholly unimaginable at the time of her birth.
Electric lights, the telephone, automobiles
and airplanes, even flush toilets. All of these would
have been either extremely rare
or nonexistent in her childhood. But what of someone born
in 1951 looking at the world today? Sure, we have cell phones and Facebook. The
tools of medicine are quite a bit fancier.
But, fundamentally, the architecture of modern life has
not changed much.
A US household today is only incrementally different from
a US household sixty years ago.
That, essentially, is the core point of The Great Stagnation.
Cowen goes on to note that most of the technologies that
have defined the modern world—
those that would have seemed marvelous to my grandmother
on her sixtieth birthday—
were first introduced at the end of the nineteenth
century. Their impact on the economy
peaked in the 1920s and 1930s. It was these technologies that
drove the growth in both industry
and government during the Industrial Age—the age of
economies of scal
that I describe in chapter 1 of The Coming Prosperity.
The story of the social and economic changes wrought by these new technologies
is, as I have argued, the economic subtext
of the twentieth century. Cowen is not alone in making
this argument.
Venture capitalist and entrepreneur Peter Thiel similarly
received considerable attention
for a fall 2011 piece in The National Review titled
“The End of the Future.”
New York Times economics correspondent David
Leonhardt echoed the themes
in The Great Stagnation in an essay titled “The Depression: If Only Things Were That Good”
that pointed to a surprising contrast between short-term
and long-term trends
at the time of the Great Depression:
Underneath the misery of the Great Depression, the
United States economy was
quietly making
enormous strides during the 1930s. Television and nylon stockings were
invented. Refrigerators and washing machines turned into mass-market products.
Railroads became faster
and roads smoother and wider. As the economic
historian Alexander J. Field has said,
the 1930s constituted “the most technologically
progressive decade of the century.”
Economists often distinguish between cyclical trends
and secular trends—which is to say,
between short-term fluctuations and longterm changes
in the basic structure of the economy.
No decade points to the difference quite like the
1930s:
cyclically, the worst decade of the 20th century, and
yet, secularly, one of the best.
(Note: Cowen updated his view substantially in his most
recent book, Average is Over.)
The Vanishing of
Investment Opportunity
All is well so far. But, haven’t similar predictions of
impending technological stagnation been made—and proved wrong—before? Yes, on a
fairly regular basis.
In fact, the last flurry of techno-pessimistic outpouring
was in the in the 1920s and 1930s—
exactly the time when, as Cowen and Leonhardt both
accurately report,
the great inventions responsible for past prosperity were
peaking in terms of their aggregate impact. In chapter 1, I quoted John Maynard
Keynes, who stated in 1929 that “it is common to hear people say that the epoch
of enormous economic progress which characterized the nineteenth century
is over; that the rapid improvement in the standard of
living is now going to slow down.”
Similarly, here is Joseph Schumpeter himself, in a
chapter from
Capitalism, Socialism, and Democracy titled “The
Vanishing of Investment Opportunity,”
paraphrasing the view of his own techno-pessimistic
contemporaries:
Most of my fellow economists [ feel that] we have been
witnessing not merely a depression
and a bad recovery, accentuated perhaps by
anti-capitalist policies,
but the symptoms of a permanent loss of vitality which
must be expected to go on
and to supply the dominating theme for the remaining
movements of the capitalist symphony;
hence no inference as to the future can be drawn from
the functioning of the capitalist engine
and of its performance in the past.
This is about as succinct a summary as is possible of the
arguments recently advanced
by Cowen, Thiel, and Leonhardt.
Of course, the mere fact that arguments similar to those
in The
Great Stagnation
have been advanced, and proven incorrect, in the past
does not prove
that contemporary versions are without merit. As I expect
is evident both from my summary
of Cowen’s argument and my decision to feature it here, I
am largely in agreement
with at least one dimension of the core point he is
making: that both scientific invention
and market-based innovation are, in some sense, getting
more difficult as time goes by.
Creating New
Combinations
Some years ago I organized a panel at a meeting held at
the Kauffman Foundation in Kansas City (where I am currently affiliated) that
focused on the relationship between technological complexity and the long-term
future of innovation. Among the panelists who consented to participate
was Ben Jones, a brilliant young economist recently
graduated from the doctoral program at MIT.
At the meeting, Jones summarized findings from two of his
papers, “The Burden of Knowledge and the
‘Death of the Renaissance Man’: Is Innovation Getting Harder?” and “Age and Great Invention.” These papers
intrigued me because they offered a painstakingly argued validation of a
conjecture
I had been forming in my own mind at the time—that
increases in the complexity of technology compelled scientists to specialize
ever more narrowly in order to make significant advances,
but at the same time they increased the returns to the
difficult task of bridging disciplines
to create fundamentally new economic combinations.
Jones found that the average age at which great inventors
arrived at their breakthroughs
was about six years later for inventors working at the
end of the twentieth century
than for those working at the beginning of the twentieth
century (see figure below).
This finding supports the notion that the “low-hanging
fruit” of scientific discovery
has been harvested by earlier generations; as a
consequence, for any given scientist,
future advance will be increasingly challenging. Young
scientists can compensate for this
increasing “knowledge burden,” as Jones terms it, by
specializing ever more narrowly
within a disciplinary area of study. But, such
specialization comes at a well-known cost:
an intellectual narrowing that, in the limit, results in
knowing everything about nothing
and nothing about everything. It is due to precisely this
dynamic that the phrase “it’s academic”
has sadly come to be synonymous with “it’s
irrelevant.”
Yet, despite evident costs to society as a whole, such
long-term trends cannot be easily shifted, much less reversed. The reality
today remains much as Jones found it to be a decade ago:
without increased specialization, scientific discovery
slows or ceases; without teamwork
and collaboration across disciplinary boundaries,
technological innovation slows or ceases.
If technological complexity increases more rapidly than
the average human life span,
these two observations combine to suggest a sort of
fundamental limit on the human potential
to generate technological advance.
Will it someday be impossible to live long enough to
acquire the knowledge needed
to make advances on prior knowledge? Will new learning
come to an end?
No. An end to technological
evolution is no more likely than an end to biological evolution.
The underlying reason is the same in both cases: the nearly
unbounded power
of combinatorial possibilities (see
chapter 7 of The Coming Prosperity).
If the current generations of techno-pessimists fail to
see the creation of new combinations
at work today, it’s simply because they either can’t glimpse
them from where they sit,
or they’re just not looking hard enough. Granted, the
technologies that drove past prosperity
in the United States—electric lights, the telephone,
automobiles and airplanes, flush toilets—
re today improving only incrementally in comparison with
the past.
But those very same technologies are only now reaching the majority of the world’s
population.
The resultant productivity gains are massive and
reverberating in an epic fashion on a global scale. That process is just
beginning.
What’s more, the infrastructure technologies that will
define the nature of both business
and government in the coming century are just now coming
into use.
Where twentieth-century technologies reshaped the world
around economies of scale,
twenty-first century technologies will shape the world
once again,
this time around economies of collaboration. For a new
generation of innovators,
overcoming complexity is the paramount challenge. As
Martin Weitzman has astutely
observed, “The ultimate limits to growth may lie not as much in our ability
to generate new ideas,
so much as in our ability to process an abundance of potentially
new seed ideas
into usable forms.” Contemporary tools are,
unsurprisingly, particularly well suited
to contemporary challenges: assessing the effectiveness
of new combinations,
rather than generating new building blocks.
As to whether that process—sorting the good ideas from
the bad in a complex world—
will itself ultimately get so difficult that human
progress will terminate altogether
in the twenty-third or twenty-fourth centuries?
We can answer that when the time comes. For now, it's academic.
This post is an excerpt from chapter 9 of The Coming Prosperity, with
slight modifications.
https://www.linkedin.com/pulse/techno-pessimism-wrong-1930s-today-philip-auerswald
You can TCR specialist and language dictionaries
that are spontaneously accessed.
I can Turbo Charge Read a novel 6-7 times faster and remember what I’ve read.
I can TCR an instructional/academic book around 20 times faster and remember what I’ve read.
Emotions when
Turbo Charged Reading YouTube
Perhaps
you’d like to check out my sister blogs:
TurboChargedReading uses these skills significantly faster.
To
quote the Dr Seuss himself, “The more that you read, the more things you will
know.
The
more that you learn; the more places you'll go.”
