The Rate of Technological Change Will Grow, But Our Economy Might Not

Will we see a greater rate of technological change in the next half century than in the last?

Economist Robert Gordon argues that American growth is slowing down because innovation remains at similar levels while the relative size of the labor force shrinks and wealth production is not well distributed.[1] Gordon states that the technological change and accompanying prosperity of the period between 1920-1970 was unique. I think the phenomena Gordon describes are profound, and that he may be largely right. But I am not convinced it is a slowing down of technological change causing the economic stagnation.

Technological innovation and economic growth

The assumption that technological innovation will lead to economic growth for the country as a whole may no longer be viable. Network effects, patents, privatization, monopolization, and other factors have all contributed to a skewed technological marketplace with high barriers to entry. There may be a thriving start-up scene, but the majority get bought out by one of a few technology companies (if they don’t fail first.) If we look at entrepreneurship as the rate of new-business formation, it has declined every decade since the 1970s. According to Derek Thompson writing in The Atlantic, “This decline in dynamism has coincided with the rise of extraordinarily large and profitable firms that look discomfortingly like the monopolies and oligopolies of the 19th century.”[2] With fewer people in control, fewer are enjoying the benefits. Even though productivity has risen steadily, wages for the majority have not, leading to increasingly dramatic income inequality over the last 30 years.[3]

The conflation between technological growth and economic growth is probably a by-product of the traditional description of economic output as a function of technological change. However, for the reasons listed above, we shouldn’t assume technological growth leads to growth for the economy as a whole. Therefore, to explore the rate of technological change, we may need to assess it on its own.

A new definition and account of technological change

Because of the complexity of the relationship between technology and the economy, I offer a definition of technological change that is neither bound by economic means, nor normative ideals. I define it merely as the displacement or alteration of behavior. (I.e. a car both displaces a horse and alters our ability to move around.) With this definition in hand, the case for a greater rate of technological change in the next half century can be made. Between 1915 – 1965 we saw the rise of enormously important technologies that both displaced and altered behavior. These included electricity, atomic power, and many new kinds of materials. Without a doubt, these technologies had profound impacts on people’s lives, societies, and the environment. However, I think the rate of technological change will increase over the next 50 years for the following three reasons:

  1. Artificial intelligence and automation

Humans have had a great privilege because we have been the smartest thing around. If current developments in AI continue, we may not maintain that privileged position for long. Google’s AI has developed an entirely new language on its own, one it was not asked to create, and one which no human understands.[4] When this is combined with automation and robotics, we could see a loss of much of the work we previously carried out. A 2013 report suggested that 47% of US jobs could be lost due to AI and automation in the coming decades.[5] There are already many tasks that used to be conducted by humans just a few years ago that have been replaced. We talk often about autonomous vehicles, but less about the robots that are already building the cars in the first place.[6]

  1. The mutability of natural systems

While we are already in the Anthropocene and facing unprecedented human impact on environmental systems, the kinds of changes on the horizon are arguably of a different kind. Recent advances in “gene editing”, synthetic biology, and various reproductive technologies have made the genetic alteration, creation, and destruction of life forms cheaper, easier, and more precise. This is true from the microbial scale on up to the human scale. So-called “gene drives” (not to mention synthetic viruses) have the potential to wipe out entire species. Moreover, geo-engineering could be used to “control” weather-patterns in novel ways.

  1. The convergence of technologies

Founder of the World Economic Forum Klaus Schwab argues that we are entering a 4th industrial revolution that goes beyond the 3rd (digital) revolution and is “characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”[7] This will include the Internet of Things in which every object is connected, as well as the Internet of Bodies, in which devices are implanted within us.[8]

The three changes mentioned above could displace and alter nearly all aspects of our existence. For this reason, I believe the pace of technological change will increase in the coming fifty years. However, questions relating to risk/benefit/harm/profit/distribution are significantly harder to answer. If we see these technological changes without a simultaneous redesign of distribution mechanisms, we could face ever-greater inequality. In that case, a singular notion of “American growth” as a unit of analysis may be relatively meaningless.

[1] Porter, Eduardo. “America’s Best Days May Be Behind It,” The New York Times. January 19, 2016. https://www.nytimes.com/2016/01/20/business/economy/a-somber-view-of-americas-pace-of-progress.html

[2] Thompson, Derek. “America’s Monopoly Problem,” The Atlantic. October 2016. http://www.theatlantic.com/magazine/archive/2016/10/americas-monopoly-problem/497549/

[3] “Income Inequality,” A project of the Institute for Policy Studies. http://inequality.org/income-inequality/

[4] Burgess, Matt. “Google’s AI just created its own universal ‘language’,” Wired. November, 23, 2016. http://www.wired.co.uk/article/google-ai-language-create

[5] Osborne et al. “THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION?” September 17, 2013. http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf

[6] Lambert, Fred. “Tesla Gigafactory: a look at the robots and ‘machine building the machine’ at the battery factory,” Electrek. July 31, 2016. https://electrek.co/2016/07/31/tesla-gigafactory-robots-machines-battery-factory/

[7] Schwab, Klaus. “The Fourth Industrial Revolution: what it means, how to respond,” World Economic Forum. January 14, 2016. https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/

[8] Neal, Meghan. “The Internet of Bodies Is Coming, and You Could Get Hacked,” Motherboard. March 13, 2014. http://motherboard.vice.com/blog/the-internet-of-bodies-is-coming-and-you-could-get-hacked

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s