Is our economic future behind us?

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Is our economic future behind us?

CHICAGO — With the global economy yet to recover from the 2008 economic crisis, concern about the future — especially of the advanced economies — is intensifying. My Northwestern University colleague Robert J. Gordon captures the sentiment of many economists, arguing in his recent book “The Rise and Fall of American Growth” that the enormous productivity-enhancing innovations of the last century and a half cannot be equaled. If true, advanced economies should expect slow growth and stagnation in the coming years. But will the future really be so bleak?

Probably not. In fact, pessimism has reigned over economists’ outlooks for centuries. In 1830, the British Whig historian Thomas Macaulay observed that, “[i]n every age, everybody knows that up to his own time, progressive improvement has been taking place; nobody seems to reckon on any improvement in the next generation.” Why, he asked, do people expect “nothing but deterioration”?

Soon, Macaulay’s perspective was vindicated by the dawn of the railway age. Transformative advances in steel, chemicals, electricity, and engineering soon followed.

When it comes to our technological future, I would expect a similar outcome. Indeed, I would go so far as to say, “We ain’t seen nothin’ yet.” Technological advances will create a tailwind of hurricane-like proportions to the world’s most advanced economies.

My optimism is based not on some generalized faith in the future, but on the way science (or “propositional knowledge”) and technology (“prescriptive knowledge”) support each other. Just as scientific breakthroughs can facilitate technological innovation, technological advances enable scientific discovery, which drives more technological change. In other words, there is a positive feedback loop between scientific and technological progress.

The history of technology is full of examples of this feedback loop. The seventeenth-century scientific revolution was made possible partly by new, technologically advanced tools, such as telescopes, barometers, and vacuum pumps. One cannot discuss the emergence of germ theory in the 1870s without mentioning prior improvements in the microscope. The techniques of X-ray crystallography used by Rosalind Franklin were critical to the discovery of the structure of DNA, as well as to discoveries that led to over 20 Nobel prizes.

The instruments available to science today include modern versions of old tools that would have been unimaginable even a quarter-century ago. Telescopes have been shot into space and connected to high-powered adaptive-optics computers, to reveal a universe quite different from the one humans once imagined. In 2014, the builders of the Betzig-Hell microscope were awarded a Nobel Prize for overcoming an obstacle that had previously been considered insurmountable, bringing optical microscopy into the nanodimension.

If that is not enough to quash technological pessimism, consider the revolutionary instruments and tools that have emerged in recent years — devices that would never even have been dreamed of a few decades earlier. Start with the computer. Economists have made valiant efforts to assess computers’ impact on the production of goods and services, and to measure their contribution to productivity. But none of these measures can adequately account for the untold benefits and opportunities computers have created for scientific research.

There is no lab in the world that does not rely on them. The term in silico has taken its place next to in vivo and in vitro in experimental work. And entire new fields such as “computational physics” and “computational biology” have sprung up ex nihilo. In line with Moore’s Law, advances in scientific computation will continue to accelerate for many years to come, not least owing to the advent of quantum computing.

Another new tool is the laser. When the first lasers appeared, they were almost an invention in search of an application. Nowadays, they are almost as ubiquitous as computers, used for seemingly mundane daily uses ranging from document scanning to ophthalmology.

The range of research areas that now rely on lasers is no less broad, running the gamut of biology, chemistry, genetics, and astronomy.

LIBS (laser-induced breakdown spectroscopy) is essential to the protein analysis on which so much research in molecular biochemistry depends. Recently, lasers enabled the confirmation of the existence of gravitational waves — one of the holy grails of physics.

Digitization has lowered access costs for researchers substantially. All research relies on access to existing knowledge; we all stand on the shoulders of the giants (and even average-size figures) who came before us. We recombine their discoveries, ideas, and innovations in novel — sometimes revolutionary — ways. But, until recently, learning what one needed to know to come up with scientific and technological innovations took a lot more work, with countless hours spent scouring libraries and encyclopedia volumes. Nowadays, researchers can find nanoscopic needles in information haystacks the size of Montana. They can access mega-databases, where they can find patterns and empirical regularities. The eighteenth-century taxonomist Carl Linnaeus would be envious.

Our scientific knowledge is surging forward, leading to innumerable new applications. There can be no doubt that technology will forge ahead as well, in scores of expected and unexpected areas. It will bring economic growth, albeit perhaps not the kind that will register fully if we continue to rely on our outdated standards for national income accounting.

Copyright: Project Syndicate, 2016.

*The author is a professor of economics and history at Northwestern University.

Joel Mokyr
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