Diminishing Returns from Technological Progress?

The Lehmann Letter (SM)

In 1996 John Horgan published “The End of Science: Facing the Limits of Knowledge in the Twilight of the Scientific Age.”

Mister Horgan’s book ignited debate about the future of science. Was progress limitless, as most of us had been trained to believe? Or was the Scientific Age more like the Age of Discovery, destined to end with the successful completion of the major voyages? If that was true, then the Scientific Age – 1500 to 2100 – was coming to a close much like the Age of Discovery – 1500 to 1800 – before it.

Here’s how one can think of it. Picture the gold laying in the streams of California’s Sierra Nevada before its discovery in 1849. The easy pickings ended quickly and the glory days of California gold-mining are over. Another metaphor: The low-hanging fruit was quickly harvested and little remains.

There will be no more Newtons or Darwins or Einsteins. There was no science before 1500, but now the major discoveries are behind us. We may never know the origin of the universe or the origin of life or the nature of human consciousness. Future discoveries will be more difficult and much more costly to achieve. We will not have the will or the resources to push the frontier in the fashion we pushed it in the past.

Mister Horgan was careful to distinguish between science and technology. He said that technological progress would continue, but it would be limited by the increasingly meager advance of science. In any event, diminishing returns were a problem.

Now, however, economists debate whether or not advancing technology will provide the limitless benefits we have come to expect.

See for instance the article by Timothy Aeppel in the June 16 Wall Street Journal:

“Economists Debate: Has All the Important Stuff Already Been Invented?”

http://online.wsj.com/articles/economists-duel-over-idea-that-technology-will-save-the-world-1402886301

Robert Gordon and Joel Mokyr are the economists to which the headline refers.

Here are some excerpts from the article:

“….Mr. Mokyr has long studied how new tools have led to economic breakthroughs. For example, how the development of telescopes allowed for rapid advances in astronomy. History makes him certain his colleague is wrong.

Mr. Gordon’s ideas, in fact, fly in the face of modern economic orthodoxy. Since Nobel economist Robert Solow first argued in the 1950s that growth was driven by new technology, most economists have embraced the idea. Progress may be uneven, according to this view, but there is no reason to expect the world to run out of ideas……

””…. Mr. Gordon said, economies need technological advances. The problem is that the biggest breakthroughs—like electrification or the discovery of antibiotics—are behind us. Electricity changed how people lived and worked, and it spawned hundreds of new industries. The technology that allowed people to communicate instantly or travel quickly over long distances were 19th- and 20th-century innovations.

“More recent inventions—including the Internet—won’t pack the same punch, he said: “The rapid progress made over the past 250 years could well turn out to be a unique episode in human history.”….”

Are we facing the end of technology and the end of science? That remains a minority view. But we should consider it carefully because of its implications for gains in productivity (output per hour). If efficiency does not improve – if we can’t produce more per capita – then per-capita income growth will stagnate in the long run. Right or wrong, it’s a serious issue.

(To be fully informed visit http://www.yourowneconomist.com/)

© 2014 Michael B. Lehmann