The limits to productivity growth are set only by the limits to human inventiveness


The thesis of Robert Gordon’s magisterial book The Rise and Fall of American Growth stands in sharp contrast to the technological optimism that bubbles out of Silicon Valley. The argument is that the years from 1870 to 1970 were the “special century”.

Someone born when Benjamin Disraeli was prime minister and who lived to see Edward Heath in Downing Street would have witnessed horse-drawn transport give way to cars and aircraft. Born when medical services were largely useless, she would have seen cures found for most infectious diseases and experienced the introduction of electric light, indoor plumbing and colour television.

The past 50 years, according to Professor Gordon, have been “dazzling but disappointing”. We are dazzled because our attention is focused on advances in entertainment, communications and information technology. The disappointment is partly statistical — productivity growth has slowed. And looking beyond the field of IT, he argues, there have been no advances in materials, fuel technologies or food production and distribution comparable to those of the special century.

Boeing’s first 747 flew in 1969, and today’s jumbo jets are recognisably similar. The great blockbuster drugs have, it seems, been discovered. While US productivity enjoyed a spurt in the 1990s, as digital innovations transformed our lives, the special century is unlikely to be repeated. Given an ageing population and an inadequate educational system, a significant increase in American living standards should not be expected.

Progress in introducing robotics into service activities is “glacially slow”, observes Prof Gordon. Amazon employs product pickers; delivery drivers still mostly load and unload their trucks manually. Sceptical of driverless cars, he asks what commuters will actually do with the time they do not have to spend behind the wheel. His scepticism will no doubt have been compounded by a recent accident involving one of Google’s driverless cars.

Yet, if not much seems to have happened, it is perhaps because we see that much is yet to come. No great effort of imagination is required to visualise machines that unload casks of beer or stack supermarket shelves. And if we trust robots to undertake surgery, why should they not offer pedicures or cut hair as people become more expensive and machines cheaper? Perhaps the future of progress lies in the application of IT to things that do not at first sight have much to do with it.

Such opportunities are of two kinds. Computers can now replace human operatives in well-defined repetitive tasks. Examples include the computerised conveyancer, the robo-adviser as portfolio manager and the digital doctor. Many traditional middle-class occupations will be eliminated in this way.

The more subtle, and perhaps more profound, development is the capacity of digital processing to aid the discovery of things that will form the basis of new technologies. Gene sequencing and big data are likely to shape the future of medicine. Progress in battery technology is advancing by leaps and bounds thanks to the analytic capabilities in the hands of today’s researchers. If the world became wired in the “special century”, perhaps it will become wireless in the next.

And do not underestimate the increasing speed at which innovations are adopted. Ben Franklin discovered electricity in 1752 and Richard Trevithick’s car, the Puffing Devil, took to the roads of Cornwall in 1801. But it was only towards the end of the special century that electricity and cars were available to most households. The first smartphone was sold in 2007 and today 1.5bn are in use.

The limits to productivity growth are set only by the limits to human inventiveness.


This article was first published in the Financial Times on March 2nd, 2016.

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