Is Technological Progress a Thing of the Past? Joel Mokyr Departments of Economics and History Northwestern University Berglas School of Economics Tel Aviv University Milan Expo Meeting, Sept. 2015 1 Economics, sometimes known for being “the dismal science” has always had its share of alarmist and scary predictions of stagnation and economic decline. Among the many scenarios suggested in the past: • Overpopulation and Malthusian disasters • Population aging and fertility decline • Resource exhaustion • The welfare state is unsustainable • Structural lack of aggregate demand (secular stagnation) • Environmental disasters such as climate change Milan Expo Meeting, Sept. 2015 2 Most recently the question that has been raised is: can we keep up the technological momentum that has so dramatically changed our lives since 1850 or so? Milan Expo Meeting, Sept. 2015 3 A new wave of techno-pessimism is upon us: The new technopessimist interpretation (for instance Robert Gordon) says that the low-hanging fruits of invention have all been picked. Future inventions, we are told, will not have nearly as radical an effect as before. For that reason, innovation will not be powerful enough to counter other economic “headwinds” and annual GDP growth will slow down to a trickle. Milan Expo Meeting, Sept. 2015 4 Innovation pessimism Has the ideas machine broken down? Milan Expo Meeting, Sept. 2015 5 Gordon is not alone: Many feel disappointed. Peter Thiel (of Paypal fame) has famously remarked “we wanted flying cars, instead we got 140 characters.” To which I would reply: wait till you need a hip replacement, buddy. Milan Expo Meeting, Sept. 2015 6 Is the world running out of ideas? Perhaps the low-hanging fruits that have changed our lives have been picked: running water, chlorination, electricity, air conditioning, antibiotics etc? But science and technology’s main function in history is to make taller and taller ladders to get to the higher-hanging fruits (and to plant new and maybe improved trees). Moreover, the old trees will keep sprouting new fruits, if only we give them proper care. Milan Expo Meeting, Sept. 2015 7 Of course, some other people are hyperoptimists They argue that the rapid improvements in computation and artificial intelligence (AI) have the potential to increase its productivity and breadth to the extent that human labor and intelligence will become increasingly superfluous. This is what is known as “singularity” associated with such futurist as Ray Kurzweil in which machines not only replicate themselves but actually are capable of what is known as recursive self-improvement. Milan Expo Meeting, Sept. 2015 8 Ray Kurzweil, computer scientist, inventor and futurist Milan Expo Meeting, Sept. 2015 9 “The productivity of computers and software has grown at phenomenal rates for more than a half-century, and rapid growth has continued up to the present. Developments in machine learning and artificial intelligence are taking on an increasing number of human tasks, moving from calculations to search to speech recognition, psychotherapy, and robotic activities on the road and battlefield. At the present growth of computational capabilities, some have argued, information technologies will have the skills and intelligence of the human brain itself” (Nordhaus, 2015). Milan Expo Meeting, Sept. 2015 10 Quite a few people think that this is a dystopian prediction and could be even worse than secular stagnation. But economists of course know that it is not at all clear that singularity is likely: computer intelligence and human intelligence are good at quite different things and may be more complements than substitutes, that is, they will work together rather than replace each other. My view is that computers, rather than becoming our masters, will help us understand and dominate nature better. [I will come back to this point]. Milan Expo Meeting, Sept. 2015 11 So the Big Question is: Quo Vadis, Technology What can an economic historian bring to this discussion? Here is the take-home line: If the patterns of the past hold (a big if), there is good reason to expect the rate of technological change to accelerate over the next decades, although it would be foolhardy to be more specific than that (and even more to try to predict the rate of productivity growth or whether we are facing a Kurzweilian singularity). Milan Expo Meeting, Sept. 2015 12 At least to give us some perspective to appreciate “Amara’s Law” “We tend to overestimate the effect of a new technology in the short run and underestimate the effect in the long run.” Roy Amara, Past president of The Institute for the Future. Milan Expo Meeting, Sept. 2015 13 Can growth continue? The world is running into “headwinds” that are supposed to slow the industrial economies down to a trickle. A few of those seem at first glance to be ineluctable. • Population ageing • Declining employment and L-force participation. • National indebtedness • Education running into diminishing returns. • Environmental problems and climate change. [note: many of those things are only “bad” if your objective is to maximize GDP as currently defined] Milan Expo Meeting, Sept. 2015 14 But against that, I argue: The “tailwind” from technology is likely to be so powerful that, like a tornado, it will overcome all “headwinds” from other factors. Can I be sure? No. Can we learn anything from history here? The best I can do is point to four factors that I think made a difference in the past, and then argue that they are much stronger today than ever before. Milan Expo Meeting, Sept. 2015 15 Four factors that mattered in the past: •Pluralism and Diversity •Artificial Revelation •Access costs •Good incentives for intellectual innovation and a well-defined agenda. So my plan is: show their historical importance, and then argue that they hold for today’s world a fortiori. Milan Expo Meeting, Sept. 2015 16 Factor one: pluralism and competition Milan Expo Meeting, Sept. 2015 17 Why do Diversity and Pluralism matter? There are two ways to think about it. One is the evolutionary notion that creativity is the result of diversity, because progress occurs through a process of selection, and as we have known ever since Darwin, the more items there are to select from on the “cultural menu,” the more likely it is that “fitter” varieties will occur. The other is the economic model of competition that says that in a world in which many entities compete hard, progress is more likely to occur because no competitor wants to “fall behind” (and those who do, drop out). Milan Expo Meeting, Sept. 2015 18 These two stories are not mutually exclusive and in fact both shed some light on why economic growth and technological progress started in the Western World around 1750 with the Industrial Revolution. This is the topic of my new book, A Culture of Growth: Origins of the Modern Economy (Princeton: Princeton University Press, forthcoming, 2016). Milan Expo Meeting, Sept. 2015 19 According to that story, the political fragmentation and the religious and cultural pluralism of Europe was a key to its success. This was, interestingly enough, fully realized by philosophers of the Age of Enlightenment Milan Expo Meeting, Sept. 2015 20 • Europe is now divided into twelve powerful, though unequal, kingdoms, three respectable commonwealths, and a variety of smaller, though independent, states: the chances of royal and ministerial talents are multiplied, at least, with the number of its rulers . . . The abuses of tyranny are restrained by the mutual influence of fear and shame; republics have acquired order and stability; monarchies have imbibed the principles of freedom, or, at least, of moderation; and some sense of honour and justice is introduced into the most defective constitutions by the general manners of the times. In peace, the progress of knowledge and industry is accelerated by the emulation of so many active rivals; in war, the European forces are exercised by temperate and undecisive contests." (Gibbon, 1789, V.3, p.636) Zurich conference, Nov. 2014 21 Here on the same topic is the greatest of all Enlightenment writers: Milan Expo Meeting, Sept. 2015 22 “Nothing is more favorable to the rise of politeness and learning than a number of neighbouring and independent states, connected together by commerce and policy. The emulation, which naturally arises among those... is an obvious source of improvement. But which I would chiefly insist on is the stop [constraint] which such limited territories give both to power and authority... The divisions into small states are favourable to learning, by stopping the progress of authority as well as that of power. David Hume (1742) Milan Expo Meeting, Sept. 2015 23 Modern economics agrees: We know that the competitive model is a good approximation for the behavior of political entities in the seventeenth and eighteenth centuries the time, which encouraged and even supported scientific and technological advances, not out of altruism but to keep ahead (or at least to keep up). Moreover, fierce competition took place not only between nations but also within them, for example between different religious groups or between cities and regions. Milan Expo Meeting, Sept. 2015 24 The evolutionary model suggests the same: In Europe of the sixteenth and seventeenth century a lot of “new cultural varieties” began to emerge and increased the size of the “menu” from which people could choose. Two examples: in medicine, the old “humoral theory” inherited from the Greeks and Arabs of disease now had to compete with the “iatrochemical” school founded by the great Swiss physician Paracelsus. In physics, Cartesianism competed with Newtonianism in the late seventeenth and eighteenth centuries, and the “atomic theory” (known as corpuscularianism) competed with “vitalism” and both competed with Aristotelianism. Milan Expo Meeting, Sept. 2015 25 What made this market so competitive is well-understood: • • • The invention of the printing press, the growth of epistolary networks, and the growth and proliferation of universities and non-academic institutions of learning such as the Accademia dei Lincei and the Académie Royale. These were happening in a world in which courts and universities of many kingdoms, cities and principalities were competing to attract the best and the brightest. But the scholars and intellectuals also competed with one another for the best patronage positions. Milan Expo Meeting, Sept. 2015 26 As the Talmud says: “The jealousy of learned men will increase wisdom” Milan Expo Meeting, Sept. 2015 27 What emerged from all this was a new world. It led to breakthroughs in science and technology, and eventually to the Industrial Revolution and modern economic growth which were driven by them. Milan Expo Meeting, Sept. 2015 28 So what does this model predict for today? The world is more pluralistic and competitive than ever. Globalization does NOT imply that competition between 5-6 major blocks is not as intense as it was in the seventeenth century (but it is to be hoped that it will not end the same way in a series of destructive wars). All participants realize that unless they keep up with bestpractice science and technology, they will fall hopelessly behind in the global competition. Milan Expo Meeting, Sept. 2015 29 One obvious reason is that globalization is far from creating a homogeneous world. Different cultures create different forms of innovation. Globalization means that all players are exposed to and have access to these options subsequently. So we have American genetic modification, German chemistry, Israeli software, and Chinese advances in acupuncture and moxibustion, among many others. But today’s world is different in one respect: if an invention is made somewhere, it is made everywhere. Diffusion is Milan Expo Meeting, Sept. 2015 30 immediate. Factor 2: Artificial Revelation: Milan Expo Meeting, Sept. 2015 31 Artificial Revelation • What drives scientific advances at any time? They are driven by many factors, but one of the most important is the tools and instruments available to scientists. • Thus technological progress stimulates and helps scientific advances no less than the reverse. Milan Expo Meeting, Sept. 2015 32 Why is this so important? Simply, because our senses and brains are too limited for much of nature, which operates at scale, frequencies, distances, and bandwidths that we cannot observe. We only observe them through “artificial revelation.” Moreover, many important phenomena are also “too complex to compute” by hand. So we need tools. Milan Expo Meeting, Sept. 2015 33 This was certainly true for the scientific revolution in the 17th Century. The best-known examples are of course “the great trio” of the telescope, the microscope, and the barometer, all developed during the early seventeenth-century. These three instruments played a big role in the Scientific Revolution. But there are many others. Let me give you a few lesser-known examples from the era before and during the Industrial Revolution to drive the point home. Milan Expo Meeting, Sept. 2015 34 Boyle’s famous air pump Robert Boyle’s famous air pump, built in the late 1650’s, which showed once and for all that contra Aristotle, nature did not abhor a vacuum, and thus paved the road for atmospheric (steam) engines. Milan Expo Meeting, Sept. 2015 35 Volta’s “pile” (1800) Volta’s battery provided chemists with a new tool, electrolysis, pioneered by Humphry Davy. He and other chemists were able to isolate element after element, and fill in much of the detail in the maps whose rough contours had been sketched by Lavoisier and Dalton. 36 And in medicine: Joseph J. Lister (father of the famous surgeon), inventor of the achromatic microscope that minimized both chromatic and spherical aberration. This made it possible eventually for Pasteur, Koch and others to demonstrate that infectious diseases were directly linked to identifiable microorganisms. Milan Expo Meeting, Sept. 2015 37 Better tools make for better science This, to, is true a fortiori in our age. Science’s toolkit has grown enormously in the past decades. This expansion cannot but lead to rapid applications, in fields that are at times obvious and immediate but often unexpected. Examples are easy to come by. Start with telescopy, in honor of Galileo: Milan Expo Meeting, Sept. 2015 38 Galileo never had this: Artist’s impression of the European Extremely Large Telescope deploying lasers for adaptive optics Future of Work 39 Here is what is can do: OECD, Paris Sept.2014 40 Adaptive optics 1. 2. 3. These are two images of the planet Uranus, one using an ordinary telescope, the other one in which the blurring caused by atmospheric distortions are corrected through adaptive optics. Adaptive optics technology sharpens images by changing the shape of telescope mirrors up to 1,000 times per second. It is believed to have more potential than Hubble’s telescope (and is a lot less expensive). OECD, Paris Sept.2014 41 Neither did Pasteur have this: Betzig-Hell type of stimulated emission depletion (STED) microscope Future of Work 42 Another example how new technology helps science: Automatic gene sequencing machines, first developed in 1986 by Dr. Leroy Hood’s laboratory at CalTech, critical in sequencing of genome. OECD, Paris Sept.2014 43 And perhaps the most revolutionary: OECD, Paris Sept.2014 44 And Now: CRISPR Jennifer Doudna Northwestern Central Bankers meeting, Sept. 2015 Meeting, 45 1. 2. 3. CRISPR basically works a bit like the “find-andreplace” function in word-processing. It may, within a generation, rid us of all 6,000 genetic diseases, from common one like Tai-Sachs and sickle-cell anemia, to rare diseases such as San Filippo syndrome. But it can be used to knock out genes or sets of genes quickly and cheaply, and thus allow scientists to study disease that depend on sets of genes such as diabetes and autism. Its capabilities in “redesigning organisms” maybe unlimited. Milan Expo Meeting, Sept. 2015 46 Even more impressive: it allows scientists to manipulate germ-line cells, and thus have the new genetic configuration passed on in perpetuity. This has raised a lot of debate among bio-ethicists. A concern that scientists could create “supermen” is only one of those. But even we ban this technique in humans, we could apply it to all other creatures and create plants and animals according to the specifications we want --- including for instance their ability to withstand the vicissitudes of climate change and growing water scarcity. Northwestern Central Bankers meeting, Sept. 2015 Meeting, 47 Finally, of course, the computer It is hard to think of a single field of research that has not been transformed by computers. The real question often seems to be: what did we ever do before it? My interest here is not in what the digital revolution does for productivity directly, but rather indirectly through its effect on science. OECD, Paris Sept.2014 48 Computers allow research hitherto impossible In Chemistry: Multiscale Models of Complex Chemical Systems, which allows the solution of the complex equations that govern the properties of quantum chemistry. In Physics: allow the simulation of complex differential equations (Navier-Stokes) that are known to govern turbulence but cannot be solved. In Material science: We now can simulate the equations that define the properties of materials using highthroughput super-computers to experiment with materials having pre-specified properties in silico. OECD, Paris Sept.2014 49 The new science then “feeds back” into technology, at times with enormous power. In this way, technology (instruments) and science mutually reinforce one another in a positive feedback loop. Or, another way to look at it: technology pulls itself up by its bootstraps through the intermediation of science. OECD, Paris Sept.2014 50 Why does this matter? Much of the discussion about the coming of the future of the digital revolution is about its direct impact on consumption and production: Will we have robots making us coffee, driving trucks, pick our tomatoes and babysit our infants? Will Artificial Intelligence teach our students and program our lives?? Milan Expo Meeting, Sept. 2015 51 But that forgets the important indirect effect: IT Science other technologies Milan Expo Meeting, Sept. 2015 52 Here is an example (from French expo 2015 pavilion) The use of digital technology to assist evolutionary selection: high-throughput phenotyping platforms, equipped with robots and cameras, which enable them to detect plant genes that are better adapted to human and environment needs. These platforms can characterize and sort 1000’s of individual plants through automated means and on a daily basis. This maybe a partial substitute for genetic modification, since it relies only on “natural” mutations. Milan Expo Meeting, Sept. 2015 53 Factor 3: Access Costs: Milan Expo Meeting, Sept. 2015 54 Some very important pieces of knowledge that “are known” to society are only possessed by few smart individuals. And hence, access by others who do not have this knowledge but need it is important. Such access is costly. Milan Expo Meeting, Sept. 2015 55 Why is access so crucial to sustained technological dynamism? • • • • Part of it that more and more invention requires access to the best science available in material science, biochemistry, combustion, etc. Even if science is not directly very useful in guiding an inventor, it is still true that Fortune favors the prepared mind. But it is also true that technology advances by “ideas having sex” as one writer famously described it. So if you have one idea, you need access to “a partner”. Finally, inventors have to know what is already known, so that they don’t reinvent more wheels than is unavoidable. Milan Expo Meeting, Sept. 2015 56 This does not matter as long as users who need this knowledge have access to it. • But access can be costly. What determines access costs? • Among many factors, clearly the technology of storing codified information and searching through it figure highly. • In the past, the most important advances in informationstorage and search-engine technology were the invention of writing, paper and the printing press. Milan Expo Meeting, Sept. 2015 57 But knowledge needs to be organized if access is to be fast and cheap and searches are to be efficient. The Age of Enlightenment that preceded the Industrial Revolution blazed new trails in access capability in technology and in science, both for codified and tacit knowledge. Milan Expo Meeting, Sept. 2015 58 The eighteenth century version of the search engine was the encyclopedia. Alphabetized encyclopedias and indices to technical books were the Googles of their age. And indeed, the paradigmatic enlightenment document is Diderot’s Grande Encyclopédie. Milan Expo Meeting, Sept. 2015 59 Pinmaking essay in Diderot’s encyclopedia Milan Expo Meeting, Sept. 2015 60 What about today? If ICT has done anything, it has reduced access costs. We no longer deal with “data” ̶ we have “meta-data,” amazing quantities of information that can only be accessed with sophisticated searchware. We can search for nanoscopic needles in haystacks the size of Montana. This is certainly not without its drawbacks, as both spies and advertisers know more and more about us. But it has enormous implications for further scientific research and technological advances. Milan Expo Meeting, Sept. 2015 61 Anyone engaged in research can access vast banks of knowledge and data. Cloud technology is just getting started. We measure storage now not in petabytes but Zettabytes (a million petabytes) and Yottabytes (1000 Zettabytes) (WHO makes up those terms? --- there is also “Brontobytes”). And they move around the planet in seconds. As Matt Ridley has remarked, “The cross-fertilization of ideas between, say, Asia and Europe, that once took years, decades, or centuries, can now happen in minutes.” . Milan Expo Meeting, Sept. 2015 62 Public databases are a huge step forward in codified knowledge All these databases (think Pubmed) are accessible free of charge, with no physical effort, at the click of a mouse. Louis Pasteur never had it so good. But what is true for medical science is true across the board, in material science, astrophysics, molecular plant genetics, and economic history. “Big-data” is changing research in every field. Milan Expo Meeting, Sept. 2015 63 Factor 4: Incentives Milan Expo Meeting, Sept. 2015 64 Economists love incentives. But in the generation of science, especially, they are problematic, since knowledge cannot be “owned” or “sold” the way other assets are owned and sold. Europe between 1500-1700 found a solution: great scientists acquired reputations among their peers, and these reputations provided them with “patronage” positions. Galileo’s position at the court of the Grand-duke of Florence is the most famous example. Milan Expo Meeting, Sept. 2015 65 Following the publication of his Siderius Nuncius he was appointed "Chief Mathematician of the University of Pisa and Philosopher and Mathematician to the Grand Duke" of Tuscany. The appointment was for life. It was a very cushy patronage job. But many other distinguished scientists were given similar arrangements. This created incentives that worked: discover something, get others to notice, become famous, and you’re set (almost) for life. Milan Expo Meeting, Sept. 2015 66 These rules still set the stage by which the game of creating science is being played. They are not perfect, but probably the best we can do. And they worked well in the past. What about today? Northwestern Central Bankers meeting, Sept. 2015 Meeting, 67 In our age we richly reward and honor successful inventors and scientists. Although most innovators capture only a minute portion of the “social surplus” they create, we tend to respect and reward them. And they still prefer (mostly) being famous to being rich. And patents, despite everything that is wrong with them (a lot) still constitute a strong ex ante incentive for innovators. But we also deploy other means: economic security through tenured jobs, first-mover advantage, prizes. These incentives have worked well for centuries. 68 Northwestern Central Bankers Meeting, Sept. 2015 Except that today they work better: globalization creates global superstars. A Nobel prize means a lot more than some Swedish kroner and dinner with the King. It means global celebrity status. Milan Expo Meeting, Sept. 2015 69 One final thought: • Science and Technology advance most rapidly when the world poses them with well-defined and urgent problems that need a solution (and those who solve it will be wellrewarded) and that are within the capabilities of that society (unlike some advances that are at first “a solution looking for a problem.”) • It involves realizing that solving them will enhance social welfare significantly. Rosenberg’s idea of “focusing devices.” • In other words, it helps to have a clear-cut “agenda.” 70 Northwestern Central Bankers Meeting, Sept. 2015 The eighteenth-century Industrial Revolution did exactly that. Britain faced a number of well-defined problems: 1. 2. 3. 4. 5. How to pump water out of coalmines. How to spin high quality cotton yarn inexpensively. How to turn pig iron into wrought iron. How to fight smallpox. How to solve the “longitude at sea problem.” Northwestern Central Bankers meeting, Sept. 2015 Meeting, 71 Of course, only the problems that were in their reach were solved. Eighteenth-century engineers could not build airplanes or submarines, tame and harness electricity, and even cheap steel eluded them for a long time. The twentieth century did the same for a host of problems, from the Haber-Bosch nitrogen-fixing process (1912) to Project Manhattan to polio vaccines 72 Northwestern Central Bankers Meeting, Sept. 2015 Similarly, in our own age: many well-defined problems 1. 2. 3. 4. 5. 73 Global warming and climate change. Ocean acidification (global warming’s ‘evil twin’) Desertification and water scarcity. Multidrug resistance to antibiotics. Energy storage and transmission. Northwestern Central Bankers Meeting, Sept. 2015 6. 7. 8. 9. 10. Digitally-driven mass-customization Fish and seafood depletion. Growing obesity. Mental deterioration with age. Information overload. Northwestern Central Bankers meeting, Sept. 2015 Meeting, 74 • Both the supply and the demand are there. We have the tools to solve these problems, and the need. • Yet, institutional and political factors may get in the way in many places and slow down or block advances that are technically possible. • However, the good news about globalization is that if problems get solved somewhere, they are solved everywhere. 75 Northwestern Central Bankers Meeting, Sept. 2015 Is this an unqualified rosy scenario? Not necessarily. Institutions and politics have not advanced at the same rate as science and technology since 1750. And hence there may be an imbalance between our technological and our political capabilities. Milan Expo Meeting, Sept. 2015 76 As Freud said with masterly understatement in his The Future of an Illusion, “While mankind has made continual advances in its control over nature and may be expected to make still greater ones, it is not possible to establish with certainty that a similar advance has been made in the management of human affairs.” Milan Expo Meeting, Sept. 2015 77 To sum up: •We are not like the late Roman Empire or Qing China, about to languish into an age of decline to be followed possibly by chaos and barbarism. •Technological progress is still remote from reaching a ceiling or even diminishing returns (and may never do so). •Economic growth, in an economically meaningful way (if not necessarily in a traditional NI accounting way) will continue. •Secular stagnation: Seems unlikely to be the problem. Northwestern Central Bankers meeting, Sept. 2015 Meeting, 78 •The Digital Age will be to the Analog Age what the iron age was to the stone age. •And we can’t even imagine what the Post-digital Age will look like. No more than Archimedes could imagine CERN. Northwestern Central Bankers meeting, Sept. 2015 Meeting, 79 Thank you Milan Expo Meeting, Sept. 2015 80 As Freud said with masterly understatement in his The Future of an Illusion, “While mankind has made continual advances in its control over nature and may be expected to make still greater ones, it is not possible to establish with certainty that a similar advance has been made in the management of human affairs.” Milan Expo Meeting, Sept. 2015 81 Milan Expo Meeting, Sept. 2015 Milan Expo Meeting, Sept. 2015 83