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The end of human progress, really?

2nd April 2014

You may remember or know of a Jim Morrison song called The End. This 1967, 12 minute long song by The Doors was about Jim Morrison’s breaking up with his girlfriend, not about human progress but it came to mind when I read Professor Robert Gordon’s ‘Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds‘ ( in 2012, and again when he published a sequel paper in February this year with the title ‘The Demise of US Economic Growth: Restatement, Rebuttal and Reflections‘ (

Gordon’s proposition is that economic and productivity growth in the US will be appreciably lower in the next 25-40 years than it has been in the last century. He predicts little more than 1.25% growth per annum in labour productivity, which he says equates to 0.9% per capita. He reckons real income will rise by just 0.4% per head for the bottom 99% of the income distribution, and that their real disposable income will rise by half of that. Put another way, the increase in living standards for the bulk of the US population has come to an end.

Grumpy Gordon

Is Gordon just grumpy, or is he trying to tell us something we don’t want to accept? What he’s saying is controversial but important, because the suggestion is that the quantum leap in living standards in the West since the eighteenth century was a protracted one-off, and that for most of us, life will revert to the way it was for centuries before. Emerging countries will be able to catch us up for a while, but they too will join us in long-term stagnation.

Even skeptics, like me, acknowledge Gordon’s empirical and historical point that we have experienced three periods of major technological change, of which the second was the most important by far. The first dates from around 1750-1850 and was built around the harnessing of steam. The second occurred in the last quarter of the nineteenth century and early part of the twentieth century, and embraced what is called ‘general purpose technologies’ such as those emanating from the exploitation of electricity, the internal combustion engine, sewerage and clean running water. communications, chemicals, and petroleum. The third dates from about the 1960s, though with what Gordon alleges to be diminishing impact now, namely the revolution in information and communications technology.

Gordon’s pessimism is based on his view that we have now pretty much exhausted the productivity benefits that all these innovations brought us. Distance has been decimated, faster speed of production, travel or communication now has only peripheral benefits, the lion’s share of gains in life expectancy is already behind us, and educational attainment levels and research and development intensity in GDP have peaked.

He  also says all we can look forward to now are rising headwinds. Western demographic change – or the rapid rise in age structure and old age dependency – will be characterised by the boom in retirees, which will drag down labour force participation and the number of hours worked per head of population. Larger numbers of young and prime age workers will also not work, reinforcing this phenomenon. Other drags on economic performance include the competitive threats from catching-up emerging economies, the effects of income inequality and the structural permanence of high levels of debt to GDP, which will necessitate higher taxation and lower transfer.

No need to forecast innovation (!)

Gordon says in his more recent paper that there is no need to forecast the slowdown in innovation because it’s already happened, as evidenced by the protracted slowdown in labour productivity that pre-dates the financial crisis. And he takes issue with today’s technology optimists, arguing, in effect, that they’re whistling in the dark because it is possible to predict the future of technology 50-100 years in advance. You think medical research, robotics, 3-D printing, Big Data, and fracking are going to change the world? Pah! says Gordon. None of these are new, the technologies have been around for a long time, and the potential to extract major productivity gains from them is marginal.

So now, in addition to resource Malthusians, we have innovation Malthusians too. But we have had innovation Malthusians for a long time as well. It’s true that writers and smart people with vivid imaginations did imagine a hundred years ago,for example, how new innovations might develop. It’s equally true that those who our ancestors might have expected to know about the future, knew very little.

At the beginning of the nineteenth century, Dr. Dionysius Larcher, professor of Natural Philosophy and Astronomy at University College, London said that ‘Rail travel at high speed is not possible because passengers, unable to breathe would die of asphyxia’. Thomas Edison said the phonograph would have no commercial value. William Siemens said Edison’s light bulb would not be worthy of science. Lord Kelvin, British mathematician, physicist and president of the Royal Society, said that ‘Heavier than air flying machines are impossible’. By 1909, Scientific American had concluded that the automobile had reached the end of its development. Ernest Rutherford and Albert Einstein were dismissive about the potential for nuclear power. And, after the second world war, Sir Harold Spencer Jones, Astronomer Royal said, two weeks before the first Sputnik orbited the Earth, ‘Space travel is bunk’. Two years later in 1959, IBM said to the eventual founders of Xerox that the world potential for copying machines is 5000 at most. Harvard biologist George Wald said in 1970 that civilisation would end within 15-30 years unless immediate action was taken against problems facing mankind. In 1975, Jean Gimpel, technologist, historian and academic said that no more fundamental innovation is likely to be introduced to change the structure of society and that we had reached a technological plateau. Sounds familiar?

We could go on, but you get the point: we DON’T know what the future holds, nor how human ingenuity and adaptability will guide us through economic, social and environmental problems that have confounded us for millennia. And it’s curmudgeonly, to put it mildly, to say that we do. The innovations of the late nineteenth century were slow to build and kept us going until the 1970s. How can we judge that the information and communications technologies since the 1960s are exhausted, not to mention the potential only now opening up in advanced manufacturing processes, alternative and green energy, ubiquitous technologies, and multi-application technologies that may today be limited to say, medicine?

Economic navel gazing

Gordon is also wrong about his economic navel-gazing. Declining working hours and labour force participation are certainly much in evidence today and linked inexorably to the demographic transition. But longer working lives, flexible retirement patterns, higher age eligibility for benefits, and prospective changes in earnings and occupational structures to enable companies to keep older workers at work are all eminently possible solutions to this problem. In any event, once the baby boomers have moved through the age structure into retirement, including to the Great Retirement home in the sky, the age structure and rising old age dependency problem will cease to be a problem.

We can accept that the problem of income inequality is a serious economic drag and social problem. But we need not accept that it is a problem we will have in perpetuity.

We can accept that one of the major legacies of the financial crisis is a high sovereign debt to GDP ratio that will take a very long time to come down, and will almost certainly require a restructuring of taxation and transfer spending. But again, in perpetuity? We have had higher debt to GDP ratios before now that didn’t linger forever, and we are not without financial policies that can help whittle it away over time.

To repeat, income inequality and high debt are both undesirable economic phenomena, but they are self-evidently manageable and well within the field of human endeavour to overcome. We need not, and should not raise these as terminal constraints on the capacity for growth and development. Moreover, they have been deemed problematic only since the aftermath of the financial crisis a mere six years ago. Are we really to believe that they are now so concrete that they will determine mankind’s wellbeing for the indefinite future?

For my part, I’ll concede Gordon and other technophobes one point. There is a major risk in our technologies from automation, robotics and digitisation that we will see even more wrenching in the occupational structure and polarisation of the labour market. Middle level, middle wage clerical, managerial, technical and supervisory positions, even in service industries and professions such as law and accounting, are being hollowed out. Those at the top end of the educational attainment and skill spectrum are doing fine and will continue to be in demand. Many others at or forced down into the other end of the spectrum are liable to remain stuck in low pay, low productivity jobs with variable or temporary hours. We haven’t thought of credible ways to deal with this phenomenon as yet, and it is a major social problem. Perhaps, in time, the new occupations and jobs which we can’t even imagine now will be an important part of the answer. Perhaps we will, as Keynes suggested in the Economic Consequences for our Grandchildren, have conquered the production problem such that our challenge will be to find ways of managing more leisure. These are complicated and important questions, but the future will not be a technological desert and this is not the end of human progress…really.