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The Puzzle of Economic Progress

Current academic research – into the impact of new technologies, the economics of innovation, and the quality of management, for example – may be providing ever more pieces of the puzzle. But many crucial questions about economic progress remain unanswered, and others have not yet even been properly posed.
A man moves his finger toward SVH (Servo Electric 5 Finger Gripping Hand) automated hand made by Schunk during the 2014 IEEE-RAS International Conference on Humanoid Robots in Madrid on November 19, 2014. The conference theme “Humans and Robots Face-to-Face” confirms the growing interest in the field of human-humanoid interaction and cooperation, especially during daily life activities in real environments. AFP PHOTO/ GERARD JULIEN (Photo credit should read GERARD JULIEN/AFP/Getty Images)

Do we know how economies develop? Obviously not, it seems, or otherwise every country would be doing better than it currently is in these low-growth times. In fact, cases of sustained rapid growth, like Japan beginning in the 1960s, or other Southeast Asian countries a decade later, are so rare that they are often described as “economic miracles.”

Yet when Patrick Collison of software infrastructure company Stripe and Tyler Cowen of George Mason University recently wrote an article in The Atlantic calling for a bold new interdisciplinary “science of progress,” they stirred up a flurry of righteous indignation among academics.

Many pointed to the vast amount of academic and applied research that already addresses what Collison and Cowen propose to include in a new discipline of “Progress Studies.” Today, armies of economists are researching issues such as what explains the location of technology clusters like Silicon Valley, why the Industrial Revolution happened when it did, or why some organizations are much more productive and innovative than others. As the University of Oxford’s Gina Neff recently remarked on Twitter, the Industrial Revolution even gave birth to sociology, or what she called “Progress Studies 1.0.”

This is all true, and yet Collison and Cowen are on to something. Academic researchers clearly find it hard to work together across disciplinary boundaries, despite repeated calls for them to do so more often. This is largely the result of incentives that encourage academics to specialize in ever-narrower areas, so that they can produce the publications that will lead to promotion and professional esteem. The world has problems, as the old saying puts it, but universities have departments. Interdisciplinary research institutes like mine and Neff’s therefore have to consider carefully how best to advance the careers of younger colleagues. The same silo problem arises in government, which is likewise organized by departments.

Moreover, fashions in research can lead to hugely disproportionate intellectual efforts in specific areas. To take one example, the ethics of artificial intelligence is clearly an important subject, but is it really the dominant research challenge today, even in the fields of AI or ethics? The financial incentives embedded in technology companies’ business models seem to me at least as important as morality in explaining these firms’ behavior.

At the same time, some important economic questions are curiously underexplored. For example, in his recent book The Technology Trap, Carl Frey expands on his gloomy view of what automation will mean for the jobs of the future, pointing to the adverse effects that the original Industrial Revolution had on the typical worker. Yet Frey also notes that a later period of automation, the era of mass production in the mid-twentieth century, was one of high employment and increasingly broad-based prosperity. What explains the great difference between those two eras?

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