The Unbearable Lightness of A Useful Knowledge and Economic Growth

Abstract

Economists usually sing with the same nose when they answer questions about the role of technology in economic growth. They generally agree that sustained long-term growth in productivity, which began in Western Europe some two centuries ago, could not have been maintained in an environment of stagnant production technologies. Whether we consult Karl Heinrich Marx, Joseph Alois Schumpeter or Robert Merton Solow, the answer is the same: new technologies are the source of long-term economic growth. Economists, as we know, usually argue that the production and utilization of new technologies depend critically on appropriate social institutions, such as competition, decentralized markets, secure property rights, enforceable contracts, and norms of trust and reciprocity. Yet virtually no one argues that long-term growth in output per worker is possible in an economy with stationary production techniques.