As Time Goes By: From the Industrial Revolutions to the Information Revolution

As Time Goes By: From the Industrial Revolutions to the Information Revolution

As Time Goes By: From the Industrial Revolutions to the Information Revolution

As Time Goes By: From the Industrial Revolutions to the Information Revolution

Synopsis

How can we best understand the impact of revolutionary technologies on the business cycle, the economy, and society? Why is economics meaningless without history and without an understanding of institutional and technical change? Does the 'new economy' mean the 'end of history'?These are some of the questions addressed in this authoritative analysis of economic growth from the Industrial Revolution to the 'new economy' of today. Chris Freeman has been one of the foremost researchers on innovation for a long time and his colleague Francisco Louca is an outstanding historianof economic theory and an analyst of econometric models and methods. Together they chart the history of five technological revolutions: water-powered mechanization, steam-powered mechanization, electrification, motorization, and computerization. They demonstrate the necessity to take account ofpolitics, culture, organizational change, and entrepreneurship, as well as science and technology in the analysis of economic growth. This is a well-informed, highly topical, and persuasive study of interest across all the social sciences.

Excerpt

Virtually all economic historians are in agreement that the sustained growth of per worker productivity and per capita incomes that has brought a good portion of the world to high living standards is a relatively recent phenomenon. Economic growth in this sense emerged first in the United Kingdom in the last part of the eighteenth century, and then spread to continental Western Europe and the United States, and to other overseas offspring economies of Western European civilization, then to Japan toward the end of the nineteenth century, and still later more broadly. Economic growth, however, has been highly uneven across nations. The disparities in living standards today are particularly dramatic, but they were clearly evident even in the early days of modern economic growth. Quite naturally, understanding economic growth, and cross-national differences, was of central interest to the economic scholars of that era, from Adam Smith to Thomas Malthus, to Friedrich List and Karl Marx.

All of these economists had a broad and deep empirical knowledge of the actual processes and institutions involved in economic growth. Their theoretical explanations of growth reflected their understandings of the complex phenomena involved. And in their analyses, the economic growth of a nation was integrally connected with the economic, social, and political institutions of the nation more generally.

Towards the end of the nineteenth century, economic growth moved from the centre to the periphery of the writings of mainstream economic analysts. While economists like Joseph Schumpeter had a central interest in economic growth, the core interests of most economists of that generation were elsewhere. Understanding the prevailing structure of prices and outputs within a context of general equilibrium theory came to define the agenda of what later came to be called microeconomic analysis. Understanding fluctuations in overall price levels and business cycles more generally came to define what came to be called macroeconomics. Both bodies of theorizing repressed or ignored phenomena associated with long-run economic growth. When in the 1950s economic growth returned as a focal topic, there were three striking differences from the older body of research and theorizing. First, there were many more, and much better, bodies of quantitative data that could be used to study growth. The new gross national product (GNP) statistics were especially important in the new research; indeed, economic growth came virtually to be defined in terms of growth of GNP, or GNP per worker or per person in the population. Second, the new growth theory was lean and abstract, much more so than the growth theories articulated by the great nineteenth-century economists. Third, while there are some exceptions to this proposition, the new study of economic growth and the forces driving

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