1920s. Capital productivity and the possibility of capital shortage unemployment are of far greater importance today.
There is no escape from the study of the specific problems of each new technology. The search for social and institutional adaptations to its peculiar characteristics will dominate the 1980s and 1990S as surely as the Keynesian revolution and the welfare state dominated the 1930s and the 1940s. There is no quick fix in terms of real wage reductions to stimulate labour-intensive techniques. Growth theory must take account of the 'stylised facts' about technological innovation, as well as the 'stylised facts' of capital-labour substitution and capital-output ratios. Long-term growth stability depends more on institutional flexibility and adaptation to new technologies than on imaginary factor substitution processes.
This paper is based on research for the ESRC programme on 'Technical Change and Employment' at the Science Policy Research Unit. The final results of the programme have been published by Basil Blackwell in a book entitled 'Technical Change and Full Employment' (Ed. Freeman and Soete). I am grateful to my colleagues John Clark, Carlota Perez and Luc Soete who contributed greatly to the ideas developed in this paper, as well as in the programme as a whole.
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