The Unbearable Lightness of A Useful Knowledge and Economic Growth

Þráinn Eggertsson

doi:10.24122/tve.a.2008.6.2.4

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.

Highlights

Economists usually sing with the same nose when they answer questions about the role of technology in economic growth
Joel Mokyr (2005a, 2005b), the distinguished economic historian who specializes in the history of knowledge and the British Industrial Revolution, associates the rapid expansion in the stock of useful knowledge during the late 17th and 18th centuries with the Age of Enlightenment in Europe
In the early stages of an industrial and technological revolution special interests typically emerge and gradually acquire enough power and authority to safeguard the status quo. These forces see it in their interest to oppose new industrial developments that could undermine their economic base

Summary

Introduction

Economists usually sing with the same nose when they answer questions about the role of technology in 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. Virtually no one argues that long-term growth in output per worker is possible in an economy with stationary production techniques.. Virtually no one argues that long-term growth in output per worker is possible in an economy with stationary production techniques.2 In his pioneering contribution to modern (neo-classical) growth theory, Solow (1956; 1957) uses the letter to represent technology. As the Solow model assumes, in theory differences in incomes per capita must be caused by country differences in the capital-labor ratio,. In economic theory, has a long history of being a nondescript exogenous variable.

Social Organization and

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