776 Book Reviews TECHNOLOGY AND CULTURE TechnologicalInnovation and the GreatDepression. By Rick Szostak. Boul der, Colo.: Westview Press, 1995. Pp. xii+366; tables, notes, bibli ography, index. $65.00 (cloth). This densely written book offers a technological explanation for the origins and duration ofthe Great Depression. Stated simply, eco nomic growth depends upon exploitation of technological innova tion, but “[w]ith the exception of the electric refrigerator—where sales expanded steadily through the 1930s—there was quite simply a dearth of new product technology in 1929” (p. 4). Had the innova tions of the late thirties—for example, television, the modern air plane, vitamins, and synthetic fibers—been developed a decade ear lier, the sickening fall in consumption and investment that characterized the Great Depression would have been moderated and recovery launched much sooner. While this explanation is not entirely new—the emphasis upon innovation draws heavily from Joseph Schumpeter and upon structural shifts, from Michael Bern stein—it will no doubt face hostile fire from economists and histori ans of technology. Experts will challenge both the author’s broad sweep and his inability to rigorously test his model. But they shouldn’t dismiss the argument out of hand. Part one sets up the argument. Advances in three areas, electric power, the internal combustion engine, and chemical knowledge, dominated 20th-century technology. The first phase of innovation based upon this triad peaked in the 1920s. By 1929, if not sooner, markets for automobiles, radios, housing, textiles, and the like were saturated. Consumers cut back on their purchases, fueling what economists label an autonomous decline in consumption. Seeing little prospect for profit, investors curtailed their spending as well. With demand drooping, firms began to lay off workers. Many of these workers could not find other employment, since there were few if any new industries to take up the slack. Indeed, the employ ment picture was even worse. Thanks to new processes based upon the electric motor and better machine tools, innovation in the twenties had been intensely laborsaving. Reluctant to lay off good workers, firms entered the depression with excess labor. Unem ployment soared as businesses shed these workers as well as those made redundant by the decline in demand. Part two provides the evidence. Here the author adopts a sectoral approach, investigating changes in manufacturing, mining, trans port, agriculture, and services. In each of these categories, Szostak examines the pattern of technological change—both process and product, the extent ofmarket saturation, and trends in employment. Since these thumbnail sketches are based upon the secondary litera ture, historians of technology will find little that is new or striking. At the end of part two, the author undertakes “back of the envelope” calculations of how much unemployment can be attributed to satu TECHNOLOGY AND CULTURE Book Reviews 777 rated markets and technological change. He figures that these two factors explain some three million job losses, “enough that, with a reasonable multiplier, they could account for the entire unemploy ment experience of the 1930s” (p. 313). TechnologicalInnovation and the GreatDepression addresses some crit ical issues. We do not know why consumption declined so sharply in 1929, nor can we explain why unemployment remained so high in the 1930s. Surely market saturation explains a part of the first and the patterns of technological change a portion of the second. Moreover, Szostak’s insistence upon looking closely at individual in dustries rather than economic aggregates promises to improve our understanding of the dynamics of the depression. However, the au thor has not shown how we can go about “proving” his argument. As he notes, there is “no statistical means by which the employment and output effects of technology and market saturation can be mea sured precisely” (p. 153). But surely there must be better methods than dozens of industry sketches and crude unemployment esti mates. One insight he suggests would be a good starting point for linking technological innovation and economic growth: historians of technology and business should investigate closely the process of industrial innovation, particularly as increasingly complex technolo gies were promoted in research laboratories. Both the rising expen ditures for and the changing mix of research and development may account for much of...
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Dec 23, 2009
Hari Harjanto Setiawan 
Open Access
