The Fruits of Civilization (42) Productivity


One would naturally think that technological innovation leads to improved productivity, and thereby higher living standards; but this is often not so.

There was scant improvement in the life of the average working Brit in the century after industrialization. In the early 20th century, as Victorian inventions such as electric lighting ushered forth, productivity growth barely budged.

You can see the computer age everywhere but in the productivity statistics. ~ Robert Solow in 1987

The coming of the computing age was lauded at the time as offering a tremendous boon to productivity; yet output per worker did not show that to be the case. The Internet was supposed to be a 2nd coming in such productivity, but so far has been a no-show.

The American economic growth engine was humming the loudest from the start of the 2nd World War to the end of the 20th century: output per person grew 2.7% per year. Both before and after the rate was a lot lower: 1.5% from 1891 to 1939, and only 0.9% in the 21st century.

What everyone feels to have been a technological revolution has been accompanied everywhere by a slowdown in productivity growth. ~ Robert Solow

The failure of new technology to boost productivity became known as the Solow paradox, after Robert Solow, the economist who gave the issue a long look and was left scratching his head. Various attempts to explain away the Solow paradox – that the technological advances weren’t so great, or that there is a long time lag between innovation and productivity gain – are unsupported by the evidence.