[Marxism] Paul Krugman Reviews ‘The Rise and Fall of American Growth’ by Robert J. Gordon
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Sun Jan 31 10:02:41 MST 2016
NY Times Sunday Book Review, Jan. 30 2016
Paul Krugman Reviews ‘The Rise and Fall of American Growth’ by Robert J.
By PAUL KRUGMAN
THE RISE AND FALL OF AMERICAN GROWTH
The U.S. Standard of Living Since the Civil War
By Robert J. Gordon
Illustrated. 762 pp. Princeton University Press. $39.95.
Back in the 1960s there was a briefly popular wave of “futurism,” of
books and articles attempting to predict the changes ahead. One of the
best-known, and certainly the most detailed, of these works was Herman
Kahn and Anthony J. Wiener’s “The Year 2000” (1967), which offered,
among other things, a systematic list of technological innovations Kahn
and Wiener considered “very likely in the last third of the 20th century.”
Unfortunately, the two authors were mostly wrong. They didn’t miss much,
foreseeing developments that recognizably correspond to all the main
elements of the information technology revolution, including smartphones
and the Internet. But a majority of their predicted innovations
(“individual flying platforms”) hadn’t arrived by 2000 — and still
haven’t arrived, a decade and a half later.
The truth is that if you step back from the headlines about the latest
gadget, it becomes obvious that we’ve made much less progress since 1970
— and experienced much less alteration in the fundamentals of life —
than almost anyone expected. Why?
Robert J. Gordon, a distinguished macroeconomist and economic historian
at Northwestern, has been arguing for a long time against the
techno-optimism that saturates our culture, with its constant assertion
that we’re in the midst of revolutionary change. Starting at the height
of the dot-com frenzy, he has repeatedly called for perspective:
Developments in information and communication technology, he has
insisted, just don’t measure up to past achievements. Specifically, he
has argued that the I.T. revolution is less important than any one of
the five Great Inventions that powered economic growth from 1870 to
1970: electricity, urban sanitation, chemicals and pharmaceuticals, the
internal combustion engine and modern communication.
In “The Rise and Fall of American Growth,” Gordon doubles down on that
theme, declaring that the kind of rapid economic growth we still
consider our due, and expect to continue forever, was in fact a
one-time-only event. First came the Great Inventions, almost all dating
from the late 19th century. Then came refinement and exploitation of
those inventions — a process that took time, and exerted its peak effect
on economic growth between 1920 and 1970. Everything since has at best
been a faint echo of that great wave, and Gordon doesn’t expect us ever
to see anything similar.
Is he right? My answer is a definite maybe. But whether or not you end
up agreeing with Gordon’s thesis, this is a book well worth reading — a
magisterial combination of deep technological history, vivid portraits
of daily life over the past six generations and careful economic
analysis. Non-economists may find some of the charts and tables heavy
going, but Gordon never loses sight of the real people and real lives
behind those charts. This book will challenge your views about the
future; it will definitely transform how you see the past.
Indeed, almost half the book is devoted to changes that took place
before World War II. Others have covered this ground — most notably
Daniel Boorstin in “The Americans: The Democratic Experience.” Even
knowing this literature, however, I was fascinated by Gordon’s account
of the changes wrought by his Great Inventions. As he says, “Except in
the rural South, daily life for every American changed beyond
recognition between 1870 and 1940.” Electric lights replaced candles and
whale oil, flush toilets replaced outhouses, cars and electric trains
replaced horses. (In the 1880s, parts of New York’s financial district
were seven feet deep in manure.)
Meanwhile, backbreaking toil both in the workplace and in the home was
for the most part replaced by far less onerous employment. This is a
point all too often missed by economists, who tend to think only about
how much purchasing power people have, not about what they have to do to
get it, and Gordon does an important service by reminding us that the
conditions under which men and women labor are as important as the
amount they get paid.
Aside from its being an interesting story, however, why is it important
to study this transformation? Mainly, Gordon suggests — although these
are my words, not his — to provide a baseline. What happened between
1870 and 1940, he argues, and I would agree, is what real transformation
looks like. Any claims about current progress need to be compared with
that baseline to see how they measure up.
And it’s hard not to agree with him that nothing that has happened since
is remotely comparable. Urban life in America on the eve of World War II
was already recognizably modern; you or I could walk into a 1940s
apartment, with its indoor plumbing, gas range, electric lights,
refrigerator and telephone, and we’d find it basically functional. We’d
be annoyed at the lack of television and Internet — but not horrified or
By contrast, urban Americans from 1940 walking into 1870-style
accommodations — which they could still do in the rural South — were
indeed horrified and disgusted. Life fundamentally improved between 1870
and 1940 in a way it hasn’t since.
Now, in 1940 many Americans were already living in what was recognizably
the modern world, but many others weren’t. What happened over the next
30 years was that the further maturing of the Great Inventions led to
rapidly rising incomes and a spread of that modern lifestyle to the
nation as a whole. But then everything slowed down. And Gordon argues
that the slowdown is likely to be permanent: The great age of progress
is behind us. But is Gordon just from the wrong generation, unable to
fully appreciate the wonders of the latest technology? I suspect that
things like social media make a bigger positive difference to people’s
lives than he acknowledges. But he makes two really good points that
throw quite a lot of cold water on the claims of techno-optimists.
First, he points out that genuinely major innovations normally bring
about big changes in business practices, in what workplaces look like
and how they function. And there were some changes along those lines
between the mid-1990s and the mid-2000s — but not much since, which is
evidence for Gordon’s claim that the main impact of the I.T. revolution
has already happened.
Second, one of the major arguments of techno-optimists is that official
measures of economic growth understate the real extent of progress,
because they don’t fully account for the benefits of truly new goods.
Gordon concedes this point, but notes that it was always thus — and that
the understatement of progress was probably bigger during the great
prewar transformation than it is today.
So what does this say about the future? Gordon suggests that the future
is all too likely to be marked by stagnant living standards for most
Americans, because the effects of slowing technological progress will be
reinforced by a set of “headwinds”: rising inequality, a plateau in
education levels, an aging population and more.
It’s a shocking prediction for a society whose self-image, arguably its
very identity, is bound up with the expectation of constant progress.
And you have to wonder about the social and political consequences of
another generation of stagnation or decline in working-class incomes.
Of course, Gordon could be wrong: Maybe we’re on the cusp of truly
transformative change, say from artificial intelligence or radical
progress in biology (which would bring their own risks). But he makes a
powerful case. Perhaps the future isn’t what it used to be.
Paul Krugman is a distinguished professor at the CUNY Graduate Center
and an Op-Ed columnist for The New York Times.
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