[Marxism] Paul Krugman Reviews ‘The Rise and Fall of American Growth’ by Robert J. Gordon

Louis Proyect lnp3 at panix.com
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. 

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.

More information about the Marxism mailing list