Gabriel Söderberg, Ekonomisk-historiska institutionen

 Please interrupt for questions and comments!  Economic thinking relating to technology  Dominant theme: optimism versus pessimism

William Godwin Marquis de Condorcet

 Application of reason on the production process: ”A smaller portion of ground will then be made to produce a proportion of provisions of higher value or greater utility; a greater quantity of enjoyment will be produced with smaller expense of consumption; the same manufactured or artificial commodity will be produced at a smaller expense of raw materials, or will be stronger and more durable.”  Mankind heading for “a paradise that her reason has created for her”  – Condorcet, 1794

Thomas Malthus David Ricardo

 Humans must have food + food supply increases slowly + humans cannot control their reproduction = Population will grow faster than food supply  Increased food supply  increased population  return of misery  optimists are wrong  Constraining factor: agricultural technology

 Growth not possible in the long run – stationary state  Diminishing return of the soil  more expensive food  higher wages  less profits  less investments  end of growth  Two ways to counter this: technology and free trade - technology not to be trusted  freetrade as ideal partly explained by technology pessimism!!

Karl Marx,

 History is driven by the contradiction of technology and property rights  Technology is developed in a given social structure  technology advances beyond the constraints of society’s structure, the structure becomes obsolete and a hindrance for further development  society changes  The capitalist system is history’s most efficient driver of technological development  recurring crises  Socialism occurs after technology has made Capitalism obsolete

 The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam- navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization of rivers, whole populations conjured out of the ground – what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?.” – The Communist Manifesto1848  ”The production capacity that is at mankind’s disposal is unmeasurable, something infinite. The fertility of the Earth can through the application of capital, labor and science be extended into infinity.” – Engels attacking Malthus.

 The ”Neo-Classical Revolution”, analysis inspired by the mechanics of physics  Equilibrium central concept, advanced mathematical nomenclature  shift of focus from grand patterns of development to equilibrium on a given market  Many engineers involved

Joseph Schumpeter

 Technological development the driving force in economic growth: ”Creative Destruction”  ”the fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forces of industrial organization that capitalist enterprise creates” – Schumpeter 1942  Carried out by entrepreneurs  Critique against the Neoclassics: equilibrium analys fails to grasp the most important thing about economics

 Separation of micro and macro economics, growth falls under macro  Time of great optimism, reduction of inequality, increase in general welfare for the masses, large and stable economic growth  Technology and science widely accepted as the driving force

Simon Kuznets Robert Solow 1924-

 The reason for economic growth is:”…the vast increase in the stock of useful knowledge…the underlying capacity of the knowledge transmitted to control production processes, the emergence of experimental science and the empirical outlook which, building upon past attainments of mankind, provided the indispensible basis for modern economic growth” – Kuznets 1965

 The Solow model (1956): Y=A+K+L  A=Y-K-L  technological development is the thing left!  The most important factor, but is left unexplained in the model!  Technological development is taken for granted, ”a gift” from public funding of science

 The Rigoletti Conference 1955: politicians, representatives of business and science – the state important to support science and new technology  ” The transformation of society is still far from completed. Actually the greatest and most inspiring tasks in the strivings to ensure the social and cultural liberation of mankind remains...At the same time we approach a new technological transformation, that eventually will change totally the conditions of mankind. This transformation can give unimaginable opportunities for the building of a constructive society. The perspectives opened up by this are stimulating and suggestive to our imagination.” – Olof Palme 1956

 1970s: oil crisis, stagnant growth, ideological and theoretical shift  Crisis of values: growth questioned, environmental movement skeptical about eternal growth

 Club of Rome founded 1968  ”Limits to Growth” (1972) – population growth and consumption needs to be reduced; sells in 12 million copies, in 30 languages  Solow’s Criticism: ” "The authors load their case by letting some things grow exponentially and others not. Population, capital and pollution grow exponentially in all models, but technologies for expanding resources and controlling pollution are permitted to grow, if at all, only in discrete increments."

 Increased interest in the roots of growth – how is ”the right” technology, ”the right” knowledge created?  Endogenous growth theories  The innovation school becomes stronger, embraced by national governments and OECD

 ”VINNOVA, Verket för innovationssystem, is a government organization with the purpose to increase growth and wealth in the entire nation.”  2 billion kr in budget, 200 employees  ”Our special area of responsibility is innovations connectd to research and development – that is original, successful products, services or processes with a scientific basis.”  ”Entrepreneurship is a dynamic and social process, where individuals…identifies possibilities and do something with them in order to reshape ideas to practical and goal-oriented activities in social, cultural or economical contexts. "- Vinnova  ”…do something with them…”????