That's a tiny article, but it does contain an interesting passage: "for having identified the prerequisites for sustained growth through technological progress" which is the core of the reason the prize was awarded. I find it interesting to see technological progress so tightly coupled to sustained growth and I wonder if the implication is that growth will stop when technological progress stagnates. Is there any proof to that effect?
There is two contributors to growth: increase in population, and productivity gains. If tech adoption slows down and population slows down, we go back to the historical norm of no economic growth.
Productivity gains don't only come from technological progress. Accumulation of capital, such as infrastructure, education, access to healthcare etc, also increase productivity.
Claiming "access to healthcare" is capital is a novel idea. It's a social infrastructure. It doesn't directly lead to production, any more than lunch breaks do.
Capital is not simply "anything that I can tie to improving my work output".
If you view the humans actually producing stuff as human capital, which many economists have done, then keeping that (human) capital in decent enough form by allowing it to have access to decent enough healthcare is a logical step forward.
We could then go a step or two forward and posit that a sick populace means a sick consumer class means reduced demand for goods that generate growth, but those are just details.
Gary Becker famously did, a fellow Nobel laureate. Granted, I haven’t kept pace with the latest in economics, it could be that is has become all mathematicised by this point, which is par for the course for this dismal science.
Of course I agree with this, but without technological progress this "saturates" rapidly. Only long-term durable productivity growth per unit of labor comes from technology - i.e. better ways of doing stuff.
A somewhat unfair characterization of the historical norm. Before the Italian Renaissance, history was marked by periods of growth interleaved with periods of decline, in many cases because a societal crisis caused a destructive regime to take hold. For example, the Mongol conquests installed an extractive regime that was soon replaced by the ultraconservative Ming dynasty, which resulted in China's progress stalling for some four centuries.
From an economist's perspective, energy is not typically recognised as a critical quantity. In so far as it is considered, it's thought of as an incidental property of some good or service being traded like oil or electricity.
But technological progress can be understood as successively more sophisticated ways of capturing and directing energy from natural processes. Economic growth has always occurred downstream of technologies that extract more energy or increase efficiency. Sheep, horses, windmills, coal, oil, nuclear ... etc.
Metrics like kWh per capita might become more interesting as the understanding of energy/growth matures. Or externally added energy (by electricity, oil, and fertiliser) per calorie of food.
To achieve growth while also reducing energy use, efficiency must be increased proportionately through technology. Electrification of transport (bc low thermodynamic efficiency of combustion engines) is an example of how we are doing this.
So even if technology continues to develop, unless efficiency grows faster than energy sources wane, there will only be economic degrowth.
There’s also almost the entire economics-related work of Nicholas Georgescu-Roegen. From his Wikipedia page:
> He is best known today for his 1971 magnum opus The Entropy Law and the Economic Process, in which he argued that all natural resources are irreversibly degraded when put to use in economic activity. A progenitor and a paradigm founder in economics, Georgescu-Roegen's work was decisive for the establishing of ecological economics as an independent academic sub-discipline in economics.
> To achieve growth while also reducing energy use, efficiency must be increased proportionately through technology.
And that's something which happens thousands of times per day all over the world in different businesses and in almost all human endeavour. We're constantly getting more and more utility out of the material and energy we use. So growth is both using more resources, as well as using them in better ways.
For reducing energy use, social values matter at least as much as technology. Imagine if we had no better technology - but most people drove small cars instead of large SUV's and trucks, and jet plane trips were not routine for hundreds of millions of people.
Feel free to live in a modest-sized, well-insulated version of the https://en.wikipedia.org/wiki/The_Breakers with a live-in domestic staff serving your meals on solid gold plates.
Or is your definition of luxury "performative wasting of energy"? If so, the lower the tech that you have access to, the better for the rest of humanity. :(
> the lower the tech that you have access to, the better for the rest of humanity.
Back in the early 2000's when I saw Pres. Bush on the TV, he would say something like, "... and they hate our way of life" and I assumed that had to do with our secular way of having different religions around or something.
As I get older, I realize that he was talking about the above quote.
Isn't that almost a tautology? Technological progress is often defined as something that increases efficiency. It would be shocking if they weren't connected.
The world/universe doesnt last forever either. That does not say much. Unless you have reason to believe technilogical innovation will end in a foreseeable future, growth will not be expected to end in that timeline
> Technology advances rapidly and affects us all, with new products and production methods replacing old ones in a never-ending cycle. This is the basis for sustained economic growth, which results in a better standard of living, health and quality of life for people around the globe.
> However, this was not always the case. Quite the opposite – stagnation was the norm throughout most of human history. Despite important discoveries now and again, which sometimes led to improved living conditions and higher incomes, growth always eventually levelled off.
We know this to be false given the number of civilisations that depleted their soil due because they didn’t know (or care) about crop rotation. Stable-state economies which nevertheless collapsed because they missed a key technology.
> Innovation is such that efficiency increase requires fewer resources and land.
...to produce the same output. Growth requires greater output though.
Just look at the timeline of energy consumption [0]. Either you're wrong and innovation requires more resources, or you're right and there's no direct relation between innovation and overall resource usage.
The metric you’re looking for is energy intensity of GDP [1]. How much energy does each unit of GDP cost. It’s been going down, and it’s lower in rich countries than less developed ones. (Its material counterpart is material intensity of GDP.)
I'm not sure that's what I was looking for though. That's unit consumption per GDP, so it may look stable or even declining regardless of actual consumption of resources.
In a way, it indicates the potential for a more sustainable living but unless it goes down by greater amounts than GDP growth, it's still net positive environmental damage.
> unless it goes down by greater amounts than GDP growth, it's still net positive environmental damage
Sure. Link in population and living standards and you start to get a toy model that dispels the notion that all growth must be about consumption. (A palette of iPhones represents growth from mainframes of equal mass and energy consumption.)
> Technology advances rapidly and affects us all, with new products and production methods replacing old ones in a never-ending cycle. This is the basis for sustained economic growth
since the end of the 19th century...
Am I missing something?
How can they assert that the current trajectory of economic growth won't end in stagnation, like every other growth spurt throughout history?
Sure, the economic growth of the last 150 years is unprecedented in history. But so was the second most significant period of economic growth before it stagnated.
This is a persistent mythology of western economic history to "cleanwash" the past and "explain" the present inequality (or what was the present until recently)
Think about the components of all those innovations from the past and if they would have been possible (to scale) without violent and forcible extraction of resources from around the globe, incl forced labor.
Think about when GDP was constructed and how, and from which point stuff got counted into it (ie from which point in the production chain it added to a country´s gdp). If you take raw materials X and Y from somewhere, by force and for cheap, then make sth like a out of it and only count that topline, now you have a big gdp, congrats.
Eg even the "US" was not even "settled" (forcible land expansion) until the late 19th or early 20th century. So you have a steady influx of cheap/free land to support a growing population that keeps adding to the "gdp". Lo and behold, soon after this dynamic stopped, financial bubble and bust ensues.
The main lesson for me is that progress and growth are completely separate things/concepts. You can absolutely progress without "growing" (bloating) your gdp, if you change some things. You can absolutely regress while "growing" (bloating) your gdp. Look at "US" today.
Chicken are coming home to roost. This is why first instinct of Trump and his cohorts is now to expand again "US" borders. Go back to extraction to "grow", since they are institutionally and mentally incapable of progress without extraction. More importantly, without "growth" the system as it is will collapse. It behaves like a cancer that has close to killed its host. It´s over, and anyone who can see knows it on some level.
The west didn't get rich from colonizing the world.
It got rich domestically through industrialism. Then the newly rich countries went on to colonize the world, because now they could. If and how much the colonies made them even richer is debatable, but it was probably a net cost on average.
This is one of several insights counter to "common sense" that economists have figured out.
> If and how much the colonies made them even richer is debatable, but it was probably a net cost on average. This is one of several insights counter to "common sense" that economists have figured out.
I haven't heard this before, do you have sources where I could learn more?
Acemoglu has argued that colonialism helped develop European economies:
"Our hypothesis is that Atlantic trade—the
opening of the sea routes to the New World,
Africa, and Asia and the building of colonial
empires—contributed to the process of West
European growth between 1500 and 1850, not
only through direct economic effects, but also
indirectly by inducing fundamental institutional
change."
Aren't natural resources wealth? Isn't forced work wealth? "Stealing" seems like the best word to describe the situation without obfuscating the matter with grander narratives (the kind that might win you the "Nobel prize" for economy, incidentally).
You're implying that the colonial powers got rich by taking natural resources from Africa and forcing Africans to work without pay.
Since you don't offer any evidence for this scenario, I can't really refute it :)
But note that 90% of Africa didn't even get colonized before 1884. That was over a century into the Industrial Revolution era, during which Western Europe had roughly doubled it's population and tripled their GDP.
You could also see it as a double condemnation of colonialism - not just immoral, but an economically useless endeavor.
Looking to the future, I'd prefer colonialism not be considered a lucrative strategy (though the thesis doesn't deny that colonialism was profitable for specific interest groups - just that those groups were a small part of the newly industrializing economies, and that the nation-level balance sheet gained little from their pillaging, compared to the costs of empire-maintenance).
On the one hand my common sense wants to say of course, the more you transform a natural resource into something complex and desirable, the more value you create so yes all this wealth is the product of industrialism but on the other hand... all those natural resources had to come from somewhere no ? It would seem to me that colonialism was an essential part in this wealth creation even if the whole enterprise of getting your hands on those resources were in themselves a net cost
Natural resources are much less important for prosperity than people think.
I won't write an essay about it, but note that (1) Russia and Africa both have enormous natural resources and are very poor, and (2) Hong Kong and Singapore have no natural resources and are very rich.
Let me just add that the colonizing of the Americas in the 1500s was of course unrelated to industrialism emerging centuries later. Much of that was an accident of immunology.
Note that industrialized countries without colonial empires ended up at least as rich as the big European colonial powers.
May be progress is as simple as making energy very cheap, ensuring a diverse manufacturing capability with most efficient methods while making sure 1 or 2 inputs do not bottleneck you.
Larger and bigger powers can control different parts of 'supply chain' (for lack of a better word) and make it difficult to progress without them getting a royalty. In their minds they are justified as they made progress first and others are simply copying their IP
> Think about the components of all those innovations from the past and if they would have been possible (to scale) without violent and forcible extraction of resources from around the globe, incl forced labor.
This is just silly. Everywhere had forced labour, but didn't manage to build what the west did. The African slavers selling their fellow continent-dwellers didn't somehow manage to pick all the people who could build the most advanced things in the world at the time.
Oxford University was founded in 1096, long before what you're describing. This is very strong evidence that the UK has a thousand years of excellent investment in education, which much better explains all the advantages that built its empire, the good bits and bad. Its advances are in part due to the Roman colonisation, which allowed Britain to rediscover things that much more advanced civilisation had discovered 1000 years prior to that founding, and then push on to far greater heights.
There are entire countries that still wouldn't have universities today if left to their own devices. But they would still have slaves, because western powers wouldn't have ended this practice, either through Christianity or, if that didn't work, by force.
Other civilizations had great academic and scientific revolutions, much before Oxfordians did anything of note. Just look at the history of Indian, Chinese, Persian, and Arabic mathematics for a simple example, or Indian linguistic inquiry for another.
The romans did not discover anything the celts had built in the british isles; they largely existed in opposition to them.
> Other civilizations had great academic and scientific revolutions
I didn't say they didn't. The ancient Egyptians built the Pyramids, too. But that doesn't mean Egypt sustained that advantage and developed leading-edge science, values, and technology to the present day. They had a brief moment, and they are today in some ways a very cool country, but, as with most countries, they measure progress as "how far along the tech and culture trees we are compared to the West".
> The romans did not discover anything the celts had built in the british isles; they largely existed in opposition to them.
Maybe you should read my comment again tomorrow, with a clearer head.
