“Inventions reached their limit long ago, and I see no hope for further development.”
– Julius Frontinus, 1st Century AD
Humanity has reached a “technological plateau”. So say the so-called “end of innovation” theorists – a small but increasingly vocal group of economists heralding an era of technological and economic stagnation. In the words of Tyler Cowen, a leading proponent, there are “no more low-hanging fruit” – all the good inventions (or at least the easy ones) have already been invented. This view is shared by Robert Gordon, another key theorist, who argues that there are only a handful of truly fundamental innovations – electrification, transportation, communication – and that most of these have already happened. "There will be more innovation”, he predicts, “but it will not change the way the world works in the way electricity, internal-combustion engines, plumbing, petrochemicals and the telephone have."[1]
Gordon cites the example of human mobility. In the year 1900, the quickest way to move people and goods was by horse and cart. There was no heating or air-conditioning, and certainly no USB charger. A horse and cart travels at one per cent of the speed of sound. Fast-forward 60 years, and we have the Boeing 707, which travels at 80 per cent of the speed of sound. Fast-forward another 60 years, and we’re still travelling at the same speed. A similar “plateauing” is observable in electrification, car ownership and central heating, all of which, Gordon notes, “went from zero to 100 per cent” [in the US] in a few short decades. These innovations spurred massive growth, but their reach is now absolute, and hence their influence is waning. The IT revolution, he argues, cannot match the impact of these earlier innovations in terms of growth in productivity, and thus living standards.
Yet the “end of innovation” is not a universally accepted theory, even among economists. The McKinsey Global Institute, one of the world’s leading private-sector think tanks, recently published a 152-page report titled “Disruptive technologies: Advances that will transform life, business, and the global economy”, which identified 12 emerging technologies with “the potential to truly reshape the world”.[2] These include mobile internet, autonomous vehicles, cloud technology and the Internet of Things. In contrast to Gordon’s bleak projection, the report posits a direct correlation between future innovation and growth. For example, emerging energy technologies, such as improved energy storage and renewable energy, could boost overall economic growth, while others, such as advanced robotics and 3D printing, could bolster productivity and growth within the manufacturing sector. As noted by the Forbes technology journalist Gil Press, “what is interesting…about this list of disruptive technologies is how most of them are derived from a single disruption or revolution, that of information technology”.[3] Crucially, Press argues, information technology is radically different from the “fundamental innovations” that preceded it: whereas electricity, steam trains and the like have a narrow, specific purpose, information technology has limitless applications. IT is not a single innovation, then, but a whole new way of innovating.
“The only function of economic forecasting is to make astrology look respectable.”
– John Kenneth Galbraith.
So what should we make of the “end of innovation”? It is the wont of economists to predict the future, yet predicting innovation may be beyond even them. In the words of Ben Bernanke, Chairman of the US Federal Reserve Board, “innovation, almost by definition, involves ideas that no one has yet had, which means that forecasts of future technological change can be, and often are, wildly wrong.” We will continue to innovate, he predicts, just as we’ll continue to forecast the end of innovation.[4]
[1] https://www.economist.com/briefing/2013/01/12/has-the-ideas-machine-broken-down
[2] https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/disruptive-technologies
[3] https://www.forbes.com/sites/gilpress/2013/06/15/the-end-of-innovation-crowd-doesnt-get-it/?sh=2003225840c0
[4] https://www.federalreserve.gov/newsevents/speech/bernanke20130518a.htm