There seems to be a pervasive belief that technological advances are the key to economic growth. Moreover, many people even believe that the creation of some new wondrous technology might be all that is needed to “save” the economy from the current downturn, and set the world back on a path of perpetual growth.
On the face of it, I find it hard to think this blind faith in the ability of technology to drive economic growth is well placed. There have been massive technological leaps in the past (e.g. railroads, telegraph, telephone, automobiles), yet they didn’t stop the business cycle or prevent depressions, so why should some new-fangled internet, or computer, technologies prove to be a wonder cure for all that ails the economy?
Does anyone know of any thinking that has been done on this subject?
Rothbard has written about this. I’d say technology is required but to say it drives economic growth or that technology alone is sufficient misses the point. At any point in time the technology available is far superior to that in use. Without capital, technology is useless as there is no way to implement it.
The right technology drives economic growth, but economic growth drives technology. They go hand in hand. Technology is really just efficiency.
I would argue government funded technology advancements reduce the economy, since resources are being wasted on political investments, not being used on market investments.
Values drive goals, goals drive necessities and wants, and necessities and wants drive innovation (and thus invention).
edit But that in itself doesn’t entail economic growth. I doubt all the latest gadgets for wanking off will send anyone to the Moon or make permanent wealth that will grow the economy as a whole (or subsection of wanking off gadgets industry).
Technology comes before, but is useless without the required capital. Robinson Crusoe may well have an idea as to how he can use a stick to gather more berries but without that stick he can’t use the technology.
Technology, ideas, recipes, are not capital goods, because they are not goods, nor are they capital because capital refers either to capital goods, or the monetary value of capital goods, or money slated for investment (money capital).
According to Menger’s definition of a good they are… Why do people buy recipe books? It’s not the book they’re interested in - it’s the ideas. The idea (a recipe in this case) is capable of satisfying a human need, when used in combination with other higher order goods (such as human labor, flour, milk and eggs). So ideas (technology) according to Menger would be higher order goods.
Perhaps this is a bit of a tricky question though since ideas actually form part of Menger’s description of a good in the first place (i.e. the knowledge of the causal connections that enable something to be transformed such that it might satisfy a human need). None the less, I’m still holding to the above paragraph, which is that technology is a good.
That only says that technology is not an economic good - it doesn’t say that it’s not a good (this being the difference between economic goods and other goods).
