Science and technology are the greatest agents of collective human progress.

Surely, only a politician could think that:

A free-market economy, operating under the right rules and regulations, is the greatest agent of collective human progress ever created.

Or maybe a politician and an economist. For everyone else, a much stronger case can be made for mathematics and written language, or science and medicine, or the ability to cooperate rather than kill each other.

Even if we restrict ourselves to purely economic progress, still there is little evidence that the market is the thing. Economists know this but do not always say it. Prosperity roughly equals productivity and increasing productivity is the ability to do things faster. The thing that helps us do that is replacing human power (or horse power) with machine power which requires machines, and machines come from advances in science and technology.

For some history, have a look at this graph below of GDP per capita* in the UK over the last 300 years. [Data from BoE Three Centuries of Data (xls)]. Growth trundled along at 0.3% per annum until around 1830 and then took off. So what changed? Well, Stephenson’s rocket was built in the North East of England in 1829. The Liverpool and Manchester Railway opened in 1830. Suddenly people and goods could move around much faster increasing the velocity of trade. Railways needed coal and coal production also took off around 1830. After innovation comes the maniacal capitalists trying to profit from the new technology – railway mania in 1840s, or more recently the dot-com bubble or German Neuer Markt around 2000.

After railway mania, the next wave of new technology boom came with the automobile around 1910 but the associated growth boom was set back by the World Wars. Only after the end of World War II – with aeroplanes as well – did we see runaway growth. During this economic golden age between 1945 and 1975, GDP per capita in the UK  grew at an astonishing 2.7% per annum. But this rate could not be sustained and we are now back on the 1.4% trend dating back to the time of Robert Stephenson.

Now you could argue that technology needs free markets to flourish but the evidence is not there for this. In fact between 1920 and 1980 GDP per capita rose much faster in the `non-free’ Soviet Union (by a factor of 12, data from the Maddison project) than in the `free’ USA (a factor of 3.4), albeit the Soviet Union started from a much lower base. The Soviet Union also led on many new technologies including space , cryogenics, and lasers however, politics often got in the way of recognising the achievements of their scientists.

To sum up. The market is not the thing and never was. If you want to improve living standards you need to improve productivity – doing more with less. To do this, you should invest in the type of research and development that will lead to productivity gains. In this respect, the UK (with 1.7% of GDP invested in R&D) is currently lagging far behind innovative countries like South Korea at 4.1%! Not my field, but may I suggest that we could make a good start by ramping up on sustainable technologies that could both address climate change and lower energy costs, plus AI for care and healthcare.

* GDP per capita is a measure of economic progress but does not include other forms of progress like advances in medicine and education.

Comments

  1. Sean Danaher -

    It would be really nice to have even earlier data. I suspect a lot of growth in the 18th century was due to the building of the canal system in the UK.
    There is also a flat bit around 1800 probably due to the loss of the American Colonies in the earlier stage and the Napoleonic Wars.
    In general you are correct of course but in economic terms the invention of Fiat Currency must be up there.

    1. Charles Adams -

      Re: Fiat money. We had a gold standard during the economic golden age! Credit, may be? But I would say it is not really the system of money that matters – money is just accounting – what matters is what we do. We should never allow the tail to wag the dog. In this sense I am on side with Positive Money that we need better democratic control over money in the interests of everyone.

      1. Sean Danaher -

        Indeed Charles as a fellow Physicist I think that for prosperity Science and Technology is key; the UK has done really badly relatively since 1980. The economic system should be there to help people. A former colleague of mine used to say it made no sense that “bean counters earned more than those who grew the beans.” Just trying to answer what have economists ever done for us? But I thought the Keynesian approach vastly more credible than Neoliberalism.

        @Peter I am in despair over our PM, I thought Cameron was the worst PM easily in my lifetime, then May came along! I really struggle to say anything good. Its doubly scary as Brexit is the most complex task since the 2nd world war!

  2. Peter May -

    Agreed -Treeza’s speech was just rubbish. But if she is so deluded that she believes even half of what she says then that is probably why she doesn’t invest in science and seems unconcerned about the demise of EU funding.
    It is a despairing thought to think that she is Prime Minister.

  3. Geoff Moore -

    Surely electrification is the key 20thC productivity accelerator ?

    1. Charles Adams -

      Good point. I have tended to focus on transport as it is so important for primary industries such as extraction and agriculture, but clearly electricity played an important role in manufacturing including manufacturing primary materials.

      Another was of looking at it is that the first kink in the growth curve was coal and the second one was oil.

  4. Pingback: Charles Adams: Science and technology are the greatest agents of collective human progress. – Brave New Europe
  5. CharlesOJ -

    Could you post a link to the Soviet Union GDP per capita figures?

      1. Martin Sharp -

        Shouldn’t you really use all the data given in The Atlantic article and go from 1917 to 1991. Is it intentional to avoid the economic destruction of the Revolutionary period and the stagnation pf the1980s?

      2. Charles Adams -

        May be – then it is 6.4 vs. 4.4 and my main point – `free’ market is not a requisite for growth still holds. I am not advocating Soviet style policy. I like the regulated market economy but claiming it is greatest agent of collective human progress ever created is nonsense.

  6. David Wallace -

    I think you are possibly understating the economic performance of the USSR! The tens of millions of slaves in the labour camps had to be expensively transported and guarded, and prevented from using tools such as axes. They also had to slave in the back of beyond, far from the centres of the rest of the Soviet economy. And the death rate…That just shows how effective he rest of the economy must have been.

  7. Andrew -

    Looks to me like there is an uptick from about 1830 to about 1870, but then the trend returns to a lower level – perhaps 1% – until 1914. Then extraordinary growth after the Second World War more or less up to 2000. What next? Too early to say.

    Markets are at tool. We have had them for millennia. The important part of that quote is not the words “free” or “market”; it is the phrase “operating under the right rules and regulations”.

  8. Peter May -

    Quite, absolutely agree. That is why ‘socialism’ should not abhor markets – if it ever did? – but rather seek to impose the correct rules. That is key.

  9. Allen Bell -

    ‘albeit the Soviet Union started from a much lower base.’
    That’s an awfully big caveat.
    For the ‘progressive’ argument to advance you need to find a pair of countries that are starting from roughly the same place. The internet is full of analysis of country pairings, and not the obvious ones like North versus South Korea, or Chile versus Venezuela, but less obvious pairings like Cuba versus Hong Kong and Poland versus Ukraine which in the past 60 years have been equally wealthy at some point and have now diverged massively. Even Northern Ireland with its massive State sector versus the more free market Republic is a great pair to analyse.

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