GRADUAL REVOLUTIONS
For a Liberty Fund conference on the economics of knowledge, I've been rereading Joel Mokyr's Gifts of Athena, about which I wrote a Times column. It's a brilliant book, full of important insights and distinctions. Here's a selection, from a chapter titled "The Industrial Revolution and Beyond":
Terms like "revolution" tend to be overused and abused by historians. They draw attention. They sell books. But do they have historical content? In economic history especially, melodramatic terms have a bad name, because the field tends to be relatively undramatic. Most of the elements that drive modern economic growth work gradually, slowly, and almost imperceptibly: the dissemination of technological ideas, the accumulation of capital, even the changes in economic institutions were rarely very spectacular. Whenever a genuinely dramatic general-purpose invention occurred, its impact on the productivity of the economy as a whole took many years to be felt. The first Industrial Revolution used to be regarded as the watershed event in the economic history of mankind since the invention of agriculture and has often been mentioned in one breath with the dream-laden contemporaneous French Revolution. It has now been shown to have had only modest effects on economic growth before 1815 and practically none on real wages and living standards before 1840, more than a century after the appearance of the first steam engine. The second Industrial Revolution, similarly, was slow in manifesting its full impact on the economies in question and took much of the twentieth century to work out its effects fully. The paragon of the putative third Industrial Revolution, the computer, has still apparently not wholly lived up to the hopes and expectations regarding productivity and output.
Few scholars nowadays think of the Industrial Revolution as a series of events that abruptly and significantly raised the rate of sustained economic growth. Most of the effects on income per capita or economic welfare were slow in coming and spread out over long periods. All the same, even though the dynamic relation between technological progress and per capita growth is hard to pin down and measure, it is the central feature of modern economic history. We are uncertain how to identify the technology-driven component of growth, but we can be reasonably sure that the unprecedented (and to a large extent unmeasured) growth in income in the twentieth century would not have taken place without technological changes. It seems therefore more useful to measure "industrial revolutions" against the technological capabilities of a society based on the knowledge it possesses and the institutional rules by which its economy operates. These technological capabilities must include the potential to produce more goods and services, but they could equally affect aspects that are poorly measured by our standard measures of economic performance, such as the ability to prevent disease, to educate the young, to move and process information, and to coordinate production in large units. By those standards, it is hard to deny that the 1990s witnessed an industrial revolution, but we need to assess it in terms of those capabilities, with the macroeconomic consequences following eventually but often much later.
Update: Thanks to David Young, who helped proof TSOS, for correcting my typos. If you're in need of a professional copy editor/proofreader, I recommend him. (Email me for contact info.)