Is there a technological fix for the current global stagnation?

Abstract

Daniele Archibugi asks whether the 2007–8 financial and economic crisis was brought about by the exhaustion of the current techno-economic paradigm, and whether a new paradigm will lead to eventual recovery. My answer to both questions is ‘No’. Whilst it is useful to think in terms of techno-economic paradigms to understand the uneven process of technological and social advancement, the main reason for the crisis and the main requirement for a new upswing are both socio-political rather than technological in nature. There is a link between the neoliberal deregulation regime that led to the crisis and ICTs. This regime might actually slow down the formation of a new techno-economic paradigm based around Blade Runner technologies such as genetic engineering, artificial intelligence and nanotechnology.

Introduction

The Research Policy editors should be congratulated for introducing this new format where scholars are invited to stimulate and take part in a debate. It is an excellent idea to provide space for reflections that cannot be satisfactorily presented in a standard journal article. The current system of counting publications and citations as basis for getting tenure and allocating budgets is somewhat akin to the Soviet System of measuring output in terms of weight, and one with equally negative consequences – in the former case you get really heavy products, while in the latter you get too many standard papers meticulously analyzing relatively trivial issues.

The issues raised by Daniele Archibugi (DA) are certainly important: are the current stagnation and the 2008 crisis a reflection of the fact that the technological foundation of a long economic upswing has now been exhausted? Are there newly emerging technologies that will form the basis for a radically different techno-economic paradigm and will those lead the next recovery? If so, will they be dominated by biotechnology or are there other candidates as pervasive general purpose technologies that will drive growth?

I share Archibugi’s view that it is useful to think of economic history in terms of techno-economic paradigms. But I disagree regarding the main cause of the 2008 crisis and its possible remedy. The crisis did not reflect that the exhaustion of technological opportunities, and new technologies will not lead the next recovery. Rather the 2008 crisis reflected a combination of dubious politics and fundamental inherent contradictions in the current globalizing form of capitalism. If those contradictions are not resolved, there are no general purpose technologies, however radical, that can break the current stagnation. I will also argue that information and communication technologies played a role in the crisis but only in an indirect manner.

In his paper, DA refers to Perez (2013) and Mokyr (2013) as arguing that there is still potential for job creation based upon new technologies “provided that the social and economic systems allow for their introduction and diffusion”. My main point is that this precondition is more difficult to overcome than indicated in the discussion paper. The current socio-political paradigm is incompatible with a new techno-economic paradigm that may eventually coalesce from today’s emerging technologies. The most critical issues have to do with the contradiction between neoliberal national political governance, on the one hand, and financialization and economic globalization, on the other hand.

Moreover, even if a social transformation took place that allowed for the introduction and diffusion of emerging new technologies, economic growth and job creation would depend more on the generalized use of existing technologies in ‘the rest of the world’ (Latin America, Africa, China, India and Indonesia) than on the application and wider use of the brand-new technologies in the OECD-area. It is surprising that DA who is a world-leading expert on globalization including working on global citizenship, does not have more to say on the importance of location. It stands in contrast to the insights offered in contributions to the excellent handbook he recently co-edited (Archibugi and Filippetti, 2015).

DA reflects on how his children and grandchildren will experience the advent of new technologies. I agree with him that there is no reason to doubt that future generations will be confronted with fancy and unforeseeable new phenomena reflecting technological change. But there are reasons related to societal risk and acceptability for believing the Blade Runner technologies that DA presents as primary candidates for forming the technological basis of the future long upswing might not become as all-pervasive as he assumes.

My conclusion is that politics and new forms of governance will matter more than the economy and technology for the eventual upswing and sustained economic growth – a conclusion that might seem inappropriate and even surprising from someone with a life-long career as an expert on the economics of innovation.