Economic historian Joel Mokyr is convinced the world is not facing a lengthy period of economic misery for the same reason that has driven economic growth for the past two centuries: technological progress.Getty Images/iStockphoto
Plenty of economists look to the past to guide their assessments of the future, which these days tend to be coloured in dark hues of chronically slow growth, weak demand, stagnant incomes, rising inequality, falling productivity and worsening trade and currency friction.
Don't count economic historian Joel Mokyr among them.
"I firmly believe that the world we're living in today is nothing like the world that people lived in in the past," the Northwestern University professor said.
And he is convinced the world is not facing a lengthy period of economic misery for the same reason that has driven economic growth for the past two centuries: technological progress.
"We can do things now that we couldn't do 20 years ago," Prof. Mokyr said during a visit to Toronto on Friday, where he spoke about the impact of globalization on innovation at a breakfast arranged by the Canadian Institute for Advanced Research.
His conclusion? It's positive because the world has become ever more competitive. Which means that if you don't develop and rapidly deploy some new technology, someone else will.
"It's not that globalization means that everybody's the same. The world has congealed into these larger groups: the EU, North America, Russia, China. And they compete with each other fiercely," Prof. Mokyr said.
Prof. Mokyr, 69, is perhaps best known these days for his public feud with long-time faculty colleague Robert Gordon, 75, an influential exponent of the idea that the great age of innovation, productivity growth and economic expansion is over.
Prof. Gordon, a macroeconomist, has marshalled impressive research to back his contention. But Prof. Mokyr argues that data aren't everything.
Globally, "the numbers may not reflect that people are better off because they now have access to tools that make their lives better," Prof. Mokyr told me. "They cost so little that they don't show up in GDP statistics. That's quite a serious dilemma for economists."
He also aims to counter negative views on the outlook for productivity. Growth, he insists, will be much more than just the incremental increases forecast by some people. "Standard measures of productivity are really good at measuring what we call process innovation," such as steel making.
Produce the same amount of steel with less capital and labour, and you can chalk it up in the productivity-win column.
But what if someone improves a material without raising the price, or designs an entirely new one such as graphene, which has stormed into the market? "How would you measure that in your productivity statistics? That's actually turned out to be extremely hard to do and in most cases impossible."
Prof. Mokyr, who is an unpaid adviser to CIFAR, isn't all about optimism. He does acknowledge that politicians, for example, could always derail progress.
"Our capability of controlling nature and doing things with it is getting better all the time. But it may create a gigantic disequilibrium between the political and social institutions that control the capability of this technology to affect our lives," he said.
And like nuclear power, any technological development could be used for good or ill or both.
"So in that sense, I'm not sure if I'm an optimist or a pessimist. Things could go really well or they could go really badly."
Still, he seems to prefer the sunnier side of the economic street.
Prof. Gordon, author of The Rise and Fall of American Growth, one of the year's hottest economic tomes, has argued that the low-hanging fruit of technological transformation has already been picked. Prof. Mokyr, whose next book, A Culture of Growth, is scheduled to be published in the fall, counters that there's a solution to that: Get a taller ladder.