You can see the computer age everywhere but in the productivity statistics.Nobel Prize in Economics winner Robert Solow, in 1987 (quoted everywhere but it’s hard to find an exact source)
You can download the original paper as a .pdf here.
The “Productivity Paradox” – also referred to as the Solow Paradox – refers to the fact that boom times for new general purpose technologies don’t immediately translate into increased productivity and wealth. The history of previous GPTs helps us to understand why.
In his 1989 paper Computer and Dynamo: The Modern Productivity Paradox in a Not-Too Distant Mirror, Paul A. David drew comparisons between the slow but evolving impact of electrification on industry and domestic life at the turn of the 20th century with the (then) little felt impact of computerisation in the 1970s and 1980s. It’s a really good read – well-written, rich in historical references and data, and thought-provoking throughout. Here’s a long highlight.
My purpose in this essay is to show modern economists, and others who find themselves perplexed by the contemporary conjuncture of rapid technological innovation and disappointingly slow gains in measured productivity, the direct relevance to their interests of historical studies of the evolution of techno-economic regimes formed around “general purpose engines”. To do this I have drawn an explicit parallel between two such “engines” – the computer and the dynamo.
Although the analogy between information technology and electrical technology has many limitations when literally interpreted, the features of commonality that can be seen in the dynamics of their pervasive diffusion, their incremental improvement, and their confluence with other complementary technologies, are quite instructive nonetheless. They may provide some needed guidance as to the appropriate time-frame for us to keep in mind when discussing future developments in information technologies and their likely long-run impacts on living standards and on economic and social organization in the industrialized nations. They also may provide a context in which some aspects of the current condition referred to as the “productivity paradox” are less surprising, and more readily understood.
Just about 90 years ago [from 1989] (and not far from O.E.C.D.’s headquarters in the Chateau de Muette), a visitor to Paris might descend from the Palais du Trocadero to the river–through the hilly park dotted with the exotic
pavilions of Indo-China, Cambodia, Senegal, Tunisia and Algeria, and proceed via the Pont d’Iena to the Seine’s left bank. There, in the Champ de Mars, he (or she) would come upon the vast iron and glass halls containing the main exhibits of technology at the 1900 Paris Exposition… the first to exhibit a large number of bicycles and automobiles (the French automobile industry being very advanced at the time), and featured other technical innovations such as the first demonstration of X-rays, of “wireless telegraphy”, and sound synchronized with movies. Nevertheless, commentators of the day remarked that in comparison with previous international fairs it offered few startling scientific discoveries or technological breakthroughs.
Instead, what the 1900 Expositic appeared to contemporaries to reveal more clearly than anything else in this respect was the fulfillment of promises held out by earlier inventions; the power of modern technology, particularly the electrical technology first introduced at the Paris 1881 Exposition, to effect striking transformations in the material conditions of life for urban dwellers. This was evident not only inside the Palais de Electricity but outside as well. Although Europeans already knew of electric lighting for decades, never before Paris 1900 had it been used to illuminate a whole city–in such a way that outdoor festivals could continue into the night. It was evident too in the vastly larger, and more efficient machines that were crammed into the largest of those exhibition halls–the Gallerie des Machines. A modern historian of Paris 1900 has written of the impact made by the new, immense dynamos exhibited by Germany, as well as of the railway engines, blast furnaces, cranes, and tractors that were, likewise, larger, faster, cheaper, and incredibly more efficient than their predecessors…:
“In a march of material progress that shocked some observers, new machines rendered outmoded and, as if by magic transformed into junk those that were the ultimates in efficiency just a few years earlier.”
Among the contemporary visitors drawn to the 1900 Exposition, and one who was particularly obsessed with the contents of the Gallerie des Machines, there was the brooding American historian-philosopher, Henry Adams, then in his sixtieth year. This erudite descendant of two American presidents described himself as having haunted the exhibits of electrical machinery, relating, in a letter written some months later to his friend John Hay, how he would “…sit by the hour over the great dynamos, watching them run noiselessly and smoothly as planets and asking them–with infinite courtesy–where the Hell they are going. …”
Having marked 1900 as the dawning of the epoch of the dynamo as cultural and psychological force in human affairs, Adams brooded about the fate of the civilization now that its former energizing symbols–those of the Cross, and of the image of the Virgin Mary, whose force might still be felt at a few, confined places such as Lourdes and Chartres–had thus been suddenly supplanted by this new and utterly materialist sign of boundless power.
Whatever one might say about such metaphysical speculations, it is hard to withhold from Adams credit for appreciating in 1900 that the world was just entering a new technological era, for seeing the dynamo’s significance as a portent of things yet to come, rather than as epitomizing what had been accomplished by human ingenuity and enterprise.
The technological regime that eventually would be built up around the core innovation of the electric dynamo had remained in an essentially inchoate, pre-paradigm phase from 1870 to about 1893–that is to say, from the introduction of Gramme’s ring winding for direct current dynamos to the decision to implement an alternating current generation and distribution network for the Niagara project in the U.S. Only thereafter had its developmental trajectory become defined, as the technology for electricity generation and transmission passed quickly through a phase of “paradigm emergence” during the period 1893-1907.
Thus, a visitor who was dazzled by the display of electric lighting that brightened the Paris nights during the 1900 Exhibition, and overwhelmed by the enormous dynamos massed on the Champ de Mars, could be excused for going away impressed simply with the marvelous feats of engineering that already had been accomplished. Paris 1900 may have seemed to many contemporaries the fulfillment of what had been promised two decades before by the inventive breakthroughs achieved by Edison and others, in the generation of electricity and its application to lighting.
But, in actuality, at the dawning of the twentieth century the new techno-economic regime was just taking shape clearly in America and Germany: the universal electricity supply utility, a system based upon the generation of alternating current in massive central power stations, for distribution via a transmission network extended across a wide geographic area to residential and business customers who would use it not only for lighting, but also for traction work in the form of electric street-cars and railways, and myriad industrial applications ranging from power to drive machinery to electrolysis. At the time, this still was both a relatively novel an engineering concept and a bold, innovative strategy for expanding the field of electrical utility enterprise. Engineers and entrepreneurs with vision looked forward to the profound transformations that electrification would bring to factories, stores and homes as the new technology formed complementary modules with, and stimulated the further development of recent communications technology innovations–such as the telephone, radio, the phonograph, and sound-synchronized movies.
It may provide a helpful perspective on our present technological situation to notice that a visitor to Paris 1900, surrounded as he or she would then have been by the evidence of the international scope of the already existing electrical manufacturing industry that filled many of the foreign exhibitor’s halls in the Champ de Mars, was situated about as far distant in time from the introduction of the carbon filament incandescent lamp by Edison, and Swann (1879), and of the Edison central generating station in New York and London (1881), as today [in 1989] we stand from comparable “breakthrough” events in the computer revolution: the introduction of the 1,043 byte memory chip (1969) and the silicon microprocessor (1970) by Intel… In announcing 1900 as end of the epoch of the Virgin and the beginning of the reign of the dynamo, Henry Adams himself remarked that the dynamos were not a novelty, but rather were among the most familiar objects–which they were to someone who had been attending international expositions since 1881.
Had he been less the brooding philosopher, however, Adams presumably would not have dwelt so on symbolic meanings, and future portents. He would have been more concerned to identify and gauge what impact electricity technology already had made in the material sphere. Indeed, had Henry Adams had the interests and wit of an economist of Nobel Laureate stature–such as Robert Solow–he might well have been better remembered today, not for the juxtaposing the great images of the dynamo and the Virgin, but, instead, for anticipating Solow with the quip: “We see the dynamos everywhere but in the economic statistics.”Paul A. David – Computer and Dynamo: The Modern Productivity Paradox in a Not-Too Distant Mirror (1989)