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The
good news is that at least one economist predicts
another decade or two of solid growth with
technology-driven economies, such as that now
advancing in Virginia, in the lead. The better
news, except for neo-Calvinists, is that there
could be more rewarding work ahead and less of it,
thereby making possible a better balance between
work, leisure, family and civic action. Such are
the conclusions of Robert D. Atkinson in his new
book, The Past and Future of America’s
Economy: Long Waves of Innovation That Power
Cycles of Growth (2004, Edward Elgar
Publishing).
As the Vice President and Director, Technology
and New Economy Project, at the Progressive Policy
Institute in Washington, D.C., Dr. Atkinson has
spent more than a decade attempting to find better
explanations as to why the U.S. economy has worked
the way it has, particularly over the last 150
years. Traditional theories of the business cycle
offered him incomplete explanations, as did policy
strategies, such as John Maynard Keynes’
prescription to use government tax and fiscal
policies to smooth out those cycles. Prices and
interest rates turn out not to explain much at
all, for example, about the slow growth between
the mid-1970s and mid-1990s. And then there are
the questions about whether the
information age is here to stay.
Atkinson found the roots of a better explanation
about the New Economy and its place in economic
history in Joseph Schumpeter’s concept of
“creative destruction.” The last decade of
information and telecommunications innovation is
just the latest of the four great waves of
technological change that have fueled fundamental
transformations from one kind of economy to
another since the mid-1800s.
Steel, machine tools and electricity replaced the
agrarian economy with a manufacturing one.
Electronics, chemicals and mass consumer goods
replaced the manufacturing economy with a
corporate, mass production economy. Now, powered
by microprocessors, telecommunications, the
Internet and software, we find ourselves in a
global, entrepreneurial, knowledge-based economy.
Each of these economies, Atkinson argues, have
changed the nature of work, the organization of
enterprises, the role of government, the shape of
urban form and even social attitudes and
structure.
Dr. Atkinson builds a very readable case for each
of these transformations, including his
observation that “technology is a skeleton upon
which an economy is formed.” But his greatest
value is in adding knowledge to the traditional
economic inputs of Adam Smith -- land, labor,
capital -- and exploring how what we know and what
we can know in a timely fashion will make all the
difference to the future. In the process he
illustrates just how useless traditional types of
liberal and conservative thinking are in the New
Economy. Many liberals, Atkinson suggests, remain
in a reactive mode defending the old economy’s
Keynesian, Great Society framework, while
conservatives are even more backward looking,
seeking through supply-side economics to resurrect
factory-era economic policy.
For Virginia or any other economic unit,
therefore, Atkinson would argue that neither a
fixation on distribution of wealth nor tax cuts
for their own sake are substitutes for increased
productivity and increased standards of living,
i.e. economic growth, as real goals of the New
Economy. Further, because knowledge workers armed
with information and communications technologies
will be able to work from anywhere, a higher
quality of life, not just wealth, will be
necessary to attract and to keep them in certain
firms and certain communities. More satisfying
work, more time off and more livable communities
will result.
Government must start with fiscal discipline --
controlling spending and providing new revenues
where necessary, then move forward according to a
new kind of centrist politics organized around
problem-solving, not around certain disciplines,
ideologies or institutions. Emphasizing
partisanship, Atkinson points out, is the opposite
of organizing around problem-solving. And he
argues that governments can no longer rely on the
traditional fiscal and monetary tools it has used
in attempts to manage the business cycle. Boosting
productivity and economic growth in the New
Economy now require “policies that support the
digital revolution, boost technological
innovation, enhance workforce skills, promote
entrepreneurship and ensure competitive and open
markets.”
Atkinson has made many of these arguments before.
With leadership from private sector executives,
such as Mark R. Warner before he became governor,
the Progressive Policy Institute has laid out an
ambitious role for the public sector as catalyst
for private action in boosting economic growth.
What gives this discussion of “long waves of
innovation” importance now is that it occurs
precisely at a time when communities and political
leaders need to seize upon the transformations
underway, both to grasp more fully the benefits
and to develop the precursors of the next
technological explosion. The two decades of slow
growth between the mid-1970s and mid-1990s,
Atkinson concludes, was a time when the United
States didn’t do either very well.
What kind of changes ultimately are we talking
about? Government, for example, can develop a
better rationale about where it locates its own
jobs and give public workers remote work and
flexible work hours -- and it can encourage
private companies to do the same. Government,
Atkinson suggests, can increase its direct
investment in research at the same time it fosters
new partnerships with universities and
knowledge-based firms, particularly small and
medium-sized firms. Phasing out farm subsidies in
favor of investments in a National Rural
Prosperity Corporation is one specific new twist
Atkinson suggest to reinvigorate community
redevelopment. Rural areas and small towns, he
points out, have to meet twin concerns in the New
Economy: the concerns of firms that they can find
the number of workers they need, and the concerns
of workers that there are other jobs available
should they choose to change careers or pursue new
skill sets. There are a raft of other suggestions.
Ultimately, Dr. Atkinson argues, understanding the
way progressive knowledge-based firms and
knowledge workers function -- and moving
policy-making away from fixations on land, labor
and capital -- will allow the United States and
its technology-driven economy to produce more
wealth and a higher quality of life. But it takes
a new societal enthusiasm to embrace change.
Yelling “Get a horse!” at the automobile
didn’t work a century ago and stubbornly
questioning the need for broadband or stem cell
research doesn’t work now.
--
April 11, 2005
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