Technology, progress and economic growth

Robert Ayres

European Management Journal, 1996, vol. 14, issue 6, 562-575

Abstract: Robert Ayres asks a number of questions relating to technology, progress and economic growth. How far is human welfare attributable to science and technological progress rather than to economic growth, or vice versa? Can technological progress negatively impact on economic growth and employment? What kind of technology is needed for a truly sustainable future? The answers are critically important for producers, managers and governments. Increasing welfare is due primarily to science and technology, and only secondarily to economic growth. Scientific and technological progress generated economic growth, not vice versa. In its present form, economic growth can hinder technological progress (through increasing returns to scale reducing the rate of innovation). But current technological progress can negatively impact economic growth, and especially in the field of information technology. The falling price of manufacturing goods will lower the economic growth rate. Sustainability is the number one question. We are experiencing decreasing resource quality, increasing demand, and environmental constraints. The industrial world must cut material consumption, change its structure of demand, and sharply increase its productivity of materials and energy. The author advocates a completely new economic strategy - 'radical dematerialism', in which there is a massive reverse substitution of human labor for fossil energy and physical substances extracted from the environment. The sustainability of economies of the future will be based almost entirely on services - leasing will become the norm for products - and firms must learn to sell services, not products.

Date: 1996
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