EUROPEAN PAPERS ON THE NEW WELFARE

Abstracts from The Employment Dilemma and the Future of Work

3.3 Mobilizing Technology

in 1973 the oil crisis struck. If it had been only an oil problem, this would have justified an increase in inflation of about 1 to 2% only. This was the result of deep research carried out in the major research institutes in the world, taking into consideration the effects of the increase in the oil cost in all economic activities. Such studies had already been carried out with input-output models one or two years before the first oil crisis. Therefore the oil crisis was just one aspect of something deeper concerning the transformation of the economy. A key aspect of which was that service functions, concerning in particular research storage and distribution, utilization costs etc., were in fact the key economic factors and the pure manufacturing aspects became a sub-system.
Industrial and manufacturing companies in the world, in the main, understood this situation: they did not need new economic theories, experience was enough. They just had to face obvious problems which needed new solutions that more often than not were found and put into practice. It is at the general macro-economic level that the situation was showing obvious difficulties in understanding the fundamental reasons for the new rigidities of supply, for the persistence of inflation and the failure, during the 1970s, of the stop and go economic policies. This leads inevitably to better understand the mechanism and possibilities of science and technology.
Technology has been an indicator of economic development as much in the stone age or later the iron age as it is today in the information age. All these epochs are defined by a specific level of technology.
But a fundamental change took place at the end of last century: for the first time in history, scientific discoveries started making new forms of technological development possible. This key phenomenon (a marriage between science and technology) was behind a unique growth rate in the industrialised countries for a quarter of a century after World War II.
The marriage, however, not only made technology increasingly dependent on the ability of well educated engineers and specialists to manipulate processes and materials. Because of the link to, and therefore reliance on, basic scientific discoveries, technology was also increasingly dependent on a phenomenon exogenous to the economic process. In other words, raising prices would be of no avail if a needed technological solution was dependent on fundamental scientific knowledge not yet available.
This was the case after 1973 when everybody hoped that, with the price of oil soaring, alternatives could be found thanks to technological progress. Ten years later oil prices went down, but only as a result of slow adjustment in the consumption of energy and extraction costs of oil. Meanwhile, an incredible development started elsewhere as scientific knowledge in the field of information storage and distribution achieved an unforeseen level of maturity. We refer to microelectronics.
In addition, another fundamental change had taken place on the supply or production side of the economy: the growth of services as a paradoxical consequence of the success of manufacturing technology.
There are, of course, always and in all sectors, opportunities for technological improvements but, as they happen in any other human or natural activity, they operate through a process of diminishing returns. Each given set of technologies can be developed up to a maximum boundary, beyond which new inventions (for technology) and new discoveries (for fundamental research) will be needed and developed in a negantropy process. Only when there is a major scientific breakthrough, introducing a new set of technologies thanks to a superior level of knowledge, can progress in efficiency be achieved that overcomes the law of diminishing returns. We can expect breakthroughs to happen but we ignore their nature, when and where they will take place and we cannot command them at our will when they are of a fundamental nature. As a consequence, (economic) policy making should not rely on a given technological dream or ideology to become reality, but stay within the boundaries of the commandable.


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