Can Technology Save The Economy?

Stretching back a few hundred years there has always been a belief that a growing economy lifts the standard of living for the majority of people. But for the first time such growth is seen as benefitting an already wealthy elite rather than an increasingly less well of majority.

Changing times

From the days of the Industrial Revolution it was thought that the control nature would lead to a more productive and enriched economy.

People’s lives would get easier as they lived for longer and enjoyed better health and greater leisure time away from work.

And so it has been for millions of people in rich countries as they lived with the belief that similar wealth would spread over time.

Such a view still exists amongst many people, as they believe technological breakthroughs provide economic gain for those in poverty.

But many are sceptical, as they see under employment and inequality as barometers of failure and portents of an economy receding rather than expanding.

Their view is based on the belief that economic growth has already begun to slow as indicated by productivity and output figures.

They disagree with the view that the current technologies are having a significant or positive effect to the extent predicted by other commentators.

They argue, by way of example, that the invention of the telephone had a greater economic effect that the smartphone and that the invention of electricity far outshines the invention of Facebook.

Changing technologies

The technologies of the last almost three hundred years have undoubtedly improved the economic situation of millions of people around the world.

They changed the way we live and helped lever social and political change as education, health and life expectancy entered the mainstream political agenda.

But there is a dearth of significant technological change on to-days horizon as computers, mobile phones and the internet fail to live up to the hype that surrounds them.

They are without doubt changing industries and creating new markets and boundless profits for a few already very wealthy companies but not generating enough jobs to enliven the mainstream economy.

Income levels, productivity, economic growth, employment and inequality are all failing to perform as desired and negative rather than positive trends are beginning to emerge.

Recent technologies have served to accelerate globalisation and the disruption of millions of jobs without the replacement of sufficient new opportunities.

But the biggest change the raft of digital technologies has brought is the introduction of a winner-take-all economy where a few large companies win at the cost of everyone else.

The flow-down effect of such an economy is causing the opposite of what previous technologies did as jobs and industries are upended without the sufficient jobs being created in other areas.

So, the economy has relied on technological change to drive growth for the last few hundred years but the formula is under strain and a new approach is needed.