The book The Exponential Age, by tech investor and writer Azeem Azhar, is the latest celebration of the transformative impact of computing technologies (including artificial intelligence (AI) and social media), biotechnology and renewable energy. Azhar argues this meticulously and intelligently, describing the growth of what he calls exponential technologies, those that rapidly and steadily improve in price and performance over decades. Azhar writes: "New technologies are being invented and expanded at an ever-accelerating rate, while their price is rapidly decreasing."
Notably, he also duly points out the problems that arise from the rapid transformations brought about by these technologies, especially what he calls the "exponential gap." Big tech corporations like Amazon and Google are gaining great wealth and power from technologies. But other companies, institutions and communities "can only adapt at an incremental rate, and they quickly fall behind," he writes.
Nonetheless, their enthusiasm remains evident.
Her story begins in 1979, when she was seven years old, living in Zambia, and a neighbor brought home a piece of almost handmade computer equipment. He then tells the well-known (and still exciting) story of how those early products started the PC revolution (an interesting side note is his description of his first Sinclair ZX81 computer, bought for £69 -80 euros- after his family moved to a small town on the outskirts of London -United Kingdom-). We already know the rest. The explosion of the PC (young Azeem and his family soon switched to an Acorn BBC Master, the UK's popular personal computer) gave rise to the World Wide Web, and today our lives are being transformed by artificial intelligence.
It is difficult to refute the argument that computing technologies have grown exponentially. Moore's Law has defined that growth for generations of technologists. As Azhar points out, that's why in 2014 the price of a transistor was just a few billionths of a euro, up from about seven euros in the 1960s. That has changed everything, fueling the rapid growth of the internet, smartphones and artificial intelligence.
Essential to Azhar's claim to usher in a new era, however, is a much broader set of technologies that demonstrate this exponential growth. Economists refer to fundamental advances with broad economic effects as "general-purpose technologies"; the steam engine, electricity and the internet. Azhar surmises that cheap solar power, bioengineering techniques like synthetic biology and 3D printing could be just that kind of technology.
He acknowledges that some of these technologies, especially 3D printing, are still relatively immature, but argues that as prices fall, demand will grow rapidly and technologies will evolve and find their markets. And he concludes: "In short, we are entering a new era of abundance. The first period in human history in which the production of energy, food, computing and many resources will be trivially cheap. We could satisfy the current needs of the humanity many times over, at an ever-decreasing price.
Maybe he's right. But frankly, that super-optimism requires a huge leap of faith, both in the future power of the technologies and in our ability to use them effectively.
Slow growth
Our best measure of economic progress is productivity growth. Specifically, total factor productivity (TFP) measures the role of innovation, including management practices and new technologies. It's not a perfect way to measure it. But, for now, it is the best metric we have to estimate the impact of technologies on the wealth and standard of living of a country.
Since the mid-2000s, TFP growth has slowed in many other advanced countries (particularly steeply in the UK), despite the emergence of these shiny new technologies. That slowdown came after a multi-year growth spurt in the late 1990s and early 2000s, when computers and the internet boosted productivity.
No one is sure what is causing this stalemate. Perhaps our technologies don't change the world as much as we think, at least compared to previous innovations. In the mid-2010s, the father of techno-pessimism, Northwestern University (USA) economist Robert Gordon, showed his audience images of a smartphone and a toilet. Which would you rather have? Or maybe we don't accurately capture the economic benefits of social media and free online services. But the most likely answer is simply that many companies and institutions are not embracing new technologies, especially in sectors like healthcare, manufacturing, and education.
This is not necessarily a reason for pessimism. Maybe it's just a matter of time. Stanford University (USA) economist and leading expert on digital technologies Erik Brynjolfsson predicts that we are at the start of an "imminent productivity boom," arguing that most of the world's advanced economies are close. the lowest point of the J-shaped curve of productivity. Many companies are still struggling with new technologies such as artificial intelligence, but as they learn to take advantage of advances, overall productivity growth will pick up.
This is an optimistic view. But it also suggests that the trajectory of many new technologies is not easy. The demand is important and the markets are fickle. You have to analyze why people and companies want innovation.
For example, in the case of synthetic biology. The idea is as simple as it is compelling: rewrite the genetic code of microorganisms, whether bacteria, yeast or algae, so that they produce the desired chemicals or materials. That dream isn't exactly new, but in the early 2000s its advocates, including MIT computer scientist-turned-biologist Tom Knight, helped popularize it, especially among investors. Why not treat biology as a simple engineering challenge?
With huge fermentation vats for these programmed microbes, plastics, chemicals, and even fuels could be produced. There would be no need for oil. If they are simply fed with sugar extracted from, for example, sugar cane, they can mass-produce whatever is needed.
In the late 2000s, several start-ups, including Amyris Biotechnologies and LS9, engineered the genetics of microbes to produce hydrocarbon fuels to replace gasoline and diesel. Synthetic biology, it seemed, was about to revolutionize transportation. But a few years later that dream was almost dead. Now Amyris focuses on the manufacture of ingredients for creams and other beauty products. LS9 sold its shares in 2014.
The woes of the synthetic biology market continue to this day. Earlier this year, one of the leading companies in the field, Zymergen, suffered a financial setback when its product, a plastic made for use in foldable smartphones, failed to gain traction. Its customers, according to the company, had "technical problems" integrating plastic into their manufacturing processes.
Failures are not a doom for synthetic biology. Some products are already appearing. Despite the business missteps, the future of the field is undeniably bright. As technology improves, aided by advances in automation, machine learning, and computing, the costs of creating custom and mass-produced products are bound to decrease.
But synthetic biology is still far from transforming the chemical industry or transportation fuels. Their progress over the past two decades has looked less like exponential growth and more like the amazing first steps of a child.
The Lessons of History
I asked social scientist Carlota Pérez, who has written extensively on technological revolutions and whom Azhar refers to as "instrumental" in her book, what she thought about the relationship between technology and the economy and how we can make impressive progress, but without seeing more productivity growth.
His answer is simple: "All technological revolutions have gone through two different periods: the first, when you see productivity growth in the new part of the economy, and the second, when new technologies spread throughout the economy, generating synergies and increasing overall productivity.
He believes we are in the period where different industries are acting very differently and adds: "The question is how to get to the point where the productivity of the entire economy grows synergistically."
Pérez is a different kind of techno-optimist than the free-marketers often heard in Silicon Valley. For her, it is essential that governments create the right incentives to encourage the adoption of new technologies, including those that are cleaner for the environment, using tools such as taxes and regulation.
And he details: "It all depends on the government. Companies don't go in the green direction because they don't have to. They are making money with what they do, why should they change? Only when they can no longer be profitable doing what they do, they will start to use new technologies to invest and innovate in new directions.
But he notes that "the amount of innovation in the gestation stage is almost unbelievable." According to her, technological revolutions can happen quickly if they are fueled by proper government policies and support.
However, none of this happens yes or yes. There are no guarantees that governments will act. One concern is the current lack of research support. Our amazing new technologies may be poised to change the economy, but their growth and expansion must be bolstered by more new ideas and continued technological advances. After all, the origins of the technologies that impress us now, like synthetic biology and 3D printing, go back decades. The chain needs constant updates.
Economist at the London School of Economics (UK) and MIT John Van Reenen and colleagues have shown that the productivity of research itself is slowing because "new ideas become harder to find." At the same time, many Western governments have reduced their support for R&D in recent decades. In the mid-1960s, US federal R&D funding relative to GDP was three times higher than it is today. The United States does not have to return to such high levels, the expert believes, "but stopping is not an option either." That, according to Van Reenen, would cause TFP growth and economic progress to stagnate.
There are some signs that the United States is moving in the right direction. President Joe Biden focused part of his campaign on promises to increase federal support for R&D by hundreds of billions of euros during his first term. But getting the US Congress to accept it is proving challenging. Van Reenen stresses: "It is a choice we are facing. Everything again depends on politics. Are we prepared to make serious investments?"
That's where reluctant optimists like Van Reenen and super-optimists like Azhar converge. I asked him how sure he was of his book's prediction of "a new era of plenty." His response was: "I am optimistic about the progress of technology, but I am much more realistic, almost pessimistic, about the governance of technology. That is the most important part of the fight."