Seven years have passed since I first developed this innovation wheel. In that time, the possibility space is more visible to a larger audience. The conclusion originally drawn by Robert J. Gordon — that we have taken the standard of living as far as it will go — is still suspect to me. In light of the rapid advancements we are seeing, I am re-posting this seven years later.
In a brilliant journey through the economic history of the western world, author Robert J. Gordon looks at The Rise and Fall of American Growth. This recent book focuses on a revolutionary century that impacted the American standard of living more than any period before or after. Our standard of living is typically viewed as the ratio of total production of goods and services (real GDP) per member of the population. But this measure fails to truly capture enhancements to our well-being. Human well-being is influenced by advances in the areas of food, clothing, shelter, energy, transport, education, health, work, information, entertainment, and communications. The special century (1870–1970) that followed the Civil War was made possible by a unique clustering of what the author calls the great inventions. Clearly — as the visual I developed depicts — the great inventions of the second industrial revolution significantly improved our well-being:
The author concludes that the 1870–1970 century was unique in that many of the great inventions could only happen once. Mr. Gordon states that by 1970 the basic elements of our modern standard of living were already achieved along the dimensions identified in the visual. His forecast for the next 25 years sees limited growth, as several headwinds reduce growth in median real disposable income. In making a compelling argument, Mr. Gordon dismisses the views of the many techno-optimists that see a return to productivity and enhanced well-being, as automation drives labor productivity and scarcity gives way to abundance.
I have viewed this debate through the lens of future scenarios, their likely path, and their potential to enhance our well-being (or diminish it as explored in this post on balance). To explore this topic further, I overlaid these scenarios and their various innovation components on top of my visual inspired by Mr. Gordon’s work. This framework allows us to explore these scenarios and their potential to improve (or diminish) our well-being across the dimensions described earlier. Can we replicate or exceed the great inventions of the special century? Can we effectively manage the headwinds described by the books author?