Is technological growth inevitable irrespective of the economic macroenvironment?
In the mid-to-late aughts, Dubai’s political class was the darling of Davos and erected landmark creations including the Palm Islands and Burj Khalifa that ultimately bankrupted the emirate and led to it being bailed out by its northern cousin, Abu Dhabi.
Contemporaneously, in similar fashion, the political elite in notable areas such as Ireland, Iceland, Spain, Greece, and California enacted a series of social experiments (e.g., frothy benefits), which, on top of spurious real-estate bubbles, in retrospect amounted to little more than Menckenian hubris; the governments promised more guns and butter than was financially feasible. As a consequence of their extravagant splurging, taxpayers worldwide have become saddled with debt as both sovereign obligations and the financial industry across the globe have been bailed out and kept on life support.
Nearly four years ago, science fiction author Vernor Vinge was asked if the “future was cancelled” due to this financial crisis. At the time he said no and I said probably. Eighteen months ago, jack-of-all-trades Kevin Kelly suggested that “if in a counterfactual history, communism had won the cold war and microelectronics had been invented in a global Soviet-style society, my guess is that even that alternative policy apparatus could not stifle Moore’s Law.”
The problem with their reasoning is that both miss the fact that Moore’s Law and other innovation trend lines are in fact only descriptive behaviors of past manufacturing abilities.
Moore’s Law is not ironclad; it is not immutable and it is not science. It just so happens that semiconductor firms have been fortunate and currently are able to finance their insatiable appetite for plant expansion while at the same time increase the amount of transistors on a die.1 What began as a mere observation about manufacturing and miniaturization has turned into rank historicism that can be seen in any industry that has been disrupted internally and externally.2
The entrepreneurial ability of Craig Barrett, Paul Otellini, Hector Ruiz, and other semiconductor executives should not be overlooked as they were able to effectively and efficiently mix various factors of production (quantities of land, labor, and capital) into a profitable product. See I, Pencil by Leonard Read. ↩
Gustav von Schmoller was considered the dean of the German historical school, a school of thought whose (erroneous) interpretation of economics led to the original Methodenstreit. In some ways “chartology” and Moore’s Law divination are not much different than “numerology” of the past. See als0 Schmoller revisited. ↩