Econ 210c, Spring 2002, Reading Notes for February 20
R. Nelson and G. Wright (1992), "The Rise and Fall of American Technological Leadership," JEL (December), pp. 1931-64.
Nathan Rosenberg (1963), "Technological Change in the Machine Tool Industry, 1840-1910," JEH (December): 414-443
W. Devine (1983), "From Shafts to Wires: Historical Perspective on Electrification," JEH (June), pp. 347-72.
Nathan Rosenberg's article focuses on the machine-tool industry. If there is one industry that is key to nineteenth and twentieth century industrial development, it is machine tools, for they are the tools to make the tools of the industrial revolution. Machine-tool firms are a key place in which the technological knowledge of society is kept, and extended. U.S. technological progress throughout the late nineteenth century was "portentously rapid". What, if anything, was there about the organization and operation of the machine-tool industry that made it especially hospitable to technological progress?
While reading Gavin Wright's very important article--the most important, I think, this week--try to keep five questions in mind: First, just how was it that the U.S. was able to export so many manufactured goods at the end of the nineteenth century? Second, what does it mean for a manufactured good to be "resource intensive"? Third, to what extent is America's "resource abundance" at the end of the nineteenth century a cause and to what extent is it an effect of rapid industrialization and prosperity? Fourth, why didn't Europe match America in resource extraction--the oil is there (in Rumania), the iron ore is there, the coal is there, et cetera--circa 1900? Fifth, does Gavin Wright have an explanation for the origins of American industrial success, or does he just take the problem to a deeper level?
Devine's article examines one crucial technological change: the advent of electrification and its effect on modern industry. Just what were the changes that electrification drove, or made possible, inside the factory? How much of the benefits from electrification came from the "direct" effects--cheaper power? And how much from the many "indirect" effects that Warren Devine recounts? What speculations does Devine's article trigger as you look around you at the post-industrial information-age economy of today? Your answer to this question is especially interesting in the context of the article by Nelson and Wright--which in its mourning of the loss of American technological leadership must rank as one of the all-time failures in economic prediction, given what was about to happen over the next decade within ten miles of Gavin Wright's office at Stanford.