Why Growth Will Fall

Gustave Caillebotte: The Floor Planers, 1875
Musée d’Orsay, Paris
Gustave Caillebotte: The Floor Planers, 1875

Robert Gordon has written a magnificent book on the economic history of the United States over the last one and a half centuries. His study focuses on what he calls the “special century” from 1870 to 1970—in which living standards increased more rapidly than at any time before or after. The book is without peer in providing a statistical analysis of the uneven pace of growth and technological change, in describing the technologies that led to the remarkable progress during the special century, and in concluding with a provocative hypothesis that the future is unlikely to bring anything approaching the economic gains of the earlier period.

The message of Rise and Fall is this. For most of human history, economic progress moved at a crawl. According to the economic historian Bradford DeLong, from the first rock tools used by humanoids three million years ago, to the earliest cities ten thousand years ago, through the Middle Ages, to the beginning of the Industrial Revolution around 1800, living standards doubled (with a growth of 0.00002 percent per year). Another doubling took place over the subsequent period to 1870. Then, according to standard calculations, the world economy took off.

Gordon focuses on growth in the United States. Living standards, as measured by GDP per capita or real wages, accelerated after 1870. The growth rate looks like an inverted U. Productivity growth rose from the late nineteenth century and peaked in the 1950s, but has slowed to a crawl since 1970. In designating 1870–1970 as the special century, Gordon emphasizes that the period since 1970 has been less special. He argues that the pace of innovation has slowed since 1970 (a point that will surprise many people), and furthermore that the gains from technological improvement have been shared less broadly (a point that is widely appreciated and true).

A central aspect of Gordon’s thesis is that the conventional measures of economic growth omit some of the largest gains in living standards and therefore underestimate economic progress. A point that is little appreciated is that the standard measures of economic progress do not include gains in health and life expectancy. Nor do they include the impact of revolutionary technological improvements such as the introduction of electricity or telephones or automobiles. Most of the book is devoted to describing many of history’s crucial technological revolutions, which in Gordon’s view took place in the special century. Moreover, he argues that the innovations of today are much narrower and contribute much less to improvements in living standards than did the innovations of the special century.

Rise and Fall represents the results of a lifetime of research by one of America’s leading macroeconomists. Gordon absorbed the current thinking on economic growth as a graduate student at MIT from 1964 to 1967 (where…


This is exclusive content for subscribers only – subscribe at this low introductory rate for immediate access!

Online Subscription

Unlock this article, and thousands more from our complete 55+ year archive, by subscribing at the low introductory rate of just $1 an issue – that’s 10 issues online plus six months of full archive access for just $10.

One-Week Access

Purchase a trial Online Edition subscription and receive unlimited access for one week to all the content on nybooks.com.

If you already have one of these subscriptions, please be sure you are logged in to your nybooks.com account. If you subscribe to the print edition, you may also need to link your web site account to your print subscription. Click here to link your account services.