Regarding technological innovation, progress and prosperity: Why we are where we are, and where we go from here.
Editor’s note: This is the first part of a 2-post guest appearance by Alex Magnin, a Brooklyn-based technology entrepreneur whose latest startup is helping to “green Hollywood” (more info at the bottom). This and the next post came about as a response to Peter Thiel’s ‘The End of the Future‘ tract. This one sets the scene, while the next one will delve into how all of this relates to cleantech a bit more — it is the “ok, so what do we need to do” part, according to Magnin. Good stuff, so here it is….
by Alex Magnin
What is Progress Made of?
There have been times when the forward march of humanity seemed inevitable. In the booming 1950’s and 60’s, we envisioned a not-so-distant future of flying cars and colonizing the moon. In those moments, innovation, progress, and prosperity felt like a God-given right.
Now is not one of those moments. To the high hopes of the post-war decades, the present is a letdown. The economy has stalled. We do not vacation to outer space, drive nuclear-powered automobiles or work four-day weeks. Nor do we have sustainable energy or faster transportation or a cure for cancer. In today’s slowdown, some suggest that progress itself has stalled and that the assumption of our forward march is optimistic and flawed.
That is not likely the case. To see why, we would do well to explore what progress is made of, or, in other words, how we have gotten this far.
Look back at the whole course of human history and progress is easy to see. From hunting & gathering to agriculture, the dark ages to the renaissance, the Enlightenment to modernity, we are certainly becoming better off. This is not to say the path is without bumps. But smooth them out and the long-term trend is not just progress – it is progress accelerating.
Innovation is progress’s great driver. The number of hours in a day is static, and our natural abilities nearly so. So we build tools to increase what we can squeeze from those limits. This is the big reason behind technological innovation.
And a great innovation, like evolution, is often a mutation. It takes lateral thinking, unique approaches, genius, and luck. Science and technology advance in their current paradigm with diminishing returns – like that game of stepping 50% of the way to the wall over and over. Innovation steps to the side of that wall, creates a new paradigm, and the march forward continues. The Albert Einsteins, the Francis Cricks, the Steve Jobses are our side-steppers.
Both history and a survey of the present suggest that the pace of new technology has not let up. With 7 billion people and ever-more access to information, accelerating innovation is to be expected.
Yet real progress is not inventing technology, but using it to drive prosperity. The problem is that today’s innovation does not seem to be paying dividends. In fact, some of our innovations played a direct role in the recession we live in today. Technology drove the crash, and technology may have to drive us back out.
The history of modern innovation fits this pattern. First, a transformational technology is invented and applied to certain sectors, often where the benefit is most immediate and obvious. It is a paradigm shift, and it creates a lot of value. People get excited. Outsized expectations lead to overinvestment. The returns on new technology may unfold over generations, but we mortals prefer our investments returned sooner than that. Over-exuberance may make the bubble; essentially, it is the time-limit of credit that makes it burst.
A bursting bubble is no fun, but it can have some positive effects. Expectations come into line with reality. Clear winners and losers emerge. We better understand the new paradigm. Innovation can now turn into prosperity.
Some examples: the canal building boom in 1770’s Britain and railroad mania in the 1840’s (both new technologies at the time) resulted in speculative crashes, from which rose the Great British Leap and the Industrial Revolution. The first wave of global trade, powered by the invention of the steamship, gave us the panics and depressions of 1873-1893, before ceding way to the Progressive Era. Even the foundation for the great Post-War Boom in the United States lies in the financial modernization that came crashing down in 1929. The pattern: after each big innovation, a runaway installation, a crash, and, finally, prosperity and lasting progress.
The great technologies of our era – computing and the internet – drove twin bubbles and crashes. The late 1990’s internet-mania burst, and now internet technology is a much more robust, stable sector and a growth leader today. Similarly, the financial speculation of the last decades was largely computer-driven. Such highly-leveraged risk-taking would not have been possible without ever more powerful and (purportedly) accurate computer models. That this bubble has now also burst should be cause for hope.
Technological innovations can be transformational tools that change how we generate prosperity. Yet, in its very nature, innovation drives boom-bust economic patterns, and right now we are busted. History shows that we are likely to see a golden age ahead. The prosperity of the age of information technology may well be greater than all past booms combined. We have reason to be incredibly optimistic for the future. Innovation is not dead, and neither is progress. Like always, we are simply still learning how to use it.
Alex Magnin is a Brooklyn-based technology entrepreneur. He serves as COO of Lua Technologies, building enterprise communications software for mass collaboration — Lua is working with the Environmental Media Association and the Producers Guild of America Green Initiative to help make the $31B Film & TV production industry more eco-friendly.
He is also on the Board of Directors of Every Person Has A Story, a non-profit connecting students around the world through digital photography.
Alex helps make cool things for the internet as a partner in Betamale Ventures, and was on the founding team and formerly ran product and business development at Martini Media, a premier digital advertising technology company. He attended Wesleyan University. He owes much to many, but, in this article, a particular intellectual debt to Carlota Perez. You can find Alex at http://alexmagnin.com and www.twitter.com/alexmagnin
Learn image via shutterstock