The Discontinuity Hypothesis Is There A Pattern

The question is whether technological progress tends to be discontinuous. The short answer is clearly 'yes' (Ayres 1987, 1988a). While the motivations of inventors and researchers vary considerably - as we have indicated above - there are significant common features. The most important common feature, we suggest, is discontinuity. Most institutions are resistant to change, because change makes planning difficult and uncertain. The general attitude of established management in government and industry, including the military, is characterized by the phrase 'If it ain't broke, don't fix it!' Moreover, in most cases, this is probably reasonably good advice. The assumption underlying most demographic and economic models, too, is that change will occur very smoothly and gradually, and this is to some extent a self-justifying assumption. It is also a fairly accurate characterization of past history provided a sufficiently long-term and aggregated viewpoint is adopted.

The situation changes when the viewpoint is more localized and myopic. Continuity in many spheres, including technology, is the exception rather than the rule. Discontinuity is the rule. The discontinuity may be due to the fact that a conflict - violent or otherwise - must be resolved one way or the other (one side wins, the other loses). It may be due to geo-political power shifts, as in the Ottoman case mentioned above, the Protestant Reformation and the wars of religion, the failure of the Spanish Armada, the French Revolution and its aftermath, the rise and fall of the British Empire, the rise and fall of Marxism and the end of the Cold War. Some people think that the world is now embarking on a fundamental clash of civilizations (for example, Huntington 1993). Or a discontinuity may arise from a change in regulation, as for instance the electricity supply crisis that erupted in California in 2001-2 after the partial (and ill-designed) deregulation of the electric utilities.

A discontinuity may result from a sudden resource scarcity. Such a scarcity may be temporary and artificial, as in the case of the Arab oil boycott of 1973-4; yet that resulted in a sharp (albeit temporary) change in prices and patterns of capital investment. Or it may be due to an unexpected decline in new discoveries and reserves, as happened in the US in 1970-71, when domestic oil production peaked and the balance of power in the world oil industry suddenly moved from the Texas Railroad Commission, which regulated output, to the Persian Gulf and OPEC. Scarcity can arise from natural causes such as a famine or drought. People sometimes forget that fresh water and benign climate are fundamental resources. Cultures have been wiped out in the past due to natural events, such as Noah's Flood which seems to have occurred in the Black Sea due to the rising of the water level of the Mediterranean, due - in turn - to the melting of the glacial ice. The Atlantis myth may have originated from such a flood. More gradual climate change can also lead to catastrophic results. Such was the fate of the inhabitants of Easter Island, the Viking colony in Greenland, the

Anasazi Indians in the American West and to the formerly great Buddhist cities of central Asia, now buried under sand in Xinjiang, western China.6 Man-made discontinuities, apart from wars, have included ethnic cleansing in various countries and religious conflicts (the Reformation, the Counter-reformation, Islamic fundamentalism). Economic discontinuities worth mentioning include 'bubbles' and 'crashes' ranging from the Dutch tulip craze, the Mississippi bubble and the South Sea bubbles circa 1720 in France and England respectively, up to the Wall Street speculative bubble of 1927-9, the Tokyo land bubble of the late 1980s and the US 'dot-com' bubble of the late 1990s. The sub-prime mortgage market, which is working itself out as we write, may be another example. All of these bubbles were followed by crashes. Financial problems also include hyper-inflation, as in Germany in the early 1920s, and in a number of other countries, especially in Eastern Europe and Latin America, since then.

Finally, and most importantly from our perspective, a discontinuity may arise from a rapid substitution of one technology for another, with consequent disruptions, gains for some and losses - called 'creative destruction' by Schumpeter - for others. The rather sudden replacement of gas light and kerosine lamps by electric light, the replacement of steam power in factories by electric motors fed from central generators, and the rather sudden replacement of horse-drawn vehicles by automobiles are just a few examples. All of these, and others, created unexpected supply-demand imbalances, which led to still further technological innovations, as the decline of kerosine lamps and the spread of the automobile forced a radical transition of the global petroleum industry from producing kerosine to producing gasoline.7 The concurrent transition to an 'information society' has already created significant imbalances, and will likely create more.8

Finally, a crisis in technology may be due to the approach to some intermediate physical barrier. One of the first such barriers to be recognized was that heat engines are subject to a maximum thermal efficiency (known as the Carnot limit).9 Another famous example is the so-called 'sound barrier' (known as Mach 1), which is a discontinuity in the speed-power relationship: the power required to overcome air resistance suddenly increases non-linearly at Mach 1 and constitutes an effective limit to the speed of civil airliners. Other intermediate physical limits include the maximum current-carrying capacity of a wire, the maximum electrical resistance of an insulator, the maximum information-carrying capacity of a channel, the maximum tensile strength of steel plates, beams or wires, and the maximum temperature that a turbine alloy can withstand without losing its strength. All of these examples, and many others, have had significant impacts on the rate and direction of technological progress during the past several centuries.

One common feature of any impending shortage is a rising price of one or more 'bottleneck' commodities. The rising price of oil since 2006 is a good example. Where the barrier is a physical limit of some sort, the returns to R&D along the current trajectory begin to fall. This, too, constitutes a useful signal - albeit one that is typically only available to a narrow group of executives within the firm or industry (Mansfield 1965; Foster 1986).

To conclude this section, we see the history of technology, and the economy, as examples of 'punctuated equilibrium', appropriate terms introduced some years ago in the context of biological evolution and speciation (Eldredge and Gould 1972; Gould 1982; Rhodes 1983). While the analogy between biological evolution and human history is far from perfect, it seems to us that the key point is that, in both cases, relatively sudden changes - whether endogenous or exogenously caused - play a crucial role in the evolutionary process. But one difference is important: in the biological case, both the external change agents (such as tectonic processes, glaciation or asteroid collisions) and the internal change agents (mutations) are essentially unpredictable, if not random. In the human case, the opposite is now increasingly true. Some important discoveries are accidental, or quasi-accidental, as the discovery of penicillin is reputed to have been, but most are intentional.

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