Learning by Doing
The Real Connection between Innovation, Wages, and Wealth
James Bessen
There are so many ways in which technology is changing things for the better. We use satellites to find our location on maps and we can ask our cellphones for driving directions. Thanks to logistics, inventory management and flexible manufacturing technologies, our supermarkets carry over fifty times as many items as the grocery stores of eighty years ago and by shopping online, we can select from a far, far larger cornucopia. Most of us now use computers at work, but those computers are far more powerful than the computers of just a few decades ago that required large rooms with specialized air conditioning. We work differently, we communicate with each other differently, we create differently and we entertain ourselves differently thanks to new technology.
Yet despite all this progress, something is amiss. For the last three decades—since the beginning of the personal computer revolution—the median wage in the US has been stagnant and many well-paying jobs have disappeared. At the same time, the pay of top earners has grown dramatically as have corporate profits. Many economists blame computer technology, at least in part. Some people worry that this rising inequality undermines the legitimacy of the capitalist economic system. Why aren’t we benefiting more from technology today? Over the past two hundred years, new technologies led to dramatic increases in wages and in the quality of life for most Americans. Why isn’t that happening now?
For all the celebration of the economic wonders of capitalism, there is little understanding of how technology generated wealth for most people in the West in the past, and why it seems to fail to do so today.
A look at history suggests that technology sometimes seems to destroy good jobs, but at other times creates them. In Learning by Doing: The Real Connection between Innovation, Wages, and Wealth, James Bessen puts that history to use to explain why, and to illustrate how firms and governments can draw lessons from the past to move things forward from our current predicament.
Published by Yale University Press
Praise for Learning by Doing
Mr. Bessen sets out to refute the arguments of . . . techno-pessimists, relying on economic analysis and on a fresh reading of history.
— Tamar Jacoby, The Wall Street Journal
This important book is well written, clearly argued, and makes numerous salient points regarding the interactions between technological change, skill attainment, and earnings.
— Booklist
James Bessen is uniquely qualified to interpret technology issues, having both rich historical expertise and startup experience. I especially like the way he demystifies the concept of skills and questions the apotheosis of college diplomas and intellectual property rights. This is one of the most hopeful yet realistic books in years.”
— Gavin Wright, author of Sharing the Prize: The Economics of the Civil Rights Revolution in the American South