The subject of Tyler Cowen’s book—the slow and at times even negative economic growth of the American economy for almost the past forty years, with all its distressing social and political consequences—is of singular importance; given that all the advanced capitalist democracies are experiencing the same protracted stagnation, the subject is perhaps the most serious systemic question of our time.footnote1 We would all wish for a better understanding of the causes of the slowdown, in order to find ways to break free of the quandary that is increasingly threatening the workings of democratic polities across the developed world.
From the web, we quickly learn that Cowen is a professor of economics at George Mason University in Virginia with two personas: he is an able economist, reputed to be influential not just because he has published several books, but because his views on diverse issues appear frequently in several leading newspapers; but he is also a polymath or a dabbler, depending on how one evaluates his voluminous publications and blogs on numerous topics relating to the economy, politics, philosophy, culture and even ethnic cuisines. Regrettably, The Great Stagnation is an intellectual trompe l’oeil by a dabbler. The book is reminiscent of a campaign speech by a politician on the stump, touching eloquently on any subject that might beguile the populace to vote for him, while cherry-picking the facts to enhance his arguments. So Cowen, writing with undoubted journalistic facility, has enchanted enough readers to make his little book a bestseller, while often making dubious use of the data and of the results of other economists’ research.
Cowen, however, differs from the average politician in two, closely related respects. Firstly, a candidate generally speaks as a member of an identifiable political party, while Cowen has for some reason decided to obfuscate his own ideological leanings, proposing himself instead as a spokesman for ‘the honest middle’—a piece of campaign-trail hokum if ever there was one. In claiming to speak ‘above the din’ of partisan debates, Cowen avoids the kind of ideologically principled discussion indispensable for real debates over strategic decisions in a democracy. Secondly, politicians are expected to propose credible policies that will deliver tangible goods to their electoral base. In contrast, Cowen has eschewed rigorous, fact-based analysis and properly evaluated policy proposals in favour of catchy phrases about ‘low-hanging fruit’, ‘getting sick’ and ‘feeling better’, suggesting a cartoon Uncle Sam with a temporary bout of dyspepsia. As a result, his slender volume has garnered at least eighteen high approbations, listed in the opening pages as well as on the back cover; all by well-known journalists, mostly from leading newspapers.
Nevertheless, this strategy has exacted a very high price on the book’s argumentation, with the result that both its portrayal of the principal reasons for the prolonged stagnation affecting the capitalist democracies and, above all, its proposal for reinvigorating an anaemic economic order are largely meretricious. This is evident in Cowen’s core observation, on which all the rest of his discussion is directly or indirectly based:
In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century, whether it be free land, lots of immigrant labour, or powerful new technologies. Yet during the last forty years, that low-hanging fruit started disappearing, and we started pretending it was still there. We have failed to recognize that we are at a technological plateau and the trees are more bare than we would like to think. That’s it. That is what has gone wrong.
This is fallacious in several respects. First, Cowen fails to establish the validity of his broad assertion that the us enjoyed ‘low-hanging fruit’—that is, easy pickings—from the 1600s to the 1970s. He does not offer even the minimum necessary historical discussion of the roles played by politics, culture, education, institutions, trade and other factors in shaping us development; this is American economic history without slavery, the cotton trade, the Monroe Doctrine, the Civil War, Bretton Woods, the Marshall Plan or the fiat dollar system. Nor does Cowen ever explain the interrelations, or relative specific weight, of the three factors he identifies—free land, immigrant labour, technological change—as having been responsible for American growth rates up to the 1970s. In fact the important matters of land and labour turn out to be little more than stage-setting for Cowen’s real preoccupation, the ‘technological plateau’.
Cowen bases his central claim that the average rate of innovation peaked in 1873, and hence that the ‘fruit’ of technological change had already been plucked by the 1970s, on the work of Jonathan Huebner, a Pentagon scientist. As everyone familiar with the history of technological change knows, Huebner selected data for the table which Cowen reproduces to show ‘the rate of global innovation relative to population since medieval times’ using highly subjective criteria to define technological change, as well as patent data, which is notoriously problematic. Without offering any intellectual justification for it, Cowen uses Huebner’s global data, divided by global population, to derive a rate of innovation for his discussion of the effects of technological change on American economic performance. Apparently he agrees with Huebner who, unaccountably, believes that the average person’s capacity for invention is affected by the size of the total global population. The Great Stagnation’s assertion that the rate of innovation peaked in 1873 ignores the question of quality. For Cowen, a technical advance in the nineteenth century—when ‘innovation was easier’ and ‘could be done by amateurs’ with little education—has the same value as a twentieth-century innovation, an era when virtually all higher quality advances were made by extremely well-educated specialists. These modern innovations transformed human life far more fundamentally than did those of the fifteenth, sixteenth and seventeenth centuries, which Cowen, drawing on Huebner’s work, includes in his table.