Information Goods Want to Be Free – Really
In 1990, at just 35, Romer authored a now celebrated academic paper titled Endogenous Technological Change. There he efectively crystallised what Drucker would write just a few years later, highlighting the new and critical importance of knowledge to economic growth.
Understanding what correlates with growth had long been an obsession for economists, principally because by assessing growth’s co-factors you could infer what caused it – savings rates, population growth, rising wages – and reverse-engineer a recipe for prosperity. Prior to Romer’s paper, technological change was presumed to be ‘exogenous’, an external, constant variable akin to background noise and, therefore, unimportant. But Romer disagreed, claiming that given market forces themselves drive innovation, technological change should be understood as a major driver of capitalist development. The question was how this functioned and with what consequences.
Romer defined technological change as ‘an improvement in the instructions for mixing together raw materials’. Technological change was therefore, perhaps counter-intuitively, immaterial – amounting to nothing more than an upgraded re-arrangement of previous information. ‘Instructions for working with raw materials are inherently diferent from other economic goods,’ Romer concluded. So over time, as technology develops, the value increasingly arises from the instructions for materials as opposed to the materials themselves.
What Is Fully Automated Luxury Communism?
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