Michael Lind: We Need a New Deal for Information Technology

Michael Lind is Policy Director of the Economic Growth Program at the New America Foundation and is the author of "The Next American Nation: The New Nationalism and the Fourth American Revolution."

America’s attention is focused on the faltering recovery from the Great Recession. But we cannot neglect another question: Where are we in the long-term technology cycle?

In the mid-20th century, the economist Joseph Schumpeter observed that technological innovation is not a continuous process, but tends to be concentrated in bursts of economy-transforming change. Within the industrial epoch that began in Britain in the 18th century and continues today, historians have discerned three or four or five successive industrial revolutions, driven by "general purpose technologies" like the steam engine, electricity, automobiles and airplanes, and information technology.

Neo-Schumpeterian economists like Carlota Perez have tried to document links between technological innovation and the economy as a whole. They point out that the advent of new technologies often produce stock market bubbles -- something that occurred with canals and railroads, automobiles and the tech industry of the late 20th century. Even though the bubbles pop, they usually leave a legacy of productive investment. That was the case with the tech bubble at the turn of the century, though not with the housing and stock market bubble that followed it.

History shows another pattern: There is often a long time between the invention of a transformative technology and the economic transformation that follows. The automobile was invented in the 1860s, but it did not begin to transform society until the 1920s in the United States, reaching its maturity after World War II. Information technology was developed, largely with U.S. military sponsorship, during World War II and the early Cold War, but the personal computer had to wait until the 1980s and the World Wide Web until the 1990s....