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The attribution of the Solow Residual to "technology" is grossly misplaced and very poorly founded.

Roughly 98% can be attributed by primary energy consumption. A fact mainstream economists seem to be at pains to deny.

R.U. Ayres, Charles A.S. Hall, and numerous others have repeatedly derived this relationship, and with a pretty consistent value.



That's because a lot of technology is coming up with new ways of using energy to do useful things. See: light bulb, internal combustion engine, etc. And a lot of technology is new methods that reduce the cost of building these energy-consuming devices allowing us to produce more of then for cheaper (and more of them then consumer more energy).

I feel like you are trying to say "no, it's just consuming more energy. It's not 'technology'". But I think you've missed the point. We can't just dump more coal and oil onto a field and burn it and expect that energy to increase production. We need "technology" to turn it into something useful.


Sure, but:

1. Those new ways of using energy themselves are highly dependent on energy-intensive factors as inputs. Steel, aluminium, copper, electronics, reliable power inputs, control systems, etc., are all the products of high-energy outputs.

When you realise that the Watt steam engine revolutionised manufacturing based providing a net total of 500 prime movers of about 10 HP each net power output, you start to recognise just how energy-contrained economic activity was.

2. The Solow Residual is, quite literally, just that. It's a statistical residual. Solow himself describes it as "the measure of our ignorance". Again: there is no basis to attribute it to "technology". Other than it forms an economically convenient theory.

3. The research I've mentioned is far more specific -- rather than just run a regression of capital vs. labour and handwave a declaration that All That Is Unexplained Shall Be Termed "Technology", it specifically considers the role of other factors, including energy. And, again: shows that that accounts for up to 98% of the residual -- an insanely high fit.

So long as we're talking factors of production, I've just learned, reading of and from Alexander Hamilton Church, who more-or-less invented cost accounting, that through about 1900, only labour was considered as a factor of production.

Somewhat amusingly, his discussion of factors other than labour focuses, almost exclusively, on the ability to supply mechanical power through engines. Go figure. 1910.

https://en.m.wikipedia.org/wiki/Alexander_Hamilton_Church

https://archive.org/stream/productionfacto00churgoog#page/n1...




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