Two Kinds of Technology Change
Many of the examples in this post are drawn from Volume I of Fernand Braudel’s “Civilization and Capitalism: 15th-18th Century”, which I strongly recommend for anyone interested in a quantitative approach to history.
You may have heard that Gutenberg revolutionized the intellectual world with his invention of moving type in the mid-1400’s.
Here’s the thing, though: Gutenberg was not the first to try movable type. The Chinese were using basic printing presses in the ninth century; Pi Cheng introduced movable characters between 1040 and 1050. So why didn’t it catch on then? And even setting that aside, surely some tired monk must have thought of the idea sooner.
Turns out, prior to the 14th century, books were primarily printed on parchment — created from sheep skins. A single 150-page book required the skins of 12 sheep to make the parchment. That much parchment wasn’t cheap — the parchment on which a book was written cost far more than the actual writing. With that much cost sunk in the materials, it’s no wonder that book-buyers wanted beautiful, handwritten script — it added relatively little to the cost.
It was paper which changed all that. European paper production didn’t get properly underway until the 1300’s. Once it did, book prices plummeted, writing became the primary expense of book production, and printing presses with movable type followed a century later.
The printing press offers a clear example of a technology change whose arrival was limited, not by the genius of the inventor, but by economic viability. The limiting factor wasn’t insight, it was prices.
Once you go looking for it, there’s a lot of technology shifts like this. Newcomen’s steam engine (and Heron’s, long before). Schwenteer’s telegraph. Bushnell’s submarine. Babbage and Lovelace had all the key ideas for the modern computer in the 1820’s, but it wasn’t until the 1890 census that somebody wanted to pay for such a thing. And of course, Moore’s Law led to all sorts of ideas going from unprofitable to ubiquitous in the span of a decade or two.
In all these cases, the pattern is the same: the idea for an invention long predates the price shifts which make it marketable.
On the other hand, this isn’t the case for all technological progress. There are some technologies for which demand preceded capability. After some insight or breakthrough made the technology possible, adoption followed rapidly. Consider the Wright brothers’ flyer, or Edison’s lightbulb. Both had badly inferior predecessors, which didn’t really solve the problem: gliders and hot-air balloons for the Wright brothers, arc lights for Edison. Both built fast iteration platforms, tested a large possibility space, and eventually found a design which worked. And both saw rapid adoption once the invention was made.
One notable feature of these breakthrough-type technologies: the economic incentive for flight or the lightbulb was in place long before the invention, so of course many people tried to solve the problems. Both Edison and the Wright brothers were preceded by many others who tried and failed.
Here’s a simple model: technology determines the limits of what’s possible, the constraints on economic activity. We can think of these constraints as planes in some high-dimensional space of economic production. Economic incentives push us as far as we can go along some direction, until we run in to one of these constraints — and the technology we use depends on what constraint we hit.
Following the incentive gradient in the diagram above, we end up at the smiley face — using a mix of technologies A and B. This point is insensitive to small changes in the incentive gradient — the prices can shift a bit one way or the other, shifting the incentive gradient slightly, and the smiley-face point will still be optimal.
However, if prices shift enough, then we can see a sudden change.
Once the incentive gradient moves “down” sufficiently, we suddenly jump from the A-B intersection being optimal to the B-C intersection being optimal. A new set of constraints kicks in; we switch from technology A to technology C. That’s the printing press: inventing C doesn’t matter until the prices shift.
On the other hand, we can also change technologies by relaxing a constraint. Suppose some new-and-improved version of technology A comes along:
Technology A’ allows us to ignore the old A constraint, and move further along that direction. If we were using A before, then we’ll definitely want to switch to A’ right away. That’s Edison’s lightbulb.
In order for a technology to go from not-used to used, one of these two situations must hold: either the technology was unprofitable before and a price shift makes it profitable, or else it was profitable before, and many people tried to figure it out but couldn’t. If you yourself want to market some kind of technology, then you should consider which of these two situations applies. Has a recent price shift made it profitable? Have you made some sort of breakthrough which others have tried and failed to find? If the answer to both of those questions is no, then the technology will probably remain unused. If the answer to at least one of those questions is yes, then you may be on to something.
Thomas de Quincey, in “The Palimpsest of the Human Brain”, makes a similar point:
(The entire essay is well worth reading.)
I’m not sure that’s true. One of my friends, for a history of computing course in university, took a deep dive into Babbage’s designs for the difference and analytical engines, and concluded that they weren’t actually all that much like modern (Von Neumann) computing devices at all. The limiting factor on Babbage’s machines was not the fact that nobody wanted to pay for them, but that the necessary precision in manufacturing gears had not yet been achieved. The analytical engine, especially, required thousands of very small and precisely machined gears, and the manufacturing technology for them would not be invented until well into the 20th century.
The tabulators used in the 1890 census were a far cry from anything that Babbage designed. The Census tabulators were, more or less, very fancy sorting and counting machines. They could not do math or logical operations, but they could take a large amount of data, sort it by various fields and count how many records had the given field marked. They made no attempt at generality (unlike Babbage’s inventions and later computers), but instead sought to mechanize one or two algorithms for maximum efficiency.
Newcomen’s steam engine needed the ability to handle brass in a way that wasn’t available before 1700.
I’m not really convinced by this argument. Yes, Newcomen’s specific design needed precise manufacturing capability. But I would expect that, if there had been demand for steam engines earlier, someone would have found a design which could work with lower-precision manufacturing. Newcomen just used what was available.
Also, I intended Newcomen as an example of an early steam engine which failed to catch on, because it wasn’t very profitable yet.
The problem that Newcomen’s steam engine solved was pumping water out of mines and according to Wikipedia it caught on in the sense that there were hundreds produced. It seems to me like it was a reasonable solution at the time for the problem of pumping water out of mines for those mines that needed a lot of water pumping.
The problem of pumping water out of mines also doesn’t seem to me new, given that mines existed for a long time.
I disagree that the spread of printing presses was not constrained by insight. Gutenberg’s innovation was not the invention of the printing press, but rather the invention of a cheap way of making letterforms for the type in the printing press. Prior to Gutenberg, type had to be laboriously carved out of wood, or sculpted out bronze or ceramic. This was very expensive, and the resulting type wore out quickly, making it uneconomical to use for large print runs.
Gutenberg’s innovation was to cast the letterforms out of lead, using a hand mold. This innovation allowed him to produce letterforms that were cheaper, more durable and more efficient, in terms of ink consumption, than woodblock or ceramic letterforms that the Chinese were using. It seems to me that this was the key innovation that allowed the printing press to take off, since without cheap, high quality type, the printing press isn’t actually more economical than hand copying. Indeed, Gutenberg’s method was so successful, it remained state of the art in printing until well into the 20th century, until it was displaced by photolithography.
This analysis seems correct but somewhat misleading. Specifically, I think that when a technology is enabled by a change in economic conditions, it is often the case that the change in economic conditions was caused by a different technology. So, the ultimate limiting factor is still insight.
In particular, Gutenberg’s printing press doesn’t seem like a great example for the “insight is not the limiting factor” thesis. First, the Chinese had movable type earlier but it was not as efficient with the Chinese language because of the enormous number of characters, which is why it didn’t become more popular in China. Second, you say yourself that “printing presses with movable type followed a century later”. A century is still a lot of time! Third, coming back to what I said before, why did paper production only took off in Europe in the 1300s? As far as I understand, it was invented in China, from there it propagated to the Muslim word, and from there it reached Europe through Spain. So, for many centuries, the reason the Europeans didn’t use paper was lack of insight. Only when the knowledge that originated it China reached them did they catch on.
The invention of water-powered mills made producing paper much cheaper then it was previously and also resulted in better quality paper.
Previous low quality paper was less able to hold records for long timeframes without fading and when books are very expensive you want a book that you produce to be able to exist for hundreds of years.
It’s a classic case of disruptive innovation. Paper was lower quality and lower priced.
Here’s an alternative hypothesis for why the Chinese didn’t adopt the press, even after the introduction of paper. It also explains why the Chinese didn’t adopt wind/water mills, artillery, the slave trade, and ultimately automation: the cost of capital relative to labor was much higher in China than Europe. Across the board, we see much lower Chinese adoption of capital-intensive technology in favor of labor-intensive alternatives, even when the technical prerequisites were met centuries earlier.
It’s interesting that Gutenberg was running a company on a loan in a free city with 25 employees. It’s was a very modern of operating.
Stromers water-based paper mill near Nürnberg was also build near a free city. In both cases the businesses didn’t run in an area where the aristocracy had power.
China didn’t have free cities.
Hmm, interesting. But why was the cost of capital relative to labor so high?
I’ve been chewing on that one a lot. I don’t have a satisfying answer yet. The sheer size/density of the population is one hypothesis, and crop yields are another (rice vs wheat). But I don’t feel like I understand it yet.
Cool!
I’m reminded of this TED talk [7 minutes, well worth watching] about what factors matter the most for startup success.
The conclusion: timing matters more than anything else.
Good teams can implement the same idea. But a little too early, and the technology isn’t viable yet. A little too late, and the niche is already filled. It seems there’s a sweet spot for the timing of effective deployment of a good idea.
Actually, it might be cool to make a GIF of “how the printing press happened” with graphs like this, if anyone likes doing that sort of thing.
Do you know what changed that caused paper production to be viable?
How far back can we follow the chain?
Unsolicited editorial note: I think this might be clearer if you had extra versions of the graphs that are labeled with the relevant technologies instead of labeled abstractly. Walking through the printing press example, with a graph for each time-step for instance.
(In practice I did this myself, but it would be easier if you held my hand, with pictures that I can look at.)
This seems to be a similar argument Lachmann makes in _The Structure of Production_. That argument is very similar, probably well thought of as an extension of Smith’s division of labor limited by the extent of the market applied to capital. Technology simply being something of a more general classification that applies to both labor and capital.
For me it’s about considering innovation through the lens of complementarity with the rest of the economy and particularly at the “edges”. If we consider the economy a tapestry the edges will be frayed, not well bound. That will be where innovation can take root and integrate into the broader picture by finding new relationships with the existing threads on the frayed edges. In some cases that results in brand new economic areas. Most of the time I suspect it results in advancements in how existing economic activity is conducted or needs are met leading to the Schumpeterian process of creative destruction.
I wonder if the Euclidean graph type approach really captures the full texture of the processes at work or not. Perhaps it hides as much in the shadows as it sheds light on.
Well this seems to argue strongly for reviewing old technology proposals at some time interval. I wonder if we could develop some kind of test to apply that would make it easy to gauge whether an in-depth investigation makes sense?
If we could develop such a test, would it be worthwhile to apply it to new ideas immediately as a way to determine their viability and as an indicator of what the criteria would be for coming back to it?
Test is easy: have the inputs become cheaper and/or the outputs become more expensive, compared to alternative technologies? In other words, is it more profitable now?