Disembodied Technical Progress

Background

Disembodied technical progress refers to advancements in technical knowledge and methods that enhance productivity and output without the necessity for new investments in physical capital, such as machinery or equipment. This concept is crucial in economics as it emphasizes the role of knowledge, skills, and efficient processes in driving economic growth and improvement.

Historical Context

Historically, the role of disembodied technical progress became evident during various periods of significant economic and industrial change. Economists began to differentiate disembodied from embodied technical progress more formally in the mid-20th century to understand better and detail growth mechanisms and productivity improvements.

Definitions and Concepts

Disembodied technical progress is defined as the improvements in technical knowledge that allow more output to be obtained from given inputs without the need to invest in new equipment. The term “disembodied” highlights that these improvements do not rely on new machinery or tools but are attributed to enhanced processes, better training, and innovative management of resources.

Major Analytical Frameworks

Classical Economics

Classical economics primarily emphasizes capital accumulation and labor as the main drivers of production. However, it acknowledges improvements in productivity due to better management and efficient practices.

Neoclassical Economics

Neoclassical economics integrates disembodied technical progress within the production function, typically modeled as part of the total factor productivity (TFP). It recognizes that advancements in knowledge and processes can lead to higher output from the same input levels.

Keynesian Economics

Keynesian economics focuses less on the specific concept of technical progress. Yet, it appreciates the role of technological change in overall economic activity and productivity, indirectly supporting the idea through multipliers on innovation and skills.

Marxian Economics

In Marxian economics, technical advancements are critical but often seen within the context of moving towards capital-intensive production methods. While Marx emphasized embodied progress, his analysis recognized the value of improved economic organization benefiting productivity.

Institutional Economics

Institutional economists consider how institutions and policies foster or hinder disembodied technical progress. They analyze the role of intellectual property rights, educational systems, and research entities in facilitating knowledge dissemination.

Behavioral Economics

This field examines how psychological and cognitive factors can influence innovation and the desire for improving business operations without necessarily upgrading equipment.

Post-Keynesian Economics

Post-Keynesians might explore how demand-side factors and capabilities interact with advances in technical progress, emphasizing organizational and managerial skills over mere capital infusion bolstered under disembodied progress.

Austrian Economics

Austrian economists might highlight the role of the entrepreneur in driving disembodied technical progress through innovative solutions and effective business strategies that enhance productivity.

Development Economics

In development economics, disembodied technical progress is critical for advancing production in developing nations where capital investment levels are low. Enhancements in education, training, and policy/legal frameworks become substantial contributors to technical improvements.

Monetarism

Monetarism traditionally emphasizes the control of money supply but could include effects of technical progress wherein stable economic conditions foster advancements in knowledge and practices that boost productivity.

Comparative Analysis

Disembodied technical progress contrasts with embodied technical progress, where improvements are tied to the acquisition of new physical capital. Understanding the dynamics between these two types of progress helps economists devise policies that balance physical capital investment with innovation and efficiency upgrades.

Case Studies

Software Industry Innovations: Improvements in coding practices and software development methodologies that lead to more efficient and error-free applications without new hardware.
Agricultural Advancements: Enhanced farming techniques and crop rotation practices that increase yield per hectare without requiring new machinery.

Suggested Books for Further Studies

“The Theory of Economic Growth” by W. Arthur Lewis
“Economic Development” by Michael Todaro and Stephen Smith
“Growth and Innovation: The Ideas of Economic Theory” by Geoffrey M. Hodgson

Embodied Technical Progress: Improvements in technology that require new physical investments, such as machines or infrastructure, leading to better productivity.
Total Factor Productivity (TFP): A measure of overall efficiency in converting inputs into outputs, often used to gauge the impact of both disembodied and embodied technical progress.
Innovation: The process of translating ideas or inventions into goods and services that create value and contribute to productivity.