A Truly Original Innovation Economist and Economic Historian died Aug 24, 2015, aged 87.
The economics and engineering communities have suffered a giant loss in the passing of Prof. Nathan Rosenberg, Dept of Economics and Stanford Institute of Economic Policy Research, Stanford University, and foreign member of The Royal Swedish Academy of Engineering Sciences. Rosenberg was a truly creative and original economist and economic historian. He almost single-handedly changed the way economists and economic historians think about technology and the nature of technological change, to use the words to describe his contribution when he was awarded the da Vinci Medal in 1996. For example, in an early and very influential article from 1963 on technological change in the machine tool industry, Rosenberg detailed the nature of technological changes in that industry, pointed out new phenomena like technological convergence (e.g. of mechanics, electronics and new materials) alongside technical specialization, challenging the existing frameworks for understanding industrialization, and showing the difficulties in trying to fit these types of micro-technological changes into existing economic models.
Work in the 1950s by Schmookler, Abramovitz and Solow had established the dominant role of new technologies for economic growth at the macro level, but technology was after all something of a black box with dark matter in the economy, coming from somewhere somehow, impacting the economy without being impacted by it. In the 1960s, young economists like David, Griliches, Mansfield, Nelson, Rosenberg and Scherer began their life long pursuits studying the economics of technology at the micro level. These young economists were also inspired by the much earlier but previously generally neglected unique works of Schumpeter on the transformative role of new technologies, innovations and entrepreneurs, captured by his coinage of the term “creative destruction”. Among these young economists Rosenberg was the most historically and qualitatively oriented scholar, with penetrating empirical studies in a wide range of technologies and industries, uncovering and conceptualizing various phenomena, not only for the economics community but also for the engineering community.
The well-known titles of some of Rosenberg’s 20+ books illustrate the research path he took, by then less travelled by, and that made all the difference: ”Perspectives on Technology” (1976), ”Inside the Black Box: Technology and Economics” (1982), ”Exploring the Black Box: Technology, Economics, and History” (1994), ”Paths of Innovation”(1998) (together with Mowery). In the preface of his book ”Inside the black box” he states that ”economists have long treated technological phenomena as events transpiring inside a black box… the economics profession has adhered rather strictly to a self-imposed ordinance not to inquire too seriously into what transpires inside that box. The purpose of this book is to break open and to examine the contents of the black box.” (p.vii). That statement of purpose could just as well apply to Rosenberg’s whole scholarly career.
In these books, many of which were collections of essays, Rosenberg described and conceptualized phenomena he found inside the black box of technology, phenomena like technological convergence, e.g. of electronics and mechanics, giving rise to multi-technology innovations; learning by using as a source of innovations, paralleling the importance of learning by doing, advanced earlier by Arrow; the complex feedbacks between technology and science, e.g. through scientific instrumentation; and the complex feedbacks in innovation processes on the whole, leading him to debunk the commonly accepted and widely used linear model of innovation processes, running from science to technology to the market, and instead proposing a feedback model (together with Kline). At the same time he emphasized the uncertainty in the dynamics of technological change and innovation, not in terms of calculable probabilities, risks and rewards but in terms of genuine uncertainties with inconceivable events and outcomes and consequently with no clear event algebra and pay-off structure. His stories about miscalculations and errors made by informed scientists and inventors in forecasting the technological and economic impacts of new technologies and innovations were numerous, often humorous and always humbling, limiting the scope for rational expectations in innovation processes as well as the scope for centralized innovation policies and picking winners in these processes. With a bit of travesty: ”All inventions have been made so we do not need the patent office any more” (US 1890s); ”10-15 computers will satisfy the world demand” (IBM 1940s); ”The laser has no possible relevance to telecommunications so why should we apply for a patent?” (Bell Labs 1960s); etc. Rosenberg provided us with his stories and histories about the telephone, radio, steam engine, the laser, the MRI and the VCR among many other major innovations. The list may go on and it will go on, since Rosenberg showed that the factors behind miscalculations of the economic impact of new technologies seem to persist, even if some learning takes place in the management of new technologies. We may laugh at the stories but we will likely be laughed at in turn by future generations.
Another famous and widely translated, read and cited book is ”How The West Grew Rich” (1986) (together with Birdzell). In that larger treatise Rosenberg emphasized the evolutionary survival value of capitalism deriving from its inherently experimental and self-constructive feedback mechanisms, adapting and modifying its institutions, even to the point that the mere definition of capitalism and its institutions could be questioned. Rosenberg was not the first one to dwell on those themes, but he used his findings from inside the black box to offer new perspectives and explanations. Without suggesting any causal links one may recall that the book appeared at about the same time as the first signs of the downfall of the Soviet empire and its planned economic system, unable as it was to compete effectively on a broad frontier of new technologies in the global innovation race.
Rosenberg was very well read with a never ceasing appetite for new knowledge and a firmly grounded appreciation of education and human capital formation, having grown up in a poor Russian immigrant environment on the US east coast, poor materially and education-wise, and then making an outstanding career through higher education. He also wrote very well which made him well read by others. He skillfully and fruitfully combined stylistic elegance with analytical clarity, which made him a prominent, almost literary, writer of academic essays.
As a towering figure in his field Rosenberg also stood on the shoulders of giants– Smith, Marx, Schumpeter to just name a few. This is apparent in his many writings about great economists and economic ideas, e.g. in his book ”The Emergence of Economic Ideas: Essays in the History of Economics” (1994). He thereby combined economic history with history of economic ideas in ways that could serve as a model for historians in general.
Nathan Rosenberg exhibited a bit of a paradox. Comfortable as he was with studies of technology in his scholarly life, he was never comfortable with technology itself in his everyday life, a feature he incidentally shared with another great scholar of economics of technology – the late Edwin Mansfield. To replace a light bulb, fix a bicycle or set an alarm clock was not their thing. On the other hand, Rosenberg was indeed comfortable with technologists and worked closely together with several engineers, resulting in scholarly books and articles. In so doing he also could serve as a model for cross-disciplinary collaborative work by engineers and economists, a kind of work that is facilitated and made fruitful by a historical perspective. Rosenberg’s work also attracted great interest among engineers, with the chemical engineer and entrepreneur Ralph Landau as a prominent example, resulting in a large donation to Rosenberg’s economics department at Stanford and Stanford’s institute for economic policy research (SIEPR) and a subsequent series of projects and joint books on various themes in the area of economics of technology, innovation and growth in the 1980s and 90s.
Rosenberg was recruited (by Paul David) to Stanford in 1974, after having taught at the universities of Pennsylvania, Purdue and Wisconsin (where he had earned his PhD in 1955). At Stanford he directed the Program on Values, Technology and Society in the 1970s and was the Economics Department Chair 1983-1986 and led the Technology and Economic Growth Program at SIEPR 1987-2002. He inspired, taught and tutored many graduate students and thereby created a new generation of scholars continuing to explore the lesser and lesser black box of technology, scholars who in turn are influencing their students . He also inspired many people around the world with his works, knowledge, wit, and human warmth and was frequently invited to various events, conferences and discussions with all sorts of people – religious leaders, such as the pope, political, industrial and academic leaders, entrepreneurs, researchers etc.
Rosenberg received many awards and honors during his life and became a member of many distinguished academies and associations in the US and abroad. He was elected to the Royal Swedish Academy of Engineering Sciences (IVA) in 1991 and got honorary degrees, among others from University of Lund. He was frequently in Sweden for shorter or longer visits, at Chalmers, KTH, Stockholm School of Economics and University of Lund, often with his beloved and supportive wife Rina at his side. He participated in many conferences and academic events in Sweden, including three symposia on technology and economics, co-arranged with Chalmers and IVA over the years, and was a key note speaker at the Royal Technology Forum at IVA in 2007 on ‘Technology, Medicine and Economics’.
In his own original and creative way Nathan Rosenberg epitomized the mission of an engineering academy–to bring engineering and economics together for the greater good.