Are We Approaching an Economic Singularity? Information Technology and the Future of Economic Growth

What are the prospects for long-run economic growth?The present study looks at a recently launched hypothesis, which I label Singularity.The idea here is that rapid growth in computation and artificial intelligence will cross some boundary or Singularity after which economic growth will accelerate sharply as an ever-accelerating pace of improvements cascade through the economy.The paper develops a growth model that features Singularity and presents several tests of whether we are rapidly approaching Singularity.The key question for Singularity is the substitutability between information and conventional inputs.The tests suggest that the Singularity is not near.depleted the store of potential great inventions?Will the aging society lead to diminished innovativeness? 2 However, the present study looks at the opposite idea, a recently launched hypothesis which I label Singularity.The idea here is that rapid growth in computation and artificial intelligence will cross some boundary or Singularity, after which economic growth will accelerate sharply as an ever-increasing pace of improvements cascade through the economy.The most prominent exponents are computer scientists (see the next section for a discussion and references), but a soft version of this theory has recently been advanced by some economists as well (Brynjolfsson and McAfee, 2014) At the outset, I want to emphasize that this is not a tract for or against Singularity.Rather, the purpose is two-fold.First, I lay out some of the history, current views, and show an analytical basis for rapidly rising economic growth.Next, I propose several diagnostic tests that might determine whether Singularity is occurring and apply these tests to recent economic behavior in the United States.In the end, I hope that the analysis and tests will allow us to keep a running scoreboard as to whether the economic universe is on a stagnationist or accelerating path … or possibly in that middle ground of steady growth. II. Artificial Intelligence and the SingularityFor those with a background primarily in economics, the present section is likely to read like science fiction.It will explain the history and a modern view about how the rapid improvements in computation and artificial intelligence (AI) have the potential to increase its productivity and breadth to the extent that human labor and intelligence will become increasingly superfluous.The standard discussion in computer science has no explicit economic analysis and leaves open important economic issues that will be addressed in later sections.2 There is a vast literature on the potential sources of stagnation.In the modern era, the "Limits to Growth" school was an early computerized modeling effort that produced scenarios for overshoot and decline in living standards (see Meadows et al 1972 and Ranjens et al 1990).Gordon (2012Gordon ( , 2015) ) argues that a decline in fundamental inventions may slow growth of leading countries.Some foresee a long period of demand-side stagnation in the wake of the long recession that began in 2008 (see Summers 2014).