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The economies of speed, KE=1/2mv2 and the productivity slowdown

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  • Beaudreau, Bernard C.

Abstract

Drawing on basic physics, Kummel [24] and Beaudreau [4,5] attributed the productivity slowdown to the OPEC price-hike-led decrease in the rate of growth of energy consumption in the mid-1970s. The high post-WWII energy use growth rates observed in most OECD countries fell drastically, decreasing productivity and GDP growth. However since, considerable doubt has been cast on this view. For example, why did the rate of growth of energy use in manufacturing, specifically electricity use, fall when and where the price of electricity was either unaffected or increased slightly afterwards? Second, why did it fall instantaneously—that is, without the usual lag? Third, why did energy consumption growth rates not return to their pre-1973 level once real energy prices had returned to their pre-1973 levels. Drawing from kinetics, this paper presents an alternative hypothesis, namely that energy demand-related factors, notably the physical limits to energy-based speed-ups, not energy supply-related factors, may have been behind this sudden decrease in productivity growth and hence behind the productivity slowdown. Specifically, in many industries and sectors, maximum machine speed/velocity may have been—or was near to being—reached in the late 1960s/early 1970s, making further increases physically impossible or not economically viable.

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  • Beaudreau, Bernard C., 2017. "The economies of speed, KE=1/2mv2 and the productivity slowdown," Energy, Elsevier, vol. 124(C), pages 100-113.
    • Handle: RePEc:eee:energy:v:124:y:2017:i:c:p:100-113
    DOI: 10.1016/j.energy.2017.02.022
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    References listed on IDEAS

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    1. Bernard C. Beaudreau, 2023. "A Pull–Push Theory of Industrial Revolutions," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 29(4), pages 303-317, November.

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    More about this item

    Keywords

    Energy use; Speed; Machine kinetics; Productivity slowdown;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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