Innovation, Digital Capitalism and Productivity Growth

In this chapter, the ‘digitalization’ of the economy that has enthralled popular media through its transformation of consumer goods and social interaction is shown to lend itself to precisely the same shift in power (towards the corporate sector) that results from the labour market institutions discussed in chapter 6 - with predictable effects on inequality that are of a piece with the observed trends documented in chapter 3. The chapter also reflects on the impact of the digital revolution on productivity growth and, in particular, the seemingly transient fillip to productivity growth (confined to the ‘New Economy’ period in the US during the late 1990s) to which digitalization has given rise. Low-productivity growth sectors are both labour-attracting (accounting for a larger and larger share of employment over time) and, typically, low-wage and low-wage-growth sectors of the economy. In short, it is argued that the technological paradigm that has accompanied neoliberalism provides no obvious escape from the tendencies towards increasing inequality and demand-induced secular stagnation that appear to be the inheritance of this phase of growth.