Moore vs Baumol

The computing power doubles on average every eighteen months. This principle is known as Moore’s law, after Intel co-founder Gordon E. Moore. Actually, it is the number of transistors on an integrated circuit that doubles in this time-frame, but it translates in to double computing power – or half price for the same computing power. No-one knows if this is really a law of nature, divine intervention or simply a vision that a lot of engineers work hard to achieve, making it a self-fulfilling prophecy. But it has been consistent since the Sixties and it also turns out that not only computing power, but also memory capacity and network bandwidth follows the same pattern. This principle is key to understanding digital development and Silicon Valley-ideology (my earlier post on Kurzweil and Calico, for example). Moore’s law has put GPS-navigators in our smart phones, technology that twenty years ago was exclusive to the military and maybe ocean vessels. It is the logic behind jokes like “today an average microwave has ten times the computer power of the Apollo 13”. And we have Moore to thank for high-end graphics in video games. And so on…

Now, the strange thing is Moore’s law does not actually make everything cheaper (like some have argued). Our laptops do largely the same things they did ten years ago (granted, netbooks). Word processing has not changed fundamentally since the eighties (granted, spell check). Some things are becoming more and more expensive: software development for example. Last week, the video game GTA V was released. It is considered the most expensive game ever developed – with 250 developers working four years, industry experts estimate the development cost to $137 million. GTA V is extreme, but block-buster video games follow a similar trajectory of increasing production cost. This is the opposite end of Moore’s law: because technology gets cheaper and allows new opportunities, the public’s expectations grow and more resources have to be spent on creating content that can live up to these expectations and opportunities. This irony was first described in the Sixties (pre-Moore!) by US economist William Baumol who did research on productivity. The industrial revolution(s) increased productivity in similar way as Moore’s law, but not for all aspects of human activity. Anything that requires human involvement becomes by comparison increasingly expensive. Baumol’s example is classic music: while the cars that takes the audience to the concert hall becomes better with every new model, it still takes the same number of musicians the same time to play a Beethoven string quartet as 100 years earlier! This is called “Baumol’s cost disease” and it can be worth keeping in mind in a time that is mesmerized by the promises of Moore’s law.