Concepts

Plain-language guides to the economic ideas that connect the timeline.

  1. Baumol’s cost disease

    When productivity rises quickly in some sectors but slowly in others, labor-intensive services become more expensive relative to manufactured or automated goods.

  2. Creative destruction

    Innovation creates new products, firms, and rents while making older technologies, skills, and business models less valuable.

  3. Endogenous growth

    Long-run growth can come from deliberate investment in new ideas, so a technology that changes research productivity may change the growth rate rather than only the level of output.

  4. General-purpose technologies

    Some technologies become economy-wide platforms because they improve over time, spread across many sectors, and make further innovation elsewhere more productive.

  5. Jevons paradox

    Making a resource more efficient to use can lower its cost, expand its uses, and ultimately increase total consumption.

  6. Non-rival ideas

    An idea can be used by many people at once without being used up, creating scale and spillovers that physical inputs cannot provide.

  7. Recursive self-improvement

    AI used in AI research creates a feedback loop, but self-sustaining acceleration requires that the loop remain strong enough to overcome diminishing returns and other bottlenecks.

  8. Relational economy

    As automated goods get cheaper, spending and work may shift toward goods and services where human involvement is part of the value.

  9. Solow paradox

    Powerful new technologies can spread rapidly while taking years to produce visible gains in economy-wide productivity.

  10. Structural change

    Uneven changes in productivity, prices, and demand reallocate spending, output, and work across sectors, transforming the composition of the economy.

  11. Task-based automation

    Automation changes particular tasks inside jobs, so occupational exposure alone cannot determine what happens to productivity, employment, or wages.

  12. The knowledge problem

    Economic coordination must use knowledge that is dispersed across people, specific to time and place, and often unavailable to any central decision-maker.

  13. Transaction costs

    Markets are not free to use: finding partners, negotiating terms, monitoring performance, and enforcing agreements help determine which activities happen through markets and which happen inside firms.

  14. Weak links

    When production depends on many complementary steps, improving most of them may do little if one essential step remains hard or unreliable.