Critical Review of a Technology and Economics Article

The article Digital Technology and Institutional Change from the Gilded Age to Modern Times: The Impact of the Telegraph and the Internet describes the difficulties that exist when trying to create an accurate economic model showing responses to new, economy changing, technologies. The author Ronnie Phillips mainly focuses on institutional economics and, by showing the history of other technological advances, the need for institutional analysis. He explains how the challenge is to explain societal change, recognize what and how it happens, and create policies that will "foster" increased living standards throughout the world.

The way that the author forms his article is by first giving a rather exhaustive history of the telegraph, and reviews the impact that it had when it became a major form of fast communication. He then goes over some factors that are essential to understanding the evolution of society. One, that technology is of the nature of a "joint stock of knowledge for humankind"; two, the role institutions and organizations (like the government) play in the development of the technology; three, a so-called ceremonial encapsulation and path dependency; and four, the unpredictability of technological change and it’s impact on society.

The last half of the article addresses institutional economics, while not very clearly, he writes about the institutional changes that the internet has had on the economy, while going into a short history of the growth of the internet. The conclusion of the article involves an argument/discussion about whether or not the arguments presented in the article substantiate a "new institutional" or "old institutional" methodology versus whether or not they fall within neoclassical theory. Many questions remain unanswered through the end, and even more are raised right in the last paragraph.

Although the author does raise some very interesting and provoking questions in the beginning of the article, unfortunately, some of them are very difficult to answer, or just can’t be answered. While the article doesn’t solve any problems, it does raise awareness and creates some interesting connections with the present and the past. The overall question the author wishes to answer is "how can economists understand and explain the nature of societal change?"

The information is explained mostly through a narrative history with a short quantitative analysis of the growth of the telegraph and the Internet.