Economics, Technological Change and the Knowledge Problem

Computers and other microprocessor technology lead the world of technological change. Nevertheless, the real advances in the world at large are not necessarily in the computer industry, but in the industries whose economics benefit most by the advances that this computer revolution makes possible. The minerals industry has always been in the forefront of this advance. Technological change in the era preceding the industrial revolution, and the mining industry's part in it, provides an instructive lesson for what is happening today. Strong parallels can be drawn for predicting future advances. With each technological advance allowing more efficient production comes a re-alignment of economics - absolute and relative changes to prices, to quantities demanded, and to other market characteristics. This re-alignment applies not only to the mineral industry, but also to the world at large. Adaptability, rather than technical advancement per se is the key to survival and growth in a changing world. 'Adaptability' as a concept is easy to support. As an operational philosophy it is not so easy to implement. As a goal for planning, it is much harder to quantify. A fixed scenario of a future world may provide helpful guidelines, but a scenario that demands adaptability to an uncertain future world is much less definite. Of course, everyone else in the world is also uncertain about the future, and they are making their plans using different assumptions. This virtually guarantees that our future will turn out different to our expectations. This is in part what Hayek (1945) calls the 'knowledge' problem. Until now, most of the planning and technical research undertaken in the world has ignored this problem. This ignorance is a luxury that we can no longer afford. The paper looks at the history of technological change and highlights the characteristics of successful technological revolutions. 'Adaptability' to unforeseen circumstances is the key to success in this environment. The paper examines the knowledge problem from the perspective of the mineral industry, and suggests a number of directions for maximising the returns from application of computer technology in this important area.