[Erik Brynjolfsson] The key to growth? Race with the machines

120 years ago, American factories began to electrify their operations, replacing their steam engines with electric motors, igniting the Second Industrial Revolution.
But they didn't redesign the factories to take advantage of electricity's flexibility. It fell to the next generation to invent new work processes, and then productivity soared.

Computer is a General purpose technology of our era. And just as the earlier generations needed to redesign their factories, we're going to reinvent our organizations and even our whole economic systems.
Some situations such as income of typical worker is stagnating even productivity is growing don't mean the end of innovation, but growing pain of what Eric Brynjolfsson and Andrew McAfee call the new machine age.

Today, productivity is at an all-time high, and despite the Great Recession, it growing at a faster rate  than ever in history, include the period of Second Industrial Revolution.

But the new machine age is more about knowledge creation than just physical production. And these creation is not measured by standard metrics. because a lot of such stuffs are provided for free just like Google, Wikipedia, Skype, and TED Talk. Zero price means zero weight in the GDP statistics. That's why some smart people say growth is over, But we need to understand the underlying drivers of growth. The new machine age is digital, exponential and combinatorial.

When goods are digital, they can be replicated with perfect quality at nearly zero cost, and they can be delivered almost instantaneously. And in the age of big data, we can measure the world in ways we never could before.

Secondly, the new machine age is exponential. Computers get better faster than anything else ever. Even our brains are wired for a linear world.

Thirdly, the new machine age is combinatorial. The stagnationist view is that ideas get used up, like low hanging fruit, but the reality is that each innovation creates building blocks for even more innovations.

Individually, digital, exponential and combinatorial would each be game-changers. Put them together, and we're seeing a wave of astonishing breakthroughs.

But perhaps the most important invention is machine learning. Consider one project: IBM's Watson. It improved at a rate faster than any human could. It can surf the internet unsupervised.

Productivity is at an all time high, but fewer people now have jobs. This is great decoupling of productivity from employment, of wealth from work. We should understand its basic causes. Technology is racing ahead, but it's leaving more and more people behind. People are racing against the machine, and many of them are losing that race.

What can we do to create shared prosperity? Instead of racing against the machine, we need to learn to race with the machine.