The fundamental conclusion of this paper is that technological progress is intimately dependent on economic phenomena. The evidence suggests that society may indeed affect the allocation of inventive resources through the market mechanism somewhat as it affects the allocation of economic resources generally. If this is true, then technological progress is not an independent cause of socio-economic change, and an interpretation of history as largely the attempt of mankind to catch up to new technology is a distorted one. Cultural lags undoubtedly exist in social history. The automobile—to use an obvious example—rendered obsolete many pre-existing social arrangements and behavior patterns. But the reverse is also true. New goods and new techniques are unlikely to appear, and to enter the life of society without a pre-existing,—albeit possibly only latent—demand. Even a longstanding demand may have been intensified shortly before a technique to satisfy it is invented. In addition to cultural lag, there exists technological lag—a chronic tendency of technology to lag behind demand.

In the past decade there has been an extremely active interest in theevidence and importance of the twenty-year building cycle, or Kuznets cycle as Lewis suggests we call it, in both American nineteenth-century development and British development after 1870. The evidence of building cycles in the United States is perhaps more extensive and seems clearly, in the research accumulated by Kuznets, Burns and Abramovitz, to indicate a long swing in the general process of growth, not just long swings isolated to the building trades. Whereas American long swings pervade all domestic series of output, income and investment, British experience seems somewhat different. After 1870 long swings in British capital exports alternated with long swings in domestic investment in a fashion which eliminated excess fluctuations in income and output, which would have been due mainly to fluctuations in aggregate demand.

Between 1890 and 1950 the labor force of the United States creased by some 37.3 million workers. decade-by-decade States in-increments fluctuated widely, roughly half of the sixty-year increase (18.9 million) occurred over the first thirty years, and half (18.4 million) over the second.

The year 1873 marked the zenith of the German free-trade movement, which had been gathering impact since 1818 when Prussia first established a tariff along free-trading lines. Promulgated at the peak of prosperity, the law of 1873 abolished immediately the duties on pig iron, raw steel, and ships, but, as a concession to the protectionists, only reduced the rates on other iron products and provided for their repeal on January 1, 1877. Despite the dissatisfaction of many free-traders, the latter provision opened the door for the repeal of other protective rates. Germany thus stood at the threshold of complete free trade.