On the Demise of the Long Run

John Maynard Keynes observed that, “In the long run we are all dead,” but in terms of economic analysis, the long run also may be dead. The culprit is new technology that is wiping out many of the distinctions between the long and short run. As pointed out by Alfred Marshall a century ago, the amount of time needed to adjust to changed circumstances has been what distinguished the two runs. New technology—computer-aided design (CAD) and computer-aided manufacturing (CAM)—is likely to telescope the long run into the short run, and possibly even into the immediate market period. The key to the new technology, of course, is that it can be reprogrammed to perform a different operation, and this versatility of the new “programmable” automation distinguishes it from the old “hard” automation, in which a machine could perform only a single function.