The other day, I posted this chart, which shows that private sector investment in R&D has been growing more slowly in recent years than it did in the 1980s and 1990s:

That seems to provide evidence for the "Great Stagnation" thesis, which posits that technological improvement has been slowing down in recent decades, and perhaps permanently.

But this is the only way to look at the numbers. For example, if you only look at private sector investment in R&D as a share of GDP, that's been growing steadily:

The rate of growth was pretty strong for the 1950s through the 1970s, and during the 1980s, but stagnated in the 1990s and has been pretty inconsistent since. But still, the amount being pumped into R&D every year, as a share of the economy, is way higher than it was in 1980. This suggests that the slowdown in growth in R&D reflects more that GDP growth in general has been lackluster since 2000 or so, rather than anything about innovation per se. We're still throwing a lot of money at that.

And this is a phenomenon unique to R&D. Total investment has been pretty constant for the past 60 years or so:

Correspondingly, the share of investment that's taken the form of private sector R&D has grown:

So are the declinists wrong? Do these charts — not to mention the advent of the Cronut and the doughnut ice cream sandwich — mean that there is no Great Stagnation? Not necessarily. It just means that businesses are investing more than ever in trying to innovate. But that doesn't necessarily translate to actual innovation. Maybe the returns, in terms of new technology, to spending on R&D are falling, and we're spending more and more just to keep pace. That aligns well with the theory that a lot of the 20th century's gains were from low-hanging fruit and that future innovations of similar importance will be harder, or at least costlier, to achieve.

But then again, if the returns are falling, then private business should be responding by spending less, not more, on R&D, and diverting the money to other, better investments. Under that view, the increase in investment on R&D is prima facie evidence that the returns on that are increasing, that we're actually in a golden age of private sector innovation.

I don't know who's right. But the fact that private businesses are directing more and more of their investments to R&D is certainly interesting.