I sympathize with Maximus. The great and victorious Roman general, played by Russell Crowe in Gladiator, is tired of fighting and longs to return to the peace of his farm and family. Instead, the fictitious farmer soldier is wrongly accused of crimes against the state and enslaved as a gladiator who must fight to the death to right the wrong.

As one of the first proponents and a long-time defender of the view that IT has brought us enormous productivity gains in recent years, I feel like Maximus: I can no longer sit back and let the latest round of naysayers go unchallenged. These barbarians at the gate seek to prove that the new economy is a house of cards, not a solid fortress. It collapsed along with the Nasdaq, they say. The productivity gains from technology have been overrated, they argue, and in any case, are over. Our collective crime was irrational speculation and overinvestment. The punishment is a prolonged period of economic stagnation.

Allow me to differ. A decade ago, I predicted that competitive forces unleashed by the end of the Cold War would mean that the pricing environment would get tougher for companies. To boost profits, they would have to cut costs and boost productivity. At the time, the idea that there could be a rebound in productivity was widely viewed as far-fetched. After all, the nonfarm productivity of American workers rose a meager 1.4 percent per year on average from 1973 to 1995. Technology wasn't helping to improve the situation, or so the argument went. Economists were baffled by this lackluster productivity performance and called it the Productivity Paradox.

The Miracle Begins

But in 1996, the Productivity Paradox became the Productivity Miracle as the rise in output per hour in the nonfarm business sector of the economy jumped to 2.9 percent per year on average through 2000. While 2.9 percent may look like a small number, it converts into big numbers across time. If productivity grows at an annual rate of 2.9 percent, living standards double in 24 years. At a productivity increase of 1.4 percent, it takes almost 50 years for living standards to double.

Here's how many economists explain this jump. While companies have been investing in computers and software for decades, it took a while for them to figure out how to use these tools not just as a convenience, but to change the nature of people's jobs. At first, their effect was too negligible to show up in productivity statistics. But by the second half of the 1990s, as each innovation built on the one before, the aggregate effect of IT on productivity became pronounced enough to register in national statistics, hence the 2.9 percent jump in output per hour.

Given such evidence, I thought my days of feeling like Maximus would surely be over. After all, the correlation between technological innovation and productivity gains has been trumpeted by no less an authority on the economy than

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