The tech visionary Kevin Kelly has an excellent must read article on why Moore's law (and similar exponential improvement rates in other technologies -- see graph to left on months to double for other technologies) works. His conclusion, and I suggest you read the article yourself, is:
- Technologies that are amenable to exponential growth rates, do so by leveraging the microcosm (the very small -- as in, "there is plenty of room at the bottom", nano, etc.). This makes a doubling in performance a technological imperative (it will happen no matter what, only the rate of doubling is in doubt).
- The rate of exponential growth is a function of competition, economics, and belief (in the curve of improvement). Which means the rate of progress achievable is a function of our how our system allocates resources and our belief systems. Lots of competition and high velocity money = fast rates of improvement.
- There isn't a fundamental constraint (like energy use) that limits progress. A better explanation is that STEMI (space, time, energy, mass, and information) compression must be able to occur across all phases of the process and not be artificially limited/restricted in any way. That's why improvements in the speed of transportation haven't happened -- you can't shrink the weight or volume of a human being....
- A technological imperative. In short, a suite of technologies that can increasingly replicate the functions of the global economy at the hyper-local level (the equivalent of the very small or nano level of the global economy) -- with headroom for advancement/improvement as far as the eye can see. There are signs that this is potentially true: think 3D printing ("fab labs"), computing, bio, communications, etc. Is it true for agriculture and energy too? The jury is still out but super-empowerment is in the air...
- New beliefs and well funded processes drive improved productivity at the local level. The beliefs and process improvements required are already being developed at the organic level, but it's not getting much help from commercial sources. A good example of this is the Transition towns effort. However, new access to vast cash flows (like my proposal on using IRAs/401ks for investments in local resilience) would radically increase the velocity of money involved. This money would likely speed up the rate of doubling, dropping it from decades to years, by supercharging commercial and open source competition.
- No hard constraints. An ability to avoid or work/route around "hard" constraints on any of items on the STEMI list. The best way to avoid these limits is to obliterate thinking related to the current legacy economic system. For example: exploiting rapid advances in virtual presence and collaborative software to achieve an order of magnitude improvement in worker productivity. This obliterates the need (which we would be unable to achieve) for exponential improvements in cars, transportation infrastructure, etc. for commuting/travel. Another example: exploiting communications systems to share or purchase virtual product designs that can be locally fabricated. This is in contrast to manufacturing products in remote global locales, packaging them, storing them, marketing them, shipping them, putting them on shelves, etc. in the hope that you will purchase them.