The recent successes of the American economy have surpassed everyone's expectations. We've managed to combine fast economic growth, low unemployment, and virtually nonexistent inflation. How did these happy conditions come about? What has technology got to do with it? And what policies can keep the ball rolling?

On the last question, conventional wisdom is insistent in its answer: slash government spending, weaken job security in the name of "flexibility," and keep Wall Street happy and private business will take it from there. Technology, according to this view, is not a major factor. A different school of thought, however, asserts that technology plays a central role in today's noninflationary growth. Whether our growth spurt will turn into a new long wave of prosperity turns on getting this right.

The key question is: how fast can the economy grow without triggering inflation? Official Clinton administration forecasts, and overcautious mainstream economists such as MIT's Paul Krugman, continue to preach on the need for "diminished expectations," contending that the U.S. gross domestic product cannot grow sustainably at an annual pace of more than about 2.3 percent.

They are wrong. This is not your parents' GDP. The forces that were for so long assumed to trigger inflationary pressures have weakened or disappeared. Global competition, along with the undeniable (and regrettable) weakening of the bargaining power of unions, hold down price and wage growth. The successful "oil war" against Iraq has stabilized energy prices. The number of people wanting to work, and the hours of paid employment they are seeking, are at record highs and rising; the labor shortages that presaged earlier rounds of inflation are nowhere on the horizon. Most important, the long-promised productivity improvements from the use of computers and electronic communications are finally spreading throughout American business, from banking to retail trade to carmaking.