What factors contributed to the decline of AI research in the 1970s?

Context: TThe first AI winter 1974–1980
In the 1970s, AI was subject to critiques and financial setbacks. AI researchers had failed to appreciate the difficulty of the problems they faced. Their tremendous optimism had raised expectations impossibly high, and when the promised results failed to materialize, funding for AI disappeared. At the same time, the field of connectionism was shut down almost completely for 10 years by Marvin Minsky's devastating criticism of perceptrons. Despite the difficulties with public perception of AI in the late 70s, new ideas were explored in logic programming, commonsense reasoning and many other areas.

The problems
In the early seventies, the capabilities of AI programs were limited. Even the most impressive could only handle trivial versions of the problems they were supposed to solve; all the programs were, in some sense, "toys". AI researchers had begun to run into several fundamental limits that could not be overcome in the 1970s. Although some of these limits would be conquered in later decades, others still stymie the field to this day.

Limited computer power: There was not enough memory or processing speed to accomplish anything truly useful. For example, Ross Quillian's successful work on natural language was demonstrated with a vocabulary of only twenty words, because that was all that would fit in memory. Hans Moravec argued in 1976 that computers were still millions of times too weak to exhibit intelligence. He suggested an analogy: artificial intelligence requires computer power in the same way that aircraft require horsepower. Below a certain threshold, it's impossible, but, as power increases, eventually it could become easy. With regard to computer vision, Moravec estimated that simply matching the edge and motion detection capabilities of human retina in real time would require a general-purpose computer capable of 109 operations/second. As of 2011, practical computer vision applications require 10,000 to 1,000,000 MIPS. By comparison, the fastest supercomputer in 1976, Cray-1, was only capable of around 80 to 130 MIPS, and a typical desktop computer at the time achieved less than 1 MIPS.
Intractability and the combinatorial explosion. In 1972 Richard Karp showed there are many problems that can probably only be solved in exponential time. Finding optimal solutions to these problems requires unimaginable amounts of computer time except when the problems are trivial. This almost certainly meant that many of the "toy" solutions used by AI would probably never scale up into useful systems.
Commonsense knowledge and reasoning. Many important artificial intelligence applications like vision or natural language require simply enormous amounts of information about the world: the program needs to have some idea of what it might be looking at or what it is talking about. This requires that the program know most of the same things about the world that a child does. Researchers soon discovered that this was a truly vast amount of information. No one in 1970 could build a database so large and no one knew how a program might learn so much information.
Moravec's paradox: Proving theorems and solving geometry problems is comparatively easy for computers, but a supposedly simple task like recognizing a face or crossing a room without bumping into anything is extremely difficult. This helps explain why research into vision and robotics had made so little progress by the middle 1970s.
The frame and qualification problems. AI researchers who used logic discovered that they could not represent ordinary deductions that involved planning or default reasoning without making changes to the structure of logic itself. They developed new logics to try to solve the problems.
The end of funding
See also: AI winter
The agencies which funded AI research became frustrated with the lack of progress and eventually cut off almost all funding for undirected research into AI. The pattern began as early as 1966 when the ALPAC report appeared criticizing machine translation efforts. After spending 20 million dollars, the NRC ended all support. In 1973, the Lighthill report on the state of AI research in England criticized the utter failure of AI to achieve its "grandiose objectives" and led to the dismantling of AI research in that country. DARPA was deeply disappointed with researchers working on the Speech Understanding Research program at CMU and canceled an annual grant of three million dollars. By 1974, funding for AI projects was hard to find.

Hans Moravec blamed the crisis on the unrealistic predictions of his colleagues. "Many researchers were caught up in a web of increasing exaggeration." However, there was another issue: since the passage of the Mansfield Amendment in 1969, DARPA had been under increasing pressure to fund "mission-oriented direct research, rather than basic undirected research". Funding for the creative, freewheeling exploration that had gone on in the 60s would not come from DARPA. Instead, the money was directed at specific projects with clear objectives, such as autonomous tanks and battle management systems.

Critiques from across campus
See also: Philosophy of artificial intelligence
Several philosophers had strong objections to the claims being made by AI researchers. One of the earliest was John Lucas, who argued that Gödel's incompleteness theorem showed that a formal system could never see the truth of certain statements, while a human being could. Hubert Dreyfus ridiculed the broken promises of the 1960s and critiqued the assumptions of AI, arguing that human reasoning actually involved very little "symbol processing" and a great deal of embodied, instinctive, unconscious "know how". John Searle's Chinese Room argument, presented in 1980, attempted to show that a program could not be said to "understand" the symbols that it uses. If the symbols have no meaning for the machine, Searle argued, then the machine can not be described as "thinking".

These critiques were not taken seriously by AI researchers, often because they seemed so far off the point. Problems like intractability and commonsense knowledge seemed much more immediate and serious. It was unclear what difference "know how" or "intentionality" made to an actual computer program. Minsky said of Dreyfus and Searle "they misunderstand, and should be ignored." Dreyfus, who taught at MIT, was given a cold shoulder: he later said that AI researchers "dared not be seen having lunch with me." Joseph Weizenbaum, the author of ELIZA, felt his colleagues' treatment of Dreyfus was unprofessional and childish. Although he was an outspoken critic of Dreyfus' positions, he "deliberately made it plain that theirs was not the way to treat a human being."

Weizenbaum began to have serious ethical doubts about AI when Kenneth Colby wrote a "computer program which can conduct psychotherapeutic dialogue" based on ELIZA. Weizenbaum was disturbed that Colby saw a mindless program as a serious therapeutic tool. A feud began, and the situation was not helped when Colby did not credit Weizenbaum for his contribution to the program. In 1976, Weizenbaum published Computer Power and Human Reason which argued that the misuse of artificial intelligence has the potential to devalue human life.

Perceptrons and the attack on connectionism
A perceptron was a form of neural network introduced in 1958 by Frank Rosenblatt, who had been a schoolmate of Marvin Minsky at the Bronx High School of Science. Like most AI researchers, he was optimistic about their power, predicting that "perceptron may eventually be able to learn, make decisions, and translate languages." An active research program into the paradigm was carried out throughout the 1960s but came to a sudden halt with the publication of Minsky and Papert's 1969 book Perceptrons. It suggested that there were severe limitations to what perceptrons could do and that Frank Rosenblatt's predictions had been grossly exaggerated. The effect of the book was devastating: virtually no research at all was done in connectionism for 10 years. Eventually, a new generation of researchers would revive the field and thereafter it would become a vital and useful part of artificial intelligence. Rosenblatt would not live to see this, as he died in a boating accident shortly after the book was published.

Logic and symbolic reasoning: the "neats"
Logic was introduced into AI research as early as 1959, by John McCarthy in his Advice Taker proposal. In 1963, J. Alan Robinson had discovered a simple method to implement deduction on computers, the resolution and unification algorithm. However, straightforward implementations, like those attempted by McCarthy and his students in the late 1960s, were especially intractable: the programs required astronomical numbers of steps to prove simple theorems. A more fruitful approach to logic was developed in the 1970s by Robert Kowalski at the University of Edinburgh, and soon this led to the collaboration with French researchers Alain Colmerauer and Philippe Roussel who created the successful logic programming language Prolog. Prolog uses a subset of logic that permit tractable computation. Rules would continue to be influential, providing a foundation for Edward Feigenbaum's expert systems and the continuing work by Allen Newell and Herbert A. Simon that would lead to Soar and their unified theories of cognition.

Critics of the logical approach noted, as Dreyfus had, that human beings rarely used logic when they solved problems. Experiments by psychologists like Peter Wason, Eleanor Rosch, Amos Tversky, Daniel Kahneman and others provided proof. McCarthy responded that what people do is irrelevant. He argued that what is really needed are machines that can solve problems—not machines that think as people do.

Frames and scripts: the "scuffles"
Among the critics of McCarthy's approach were his colleagues across the country at MIT. Marvin Minsky, Seymour Papert and Roger Schank were trying to solve problems like "story understanding" and "object recognition" that required a machine to think like a person. In order to use ordinary concepts like "chair" or "restaurant" they had to make all the same illogical assumptions that people normally made. Unfortunately, imprecise concepts like these are hard to represent in logic. Gerald Sussman observed that "using precise language to describe essentially imprecise concepts doesn't make them any more precise." Schank described their "anti-logic" approaches as "scruffy", as opposed to the "neat" paradigms used by McCarthy, Kowalski, Feigenbaum, Newell and Simon.

In 1975, in a seminal paper, Minsky noted that many of his fellow "scruffy" researchers were using the same kind of tool: a framework that captures all our common sense assumptions about something. For example, if we use the concept of a bird, there is a constellation of facts that immediately come to mind: we might assume that it flies, eats worms and so on. We know these facts are not always true and that deductions using these facts will not be "logical", but these structured sets of assumptions are part of the context of everything we say and think. He called these structures "frames". Schank used a version of frames he called "scripts" to successfully answer questions about short stories in English.

Answer: Unrealistic expectations, a lack of funding, the challenge of producing significant results, and the discovery of a number of fundamental limitations that AI scientists could not overcome in the 1970s all contributed to the decline of AI research in that decade