Interesting. This idea appears pretty much exactly at the end of Bob Shaw's 1972 SFnal collection Other Days, Other Eyes. The starting premise is the invention of "slow glass" that looks like an irrelevant gimmick but ends up revolutionizing all sorts of things, and the final bits envisage a disturbing surveillance society with these tiny passive cameras spread everywhere.

It's a good read; I don't think the extrapolation of one technical advance has ever been done better.