A block doesn't have to be concrete, it could be a composite that includes an exterior shell, structure, insulation, and an interior facing layout that includes channels that line up with other blocks for running utilities. Those utility channels are then covered after construction with larger interior wall panels that fasten in place - removable for utility maintenance, expansion, etc.
We have all these modern materials and manufacturing methods, no need to just make a 'concrete block' anymore - remember most of the cost of a house is not material costs but construction labor. Move the construction to mostly automated factories instead of bringing in hoards of people to tack on bits and pieces to construct a house one nail at a time.