The Enlightened Economy: An Economic History of Britain 1700–1850

"That is where my fourth book comes in: Joel Mokyr’s The Enlightened Economy: an Economic History of Britain 1700-1850 . Mokyr emphasises the supply of innovations. He asks whether there were some special characteristics of Britain, which meant that the supply of innovations was higher there than in other parts of the world. He takes us back to culture. As you know, I’m pretty sceptical about cultural explanations of economic growth. But this is a wonderful book. It’s well written, it’s witty, it’s fun to read. It’s got lots of vivid quotations and stories. It also has important analytical arguments about the role of human capital, people’s skills, education and training. Mokyr explores the links between science and industry, and the networks of people who were interested in innovation, and the foundation of scientific associations like the Royal Society where industrialists and scientists exchanged ideas. What Mokyr argues is that northwest Europe in general, and Britain in particular, pulled ahead of other economies in the 17th and 18th centuries because of a specific culture, which he calls the ‘Industrial Enlightenment’. This had two components. The first was the Scientific Revolution, which took place in the 16th and 17th centuries, and saw a reversal of the way that people had traditionally thought. They stopped accepting ancient knowledge and started using reason, observation and experimentation to think systematically about the world. You can see that Mokyr emphasises some of the things David Landes wrote about in The Unbound Prometheus . Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . The second component of Mokyr’s new, growth-friendly culture was something specific to the 18th century— the Enlightenment side of things. Mokyr argues that in eighteenth-century Britain, people began applying the Scientific Revolution not just to the world of nature, but to the social and economic world, with the aim of improving the human condition. He argued that this culture of ‘Industrial Enlightenment’ made us recognise, for the first time, that better institutions created incentives for people to behave in ways that benefitted the economy. He thinks that a cultural change led eighteenth-century British people to believe that markets created good incentives, and that rent-seeking created bad ones. This cultural change, he argues, also generated informal norms that favoured trust, creating a sort of ‘gentlemanly capitalism’ which deterred opportunistic behaviour and reduced transaction costs. Mokyr’s view is that the ‘scientific’ side of the Industrial Enlightenment encouraged people to experiment and innovate, while the ‘humanistic’ side encouraged them to design good institutions and behave in trustworthy ways. Together, these two cultural changes increased the supply of inventions and facilitated their practical implementation in the business world. Mokyr firmly declares that economic behaviour is caused by culture. One of the most famous lines in the book is where he writes that economic change in all periods depends more than most economists think on what people believe. In short, Mokyr argues that the most important developments that caused the Industrial Revolution took place inside people’s minds. In fact, there is. He doesn’t say so explicitly. But if he is right that England saw an Industrial Enlightenment which involved a recognition that we should think about what kind of institutional rules of the game are better for making people behave in ways that benefit the whole of society instead of just their small identity group, then that might indirectly give rise to higher wages. That set of norms might favour not just industrial innovations, but many other growth-friendly activities—engaging in long-distance trade, reorganising agriculture, building infrastructure, developing micro-finance, providing fair contract-enforcement, opening up labour markets to women and migrants, making land markets work well. All of those things would have been likely to turn Britain into a richer place with higher wages. “The most important developments that caused the Industrial Revolution took place inside people’s minds.” So, although I don’t think either Allen or Mokyr made that argument, it is possible that some of the qualitative changes identified by Mokyr could have contributed to some of the quantitative developments described by Allen. Nick Crafts argued something of the sort when he reviewed the two books side-by-side in an influential 2011 article. He suggests that each book contains part of the truth. You need Mokyr talking about the factors that help deliver a greater supply of inventions and Allen on what creates a favourable cost or business environment for there to be a greater demand for innovations."