The Lever of Riches: Technological Creativity and Economic Progress

"Mokyr is absolutely right. This book was the first economics book that I ever read. My dad pushed it on me when I was in high school, and I loved it. It took me a surprisingly long time to read given that it’s not very long, but I was captivated. I decided, ‘This is what I have to do in life. I have to study these questions.’ It is just brilliantly and sharply written. He immediately captures the reader by attacking the received wisdom that ‘necessity is the mother of invention.’ He says, ‘Well, no, many societies have not successfully innovated when they really needed to.’ For me, as a young person, that was incredibly fascinating, and it makes him such a compelling author. Mokyr is different from the previous two authors who are looking at much more mundane economic factors behind the rise of the West. Mokyr notes that there’s really no way to explain the emergence of modern economic growth without reference to the technologies that bring it about. There’s no world in which we would be as rich as we are today if everybody was making cotton cloth with handlooms. Technological progress is the basis of economic growth because it makes the individual worker much more productive, and consequently able to earn a higher wage in the modern economy. That is the basis of our present standard of living. Mokyr develops a theory of technological progress that is incredibly compelling. He is addressing some older questions in the economics literature, about whether it’s big inventions that make economic growth happen, or whether it’s continuous chains of small inventions that are the most important. Mokyr says it’s both. Without what he calls macro-inventions—these seminal leaps forward, these strokes of genius, these completely original ideas—no change ever happens. But without micro-inventions, which are generally small, economically motivated refinements on existing ideas, these macro-inventions will remain just what they are: great ideas with limited economic application. “Technological progress is the basis of economic growth” The classic example is the steam engine, an early version of which was invented in the early 18th century by Thomas Newcomen. It was an enormous and inefficient pump for getting water out of mines. For the next 150 years, engineers (famously James Watt) improved it, increasing its fuel efficiency, allowing it to be applied to rotary motion, so that it was able to power machinery, trains, and ships. All these subsequent micro-inventions were necessary to take this fantastic and innovative concept and turn it into a machine that people can actually use. Until those micro-inventions happened, very few steam engines were applied in Britain. So Mokyr sees both of these strands of invention as important. In that light, he has an explanation for British growth residing not in material factors, but in people. Britain, he says, had a class of skilled artisans and inventors that were able to take all of the ideas produced by other countries in Europe, and apply them to economic problems that they faced, and then make iterations upon them whenever technical problems were presented. British engineers, when they were faced with, say, providing a particular kind of iron for the construction of tracks, were very good at refining their production processes such that they could make a particularly hard kind of iron for producing a rail system. What I’ve discussed so far is the opening chapter of the book where he lays out his theory. At least half of the book is a narrative: first of technological progress through the last several centuries of history, and then a series of comparisons between first medieval Europe and the classical world and then between Europe and China. He is endeavoring to explain why China, which during the Song dynasty from 900 to the late 13th century seems to have been the most scientifically and technologically advanced civilization in the world, responsible for a whole slew of independent inventions that are incredibly important, then falls behind. The Chinese had wet field rice cultivation, dams for drainage, iron ploughs, fertilizer, and pest control. They invented blast furnaces for smelting iron a millennium-and-a-half ahead of Europe. They invented spinning wheels, cotton gins, used waterpower and water wheels. They independently invented the water clock, the compass, paper, porcelain, wheelbarrows, crossbows, and trebuchets. Yet all of this basically disappears during the early modern period and China becomes strangely unreceptive to science and technology. Their early use of gunpowder and rocketry does not translate into later use of cannons. All of these technologies have to be imported from Europe during the 17th and 18th centuries. Mokyr is trying to discover what made China less inventive after the 13th and 14th centuries. He doesn’t settle on anything in particular but suggests that the overly large role of the Chinese state in promoting technological change made Chinese invention very vulnerable to withdrawal of that state support. So, whenever the state decided that technological change was too destabilizing for society, invention was more likely to cease than it was in, say, polycentric Europe, where a competitive state system ensured that inventors who were in a repressive society could flee to a more liberal one, and set up their trade there. It’s probably not a coincidence that two of the most liberal societies in Europe, the Netherlands and the United Kingdom, were also particularly inventive. They both took on many, many refugees from other countries in Europe. Huguenots from France, for example, helped to set up textile industries and also the watchmaking industry in Britain."