Abstract
The Economist (2018) recently claimed that there are three broad lines of inquiry regarding economic growth. The first of these, inspired by Robert Solow, argues that growth is a direct consequence of capital accumulation. As manufactured goods become more complex in design, knowledge is recognized to be increasingly embodied in those goods, and eventually, human capital is seen to be more important than physical capital in the production process. While this approach to economic growth has proven very useful in explaining income convergence, unfortunately it offers few insights into the origins of growth. A second school of thought, extending the ideas of Simon Kuznets, makes much use of empirics and searches for those factors that contribute to long-term differences in either regional or national growth. A multitude of demographic, geographic, sociological, and political factors have been tested—both separately and in combination—for signs of their significance worldwide. Too often, though, the conclusions of these studies have been plagued by data problems or by methodological concerns, such as missing variable biases, cause-and-effect fallacies, inattention to location or ecological scale, and even outright environmental determinism. The remaining school of thought, economic history, now seems to be the most promising of the three. Historians have steadily moved away from highlighting the key players and inventions of the (British) Industrial Revolution and instead study those enabling factors like the incidence of property rights, the transparency of accounts, the nature of trust, and the degree of social tolerance (Acemoglu & Robinson, 2012). While this third approach to understanding growth tends to lack the mathematical rigor of the first approach and the econometric rigor of the second, any perspective on growth that fails to address social and political complexities would now seem doomed to fail.
More than anyone else, Douglass North (1990, 2005) was responsible for the themes and topics that now dominate economic history. Throughout his career, North placed special emphasis on the pivotal role played by institutions—formal rules, informal norms, and sanctions—in the smooth operation of economic ecosystems. These externalities, which vary in form from place to place, are created or adopted so that societies can reduce uncertainty about either current or future events. Existing institutions reflect those beliefs that societies accumulate over time, and any changes to these rules and norms are usually incremental and not disruptive. Here, North often espoused the notion of “adaptive efficiency,” where the sustained health of a society requires the maintenance of institutions that are productive, stable, and widely believed to be fair. More important, perhaps, these institutions must be sufficiently flexible to allow for their modification, or even replacement, as a society grows and evolves in the long run. But institutions by themselves can never fully explain why or how small groups of people can induce the remarkable technological and organizational advances that occur from time to time in human history.
Joel Mokyr has been a leading figure in that generation of economic historians who came after North. He enjoyed early success with The Lever of Riches (1990), which examined, mostly in Europe and China, the complex relationships that often arise between inventors and their immediate physical and social surroundings. In addressing the physical context, Mokyr recognized that nature often poses direct and specific challenges to inventors, while in addressing the social context he recognized the importance of social tolerance or open receptivity to new (and often foreign) ideas. As Joseph Schumpeter pointed out, the enemies of material progress are rarely a shortage of useful new ideas but, instead, the actions of rent-seeking individuals or groups that wish to preserve the status quo: reactionary government bureaucracies, trade unions, professional associations, and favored monopolists. Later, in The Gifts of Athena (2003), Mokyr argued that a key factor in the post-Gutenberg spread of new idea was the emergence of various social networks connecting important thinkers (especially scientists), universities, publishers, professional associations, and the like. But these different networks could only thrive once reliable infrastructure (postal systems, libraries, etc.) had been established to facilitate both the spatial and intergenerational exchange of new and useful ideas.
In A Culture of Growth, Mokyr addresses two riddles of the so-called Great Divergence by focusing on the European experience between the times of Columbus and Newton (c. 1500 to c. 1700). He first argues that we know surprisingly little about the institutions that were the impetus to the very beginnings of the Industrial Revolution. What we do know is that the establishment of these institutions often involved battles, power struggles, and various arrangements made among the powerful dynasties. Mokyr also claims that we know little about the key role of useful knowledge, including, but not restricted to, formal and informal science in the unfolding of the revolution. Here he takes pains to note the parallels between the great voyages of discovery and the beginnings of experimental science, where, in both cases, attempts were made to discover what was not already known. He next borrows the notion of culture, as used by anthropologists like Lynn White, to address those “beliefs, values, and preferences, capable of affecting behavior, that are socially (and not genetically) transmitted and that are shared by some subset of society” (p. 8). Mokyr claims that culture not only provides the foundation for a society’s institutions but in turn gives those institutions legitimacy.
He agrees with many others that the key to Europe’s rise was the Enlightenment, which created a sustained agenda for seeking out useful knowledge. But he sees the rise of the Enlightenment, in the late 17th century, as being more of a lengthy, incremental change that occurred in the minds of Europe’s literary elite. Europe was neither better organized nor more dynamic than various Asian societies, but by the middle 1600s, Europe had effectively adopted a novel means of acquiring and validating (in both the narrower and wider senses) useful knowledge. Mokyr refers to this means as the republic of letters, which designates a community of scholars (philosophes, literati, etc.) who were both socially cosmopolitan and geographically decentralized. These scholars often advanced contentious (but not revolutionary) ideas while sharing generally liberal attitudes toward collaboration and disclosure. This republic of letters effectively created two interrelated markets: one for ideas, where mathematics and experimentation both became more important, and a second for competitive scholars, especially those who were seeking fame, fortune, and influence across the continent. Here he makes the interesting observation that reputation was scalable in the sense that one Galileo would outshine two lesser scientists of the time. In any case, over several generations a selection system was effectively put into place to disseminate useful knowledge. Consequently, Mokyr does not see the rise of science and technology in Europe as an extension of earlier cultures but instead as a repudiation of those cultures. At the core of this systemic repudiation was the republic of letters, which allowed knowledge for the first time to be widely shared, challenged, and corrected.
While acknowledging the possibility of feedbacks, Mokyr sees that the republic of letters was essential for the rise of the Enlightenment, and the rise of the Enlightenment was in turn essential for the economic growth that ensued across Europe. So, over a period of several centuries, two fundamental shifts gradually occurred in the beliefs of many Europeans. First, the pursuit of knowledge, including a better understanding of nature, became widely acceptable as a mechanism for improving human welfare. And, second, the adoption of new ideas and practices was no longer seen to only benefit the rich in society; instead, technological and organizational change were increasingly accepted as being necessary for improving the material conditions of all citizens.
Any reading of Mokyr’s book should probably be complemented by a reading of Deirdre McCloskey’s The Bourgeois Virtues (2006). In this and other contrarian books, she claims that economic growth depends less on investment and trade and more on personal beliefs or the ideas that people find attractive. In fact, she claims that the wealth of nations could not grow dramatically until people were finally convinced that there was dignity in enterprise and fairness in markets. In the end, Mokyr pays more attention to the various players (Francis Bacon, Newton, and the like) in his republic of letters, while McCloskey shows more concern for the shifting sentiments of the general population.
This midsized book, based on the 2010 Schumpeter Lectures given by Mokyr at the University of Graz, is certainly well organized and well referenced (with 35 pages), but somehow the whole appears less than the sum of its parts. Perhaps this is because the material is not that provocative or because substantial portions of the conversation echo what the author has already written. In any case, his claims about correspondence networks could have been sharpened by making a few relatively minor changes. On one hand, he could have made some use of the differences that exist between strong ties and weak ties in networks to clarify how useful ideas likely spread throughout European societies during the 1500s and 1600s (Granovetter, 1983). Here weak ties are believed to be especially important in forming bridges across separate or competing social networks. On the other hand, Mokyr could possibly have adopted some graphics, data permitting, either to highlight the influence fields of key figures (both leaders and connectors) or display the importance of the most active intellectual nodes (Paris, Edinburgh, etc.) in those ever-changing social networks that were the impetus for sustained economic change in Europe (Ferguson, 2017).