A Culture of Growth

The world today is richer than it has ever been. Why is this? Joel Mokyr’s central contention in A Culture of Growth is that “what happened in the economies of the world in the past three centuries was a function of what people believed”. What happened? What did people believe? And why?

The nuances of what happened are well understood. Around three centuries ago the world began to get richer. Modern economic growth propelled nations and states to higher and sustained levels of material well-being. The event that triggered this process is known as the Industrial Revolution, which began in Britain, spread to Western Europe, followed by North America, before blazing a trail across the world, as innovative technologies and useful knowledge stimulated economic activity on a scale never before seen in any society. These events were tightly interwoven with the era of European maritime exploration and empire-building.

What did people believe? Mokyr convincingly argues that the unprecedented economic advances that began three centuries ago depended on “a set of radical changes in beliefs, values, and preferences”. In short, the “Great Enrichment” depended upon new ideas. These ideas, which Mokyr refers to as “culture”, were crucial in unlocking the creative instincts and impulses of regular people who would eventually accomplish the extraordinary. This period of radical intellectual change is known as the European Enlightenment.

The European Enlightenment prepared the ground for the scientific advances and pioneering inventions that would unleash explosive technological and economic development throughout the modern era, though especially during the long nineteenth century. Joel Mokyr downplays the role of capital accumulation in the propulsion of economic growth and instead points to the pivotal expansion and improvement of “useful knowledge” commencing with the European Enlightenment as the principal stimulus of the wealth of nations.

Why do people hatch new ideas? And how do they supplant old ideas? The surge in technological creativity and innovation experienced in Europe from the late seventeenth century onward was fostered by the desire of people to unlock the secrets of the natural world around them and to put it to productive ends. European culture and institutions were shaped in the early modern period by a diverse, albeit small, community of intellectuals and inventors – philosophers, scientists, entrepreneurs, engineers, industrialists, instrument makers, etc – challenging each other about the nature of the relationship between man and their physical environment. Out of that challenge and dissent arose new ideas, innovations and radical thinking about the natural environment.

Europe, following the Reformation, enjoyed the advantages of intellectual diversity and political fragmentation that allowed new beliefs and often, even radical ideas to flourish and circulate all over the Continent as never before. Political and religious fragmentation ensured European states competed fiercely with each other. This created a pan-European market for fresh ideas among intellectuals that generated scientific innovation and sustainable economic progress as never before seen. Competition for ideas enabled inventors, scientists and entrepreneurs to flourish. Close geographical proximity facilitated the interchange of ideas and ideals among European intellectuals that ushered in the Age of Enlightenment.

The “market for ideas” – where producers persuade consumers to accept novel ideas and findings – was the primary impulse responsible for unleashing the intellectual and scientific ingenuity of ordinary citizens from which the Industrial Revolution and the Great Enrichment issue. Liberal ideas and ideals, not the material culture nor the market institutions it spawned, made what came afterwards possible.

To better understand this phenomenon in our time, consider the recent experiences of India and China. By the late twentieth century, following failed economic experiments with socialist planning models, China and India had little option but to liberalise and encourage foreigners to invest in their economies.

Since then, sustained economic growth has provided an escape from poverty for millions of ordinary Chinese and Indians. All possible because liberal economic principles have created more specialised and dynamic economies with new global connections and greater economic opportunities than was ever achieved under the aegis of socialism. Socialism is no paradise for the ordinary masses because it leads to poverty. However, by letting ordinary Chinese and Indians pursue their own private economic interests, the liberal idea has produced outcomes that no “all-wise central plan” has ever matched.

Later this century, India and China will likely return to the top of the global economic ladder, completing a Kondratiev economic cycle that began several centuries ago in the Age of Columbus.

Joel Mokyr has convincingly shown that the birth of the modern capitalist system was the culmination of a centuries’ long process of intellectual change in the quality of European cultural life. These changes set Europe apart from the rest of the world. The extension of intellectual horizons from the late seventeenth century onward led to an acceleration in economic progress, first in Western Europe, and then right across the globe. Mokyr’s superb account is a fitting testament to that remarkable achievement.

 

Joel Mokyr. A Culture of Growth, the Origins of the Modern Economy. Princeton: Princeton University Press, 2017.

Mark Donoghue has held faculty appointments at the Australian National University, National University of Singapore and the University of Notre Dame (Australia). He is currently on the faculty of the Singapore University of Social Sciences. He has published extensively in the field of the history of economic thought and is the author of Faithful Victorian: William Thomas Thornton, 1813-1880 (Palgrave, 2016).

 

 

 

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