Five lessons from Joel Mokyr that explain why some economies soar and others stagnate
Economic growth often meets resistance, unfolds slowly and surprises everyone. Joel Mokyr’s Nobel-winning work uncovers hidden forces behind why some economies flourish, others falter and what we must do to harness innovation for lasting prosperity. His most valuable insight: the value of openness.
I studied economics at the University of Edinburgh, which meant reading a lot about the economic history of Northern Britain—and that, in turn, meant reading a lot of Joel Mokyr, who is one of three economists who won this year’s Nobel award [or the Sveriges Riksbank Prize in Economic Sciences]. Later on, as I embarked on my career as an economist, I got to know him personally and his newer research continues to shape my understanding of economic growth.
Whenever I feel uncertain about the future of the economy, I turn to Mokyr.
His work is the foundation of my understanding of why some economies thrive, some stagnate and others decline. It offers both hope and a warning to countries navigating the current economic uncertainty, and sheds some light on big questions about the effect of artificial intelligence (AI) and the viability of the Chinese model.
As an admirer of his work and in honour of his Nobel, I thought I would offer the five most important lessons of Joel Mokyr.
Economic growth is often resisted: Growth has always been critical to economic prosperity—it is why people live longer and lead more comfortable lives that are free from the drudgery of hard labour. But it is often resisted, because it involves upheaval and uncertainty.
Mokyr once explained to me how, at first, men refused work in factories. They were used to working for themselves—as small-scale farmers or artisans—even though they were poor and it was not an easy life. It was what they knew.
The concept of modern work—being somewhere at a certain time, staying all day, taking orders from a boss you had no relation to—was so demeaning and offensive to men that for years factories had to hire women and children. It took a few generations of social conditioning for men to make the transition.
Growth takes time: Industrialization was made possible by a few key innovations that changed the nature of work and production. But there were critical inventions that no one knew what to do with at first. The steam engine, for example, which powered factories and made industrial production possible. It took more than a century for its contribution to even show up in productivity statistics.
Often, the most pivotal inventions take years to find their best use and in ways no one could have predicted. It is true that the speed at which innovations are adopted increases every passing year. It is also true that there are inventions that currently exist which will have a huge impact on the world many years from now.
Growth is unpredictable: New innovations destroy jobs, but they also create new ones—and it is fruitless to try to anticipate what these new jobs will be. Innovations transform the economy in ways that are sometimes impossible to comprehend. As Mokyr once told me: “Imagine explaining to someone in 1920 what a cybersecurity expert is."
Growth is cultural: One question drove economic history literature for decades: Why was Great Britain the first country to industrialize and get rich? Other countries were also inventing things, or had more wealth and natural resources, or a better climate.
Much of Mokyr’s work focuses on the cultural aspects of growth. These are critical. It comes down to an openness to risk and experimentation. This was a big part of the Scottish Enlightenment. Populations were relatively educated, their humanity was emphasized, and their curiosity and individuality were valued.
It’s not enough for a nation to invest money and build infrastructure; it’s not possible for a government to central-plan its way to prosperity. The most critical innovations are often discovered through trial-and-error.
Growth is not inevitable: For centuries, the economies of the world barely grew. There was some progress—but it was small, and when empires ended, often their progress did too. That is what makes the last few hundred years so exceptional. It is true that growth does tend to accelerate and that innovations that help grow the economy beget greater inventions. But if the right conditions for growth are not maintained, this is not guaranteed.
As [today’s uncertainty-struck] world faces a future of lower economic growth [than in recent years], policymakers may be tempted to have the government take a more active role in the economy. Policy certainly has a role to play. But all governments should realize that abundance doesn’t come from better planning.
The crucial element of growth is openness—to risk, uncertainty, change and creativity. That’s the great lesson of Joel Mokyr’s [academic exertions] and why his work is as relevant as ever. ©Bloomberg
The author is a Bloomberg Opinion columnist covering economics.
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