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Mokyr the Intellectual Origins of Modern Economic Growth.Pdf Economic History Association The Intellectual Origins of Modern Economic Growth Author(s): Joel Mokyr Source: The Journal of Economic History, Vol. 65, No. 2 (Jun., 2005), pp. 285-351 Published by: Cambridge University Press on behalf of the Economic History Association Stable URL: http://www.jstor.org/stable/3875064 Accessed: 05-11-2015 18:20 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/ info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Economic History Association and Cambridge University Press are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Economic History. http://www.jstor.org This content downloaded from 164.73.224.2 on Thu, 05 Nov 2015 18:20:09 UTC All use subject to JSTOR Terms and Conditions THE JOURNAL OF ECONOMIC HISTORY VOLUME65 JUNE2005 NUMBER2 TheIntellectual Origins of Modern Economic Growth JOELMOKYR The intellectualorigins of the IndustrialRevolution are traced back to the Baconian programof the seventeenthcentury, which aimed at expandingthe set of useful knowledge and applying naturalphilosophy to solve technologicalproblems and bring about economic growth. The eighteenth-centuryEnlightenment in the West carriedout this programthrough a series of institutionaldevelopments that both in- creasedthe amountof knowledgeand its accessibilityto those who could makebest use of it. Withoutthe Enlightenment,therefore, an IndustrialRevolution could not have transformeditself into the sustainedeconomic growth startingin the early nineteenthcentury. growthwas not a noveltyin 1800. In a celebratedpassage, EconomicAdam Smith had noted that the "annualproduce of land and labour" had been growing in Britainfor a long time.' Yet there is something dis- tinctive in the changesthat occurred in the economies of the West afterthe IndustrialRevolution that seem to confirm our intuitionthat something genuinelyimportant had happened.To be sure,technological innovations, institutionalreforms, and fresh ideas do not affect the aggregatelevel of economic activity abruptly:they need to diffuse from region to region, fromactivity to activity, cross boundariesand seas, be evaluated,adapted, andrefined. Their promoters have to dislodgethe entrenched,persuade the The Journal of Economic History, Vol. 65, No. 2 (June 2005). C The Economic History Association.All rightsreserved. ISSN 0022-0507. JoelMokyr is RobertH. StrotzProfessor of Artsand Sciences, Departments of Economicsand History,Northwestern University; and Sackler Professor (by specialappointment) Eitan Berglas Schoolof Economics,Tel Aviv University.E-mail: [email protected]. ThisPresidential Address was delivered at the sixty-fourth annual meetings of theEconomic His- toryAssociation in SanJose, California, 11 September2004. Thecomments and suggestions of KennethAlder, Maristella Botticini, Margaret Jacob, Edward Muir, Cormac 6 Grnida,Avner Greif and RichardUnger are acknowledged.I am indebtedto Fabio Braggion, Chip Dickerson, Hillary King,and Michael Silver for research assistance. 1 Smith, WealthofNations, pp. 365-66. Moderneconomic historianshave reachedsimilar con- clusions.While none of theirmethods are uncontroversial, their unanimity seems to indicatethat the "assumption"of moderneconomists such as RobertLucas and Oded Galor that there was no eco- nomic growthbefore 1800 is a gross oversimplification.See for instanceClark, "Secret History"; andSnooks, "New Perspectives." 285 This content downloaded from 164.73.224.2 on Thu, 05 Nov 2015 18:20:09 UTC All use subject to JSTOR Terms and Conditions 286 Mokyr skeptic, and reassurethe fearful. It is not surprising,therefore, that what- ever we identify precisely as the IndustrialRevolution after 1760 took its sweet time to startaffecting GDP per capita in the West in earnest.2 Modem economic growthdiffers from the processes that Smith identi- fied and thatmade Britainand the rest of WesternEurope so much richer in 1700 thanthey had been in 1066. To the hard-nosedscholar who insists that"it was all only a matterof degree,"one responseis that"in economic history,degree is everything."There is a qualitativedifference between an economy in which GDP per capitagrows at 1.5 percentand one in it which grows at 0.2 percent.Another response is that it was not just a matterof degree. It was qualitativelydifferent in at least threefundamental aspects. First, growth graduallyceased to be a niche phenomenon.Before 1750, growthhad been limitedto relativelysmall areasor limitedsectors, often a successful city state, a capital of a powerful monarchy,or a limited agri- culturalregion. These niches had to spend much of theirriches to protect their possessions against greedy neighbors, real-life manifestations of MancurOlson's "rovingbandits" who often killed entireflocks of golden- egg-laying geese. After the IndustrialRevolution, it became a more aggre- gative phenomenon,with a substantialnumber of economies becoming members of the much-coveted "convergence club." Second, pre-1750 growth,such as it was, was dominatedby institutionalchange in its widest sense: law and order, the establishmentof commercialrelations, credit, trust,and enforceablecontracts created the preconditionsfor wealthto ex- pandthrough more efficientallocation, exchange and investment.3 Techno- logical change, while never quite absent,was usually too slow and too lo- calized to assume the dominantrole it was to take later. Third,premodern growthwas normallynot sustainableand remained vulnerable to set-backs and shocks, both man-made and natural. The economic glories of the Dutch Republic and Venice had melted away by 1800, just as those of early sixteenthcentury Spain had vanishedby the deathof Philip II.4In the late eighteenthcentury the relative contributionof technologicalprogress to economic growthcompared to otherelements began to increase,and the institutionalbasis supportingthis progresswas transformed.The resultwas the IndustrialRevolution. It may have been slow, it may have been not all that industrialand even less revolutionary,it may not even have been wholly British,but it was the taprootof modem economic growth. 2 Thereis a substantialliterature that asks with JeffreyWilliamson "why was economic growth so slow duringthe IndustrialRevolution?" although the answerstend to be differentfrom the ones given by him. See Williamson,"Why Was BritishGrowth," pp. 687-712. For some suggested an- swers see Mokyr, "Editor'sIntroduction," pp. 12-17. 3 See Greif, Institutions. 4 De Vries and Van Der Woude. First ModernEconomy; and Drelichman,"American Silver." This content downloaded from 164.73.224.2 on Thu, 05 Nov 2015 18:20:09 UTC All use subject to JSTOR Terms and Conditions Intellectual Origins 287 How do we explainthis change?What has been missing, so far, is a full appreciationof the importanceof usefulknowledge. Economic decisions are madeby individualson the basis of certainbeliefs they hold andknowledge theypossess. It recentyears, it has once againbecome "kosher" if not quitede rigueurto speakof "culturalbeliefs" following Avner Greif'spathbreaking workon the emergenceof institutionsthat made trade possible in statelessand even largelylawless societies.5Douglass North refers to sharedcultural be- liefs and as the "scaffolds"on which institutionsare built.6But Greif and Northare primarily interested in the kindof beliefsthat people hold about one another,how otherswill behaveunder certain circumstances. My interesthere is aboutthe beliefs people held abouttheir physical milieu. In my Gifts of AthenaI referto these beliefs as "usefulknowledge," but of coursethey are butbeliefs aboutthe physicalenvironment and natural phenomena, held with higheror lowerdegrees of unanimityand confidence ("tightness"). Yet all so- cieties have consensus-shapingmechanisms, which determinewhat kind of beliefs will predominate.I suggestin whatis to follow thatthe changein the rate and natureof economicgrowth in the West must be explainedthrough developmentsin the intellectualrealm concerning this "usefulknowledge." The shortanswer as to why the West is so much richertoday thanit was two centuriesago is that collectively, these societies "know"more.7 This does not necessarily mean that each individualon average knows more than his or her great-greatgrandparent (although that is almost certainly the case given the increasedinvestment in humancapital), but thatthe so- cial knowledge,defined as the union of all pieces of individualknowledge, has expanded.Greater specialization, professionalization, and expertiza- tion have meantthat the total amountof knowledge thatsociety controlsis vastly larger than ever before. The effective deployment of that knowl- edge, scientific or otherwise,in the service of productionis the primary- if not the only-cause for the rapid growth of Westerneconomies in the past centuries.The huge literaturethat has accumulatedon the topic in re- cent years has been ably summarizedby Helpman'srecent book.8 In what follows, I propose a slightly differentapproach, based largely on the ex- perience of the Westerneconomies in the eighteenthcentury. THEINTELLECTUAL ROOTS OF THEINDUSTRIAL REVOLUTION Economic historianslike to explain
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