Originally published in Section Culture: Newsletter of the ASA Culture Section. Spring 2020, Vol 32. Issue 1
Book Symposium: A Culture of Growth (2018, Princeton)
Professor of Economics
It is almost intimidating to have four of the world’s most distinguished scholars — two economists, two historians — comment on one’s book, and describe it in such flattering terms. That there would be some disagreements in such exchanges is inevitable, and talking about such disagreements is useful, if only in making the exact areas of disagreement sharper.
Jan De Vries is quite right in noting that we should not think of the “epistemic barrier” as a hard barrier to economic growth. It was not a hard barrier: there could be, and had been for centuries, technological progress without any understanding of the underlying natural processes. In some cases it was not really needed (in the mechanizing of cotton spinning, for instance, where mechanical intuition and ingenuity were largely enough). In other cases it was at best partial, such as in the adoption of chlorine for textile bleaching.
The relationship between propositional knowledge and prescriptive knowledge was always subtle and bi-directional, as David Mitch points out. That said, suggesting with Deirdre McCloskey that science (including the experimental and computational methods) and mathematics had little or no impact on economic growth before the 20th Century belittles its achievements in earlier times in many areas. Even if the full principles underlying techniques in use had not yet been discovered, insights from natural philosophy were critical — none more than the discovery of atmospheric pressure in 1643. Some other striking advances of the 18th century depended on prior breakthroughs in hydraulics, astronomy, and physics — one thinks of the improved watermills, the marine chronometer, and ballistics.
Even though the physics of steam power (that is, thermodynamics) was almost a century away, James Watt had learned of the Scottish chemist William Cullen’s finding that in a vacuum water would boil at much lower, even tepid, temperatures, releasing steam that would ruin the vacuum in a cylinder. That piece of knowledge was essential to Watt’s realization that he needed a separate condenser (Hills, 1989, p. 53). Gaslighting, another paradigmatic improvement dating to the Industrial Revolution, depended on advances in pneumatic chemistry.
All the same, what mattered for the Great Enrichment was not just the “classic” Industrial Revolution of 1760-1830 per se, but the fact that the innovations of the Industrial Revolution were sustainable. Unlike earlier efflorescences (as Goldstone has memorably called them) the “wave of gadgets” of the decades between 1760 and 1800 did not fizzle out in a new stationary state but became the first act in what turned out a series of technological waves, each more powerful than the other. Steady, technology-driven economic growth was a fact of life in 1900, and it depended on the ever-tighter interaction of science and technology. The growing dependence of technological innovations on propositional knowledge meant that economic growth slowly turned from a negative feedback process to one that was positive-feedback and non-ergodic.
In addition, it meant a growing importance of a relatively small group of highly-trained informed inventors, engineers, applied mathematicians, and physicists, experimental geniuses such as Von Liebig and Pasteur and the much larger (but still small) group of technicians, instrument-makers, and other highly trained women and men that made their work possible — in short, upper-tail human capital. Knowledge became increasingly important for invention — there would have been no Marconi without Hertz. The net result for the world economy was a phase-transition, a fundamental change in the dynamics of economic change. When precisely the transition happened may be too simple a question: it differed from industry to industry, from sector to sector, even from product to product. The speed of progress depended on how hard the problem was given the tools and capabilities of the best people at the time. “Market-tested” electricity generation emerged a century after the separate condenser and the puddling-and-rolling process.
Culture, all four commentators agree, mattered. But what part of culture? As I see it, what mattered is a belief in human agency that leads to progress or “improvement” as contemporaries often called it (Friedel, 2007; Slack, 2015). Material conditions — that is, prosperity — depend on humans’s ability and willingness to harness the forces of nature to their needs and to overcome the many ways the environment resists human meddlings and manipulations. The realization that the road to success here leads through useful knowledge — the term I deploy throughout my book — is at the very basis of progress. It was not the entire story, but it was essential.
What else mattered? In contrast with Professor McCloskey I believe that institutions matter and that they are not the same as “culture.” Of course they do — or else why would we observe such gaps in living standards between North and South Korea, or between Costa Rica and Nicaragua? But those examples are low-hanging fruits. What about the centuries before the Industrial Revolution? How did institutions matter for the growth of useful knowledge? Here my argument is that institutions mattered, but not necessarily only the formal institutions known as “the state” — entities that raised taxes, exercised justice, and fought wars.
Instead, as Jan De Vries also notes, the more informal and ethereal institutions that in one form or another rewarded people who had made major contributions to our understanding of nature were of greater importance. Institutions were needed if the market for ideas was going to be the environment in which new useful knowledge was produced, vetted, and adopted. Economics has long known how hard it is to reward skeptical and heterodox out-of-the-box thought and incentivize intellectual innovators, from Galileo to Beethoven. Early modern Europe, I argue, created such institutions, and they worked. The Ottoman Empire and China did not. The Republic of Letters was one such institution, and if I stressed it in the book to a fault it is because it differs from the mostly political interpretation that scholars like North and Acemoglu-Robinson have placed on what they see as institutions. A transnational and trans-religious institution superimposed on a fragmented world of states, statelets, and autonomous cities turned out to be a fertile ground for intellectual innovation.
Steve Pincus rightly points out that I do not give states and state capacity their due. By creating an environment that incentivized both the creation of new useful knowledge (through patronage and subsidies) and its diffusion, the competitive states system was an integral part of the advances made between 1500 and 1750.
That said, and the many examples adduced by him notwithstanding, I stand by my position that in the end Europe’s formula for attaining Bacon’s dreams was to farm out the generation of intellectual innovation to the private sector. Bacon and Newton were closely associated with politics and the state (to say nothing of Leibniz), but their intellectual breakthroughs were produced first and foremost as private citizens; their political standing were often the consequence of their contributions to knowledge and the social prestige that their eminence entailed (as was the case with John Locke, whose neglect in my book Pincus quite rightly criticizes).
The role of the “state,” as I see it, was not negligible. That said, early modern Europe was the age of mercantilism and economic policies were still mostly subservient to the political objectives of the rulers and the interest groups that supported them. The triumph of the notion that the state’s role is to augment the well-being of the citizens at large rather than that of the ruler(s) was itself a product of the market for ideas of this time.