The Lever of Riches: Technological Creativity and Economic Progress

Joel Mokyr is one of the foremost experts in the technological dimensions of the industrial revolution. Here he ranges further to examine the technological (as opposed to scientific) achievements of different societies (mostly Classical, Medieval and Modern Europe, and China) and their contributions to material welfare and productivity. This short review is unparalleled for its concision and the depth of insight it offers into vexing questions about economic and technological growth. There are no sure and easy answers and Mokyr doesn't offer any, but he goes well beyond a bland survey of different views and critically evaluates different theories. This is definitely an economist's perspective on technology (if you want the engineer's perspective look elsewhere), but Mokyr easily handles the technical details of various devices when required. A modern classic in the field.

This is an important book about the historical process that not so long ago was unashamedly called "progress." Mokyr is professor of economics at Northwestern and author of The Economics of the Industrial Revolution. The present work undertakes a systematic cross-cultural, longitudinal study of the causes and conditions of economic growth. A central contention is that contemporary microeconomics lacks the conceptual equipment to elucidate the increment to economic growth supplied by technological change. This is a startling claim: can a science founded in industrialising Scotland to explain the causes of the wealth of nations fail to explicate what everyone knows is the mainspring of economic growth? Mokyr aligns with economists who believe that this is so. They call their heterodoxy "Schumpeterian economics." In the Theory of Economic Development (1912), Joseph Schumpeter emphasized that innovation is the fundamental impulse of capitalist production. Innovation is all-sided. Production, product, resource procurement, efficiency, and marketing are all drawn into the kinetic performance. The key to this dynamism was the relentless, aggressive drive of entrepreneurs. His contemporary heirs replace the entrepreneur by the inventor as the chief wealth-producing agent. While this assessment of the critical role of technology may seem obvious to the layman, it's scandalous in microeconomics. Readers are alerted to heterodoxy on the first page when Mokyr signals that his findings are at odds with "one of the most pervasive half-truths that economists teach their students, . . . that there is no such thing as a free lunch." We are apprised that it is the specific achievement of technology to deliver banquets for millions. It does so thanks to transactions between creative minds and nature that result in tapping natural powers and harnessing them to productive output. The wheel, the sail, the water mill, the wind mill (a wheel-sail), and the steam engine exemplify ways by which ingenuity coaxes nature into delivering disposable power at a precise point. These transactions occur outside the domain of market exchange, although they may and often do intersect with exchange. But it is not obvious to orthodox economics, whose doctrine is that technological innovation can be calculated as a response to market demand or else as a production cost. Mokyr answers that technological input is supply-led in the double sense that technology creates products and services unimagined by consumers, and that technology creates the incomes that make a demand for technology possible. Mokyr's strategy for supplementing economics with a theory of technological innovation is to accept the half-truth that growth can be understood within economics of commercial expansion, size and scale effects, and investment. This will capture "microinnovation," that is, efficiency improvements and other changes that are made more or less spontaneously in the course of p

It is a good book and surprisingly maligned by a couple of the other reviewers. h0td0gsh0p complains that Mokyr does not understand physics. However, the passage he quotes is entirely correct. The verge-and-foliot escapement mechanism was invented precisely because a falling object exerted a variable force on clock mechanisms due to differences in temperature, humidity, etc, which made earlier clocks highly imprecise. The reader from Bath complains that Mokry says that waterwheels were invented in Medival Europe. However, what Mokry actually says is that, "The waterwheel may NOT have been invented in Medieval Europe, but it was there that its use spread far beyond anything seen in earlier times." He points out that in 1086, the Domesday Book lists roughly 1 waterwheel for every 50 households! The Romans were capable of producing fairly advanced overshot waterwheels (as the one near Arles France), but there are very few examples (about 3 places?) that are known. Overall, I found the book very well researched.

This very interesting but relatively brief book is devoted to the role of technological innovation in economic history. In a series of well written and very well referenced chapters, Mokyr discusses the role of technological innovation as a motor of economic growth and social transformation. Topics covered include a general discussion of technological innovation and growth, narrative chapters on technological innovation in the Classical world, Medieval Europe, Renaissance Europe, and the Modern world up to about 1850, discussions of why China and Classical civilization failed to develop an industrial civilization, and a discussion of the analogy between technological innovation and organic evolution. This is a work of synthesis; Mokyr presents little novel information and draws heavily on an impressive body of existing scholarship. Mokyr presents some interesting and important conclusions. Technological innovation is not driven primarily by ordinary market forces. The Industrial Revolution was the culmination in many centuries of technological innovation dating back to the Middle Ages. The failure of China to develop an Industrial Revolution remains a persistent puzzle. By about 1400, Chinese civilization was the world leader in many key technologies but then slides back and is eventually overtaken and then explosively surpassed by Europe. An important point made by Mokyr is that no nation or culture was a perpetual locus of technological innovation. In Europe, innovations were most common in Italy during the Renaissance, followed by major sites in the Low Countries and Germany, followed by the British explosion. Europe, with its divided polities, may have been more conducive to the development of industrial technology. European intellectual and scientific traditions may also have favored the emergence of industrial technology. Whatever factors responsible, Mokyr concludes that the emergence of industrial technology was probably an unusual and highly contingent event. This is similar to the conclusion reached by Kenneth Pomerantz in his recent book, The Great Divergence, an explicit comparison of economic development in China, Japan, and Europe. These conclusions and analyses completely undermine the common and facile notions of European capitalism leading automatically to the success of European culture.

The fall of the Berlin Wall did more than free Eastern Europe; it also freed historians from the somewhat chilling influence of Marxism and post-modernism. By the late 1990s, a new flowering of grand economic history had brought us David Landes's "the Wealth and Poverty of Nations" and Jared Diamond's sublime "Guns, Germs and Steel". But before them came 1990's "The Lever Of Riches", with Joel Mokyr setting out in wonderful detail the notorious economic mystery story called technological progress. Mokyr starts with the technologies of Greek and Roman antiquity, then moves on to the neglected breakthroughs of Western Europe's Dark Ages (the horseshoe, the horse collar, the waterwheel) and the Islamic Golden Age. But his history naturally centres on the Western European technological flowering that began around 1400.He caps this narrative with an ambitious discussion of an issue he regards as central to the mystery of technological development: the relative decline of China, the pre-eminent technological power of the centuries up to 1400.Mokyr, writing before the upsurge of interest in complex adaptive systems, ends the book comparing technological progress with biological evolution. The attempt is only partially successful, but you feel he's opening a new chapter of debate. "A society that has ceased to concern itself with the progress of the past will soon lose belief in its capacity to progress in the future," he concludes. And he's right.