The Culture of Capitalism

Explaining Modern Growth

By Peer Vries
For most of human history, poverty and stagnation were the norm. In 1800, according to an
estimate by the economist Deirdre McCloskey, the real income per capita of the average
person on the planet was roughly equal to that of people in present-day Afghanistan.
Sustained economic growth and technological dynamism, meanwhile, were quite unusual.
Yet beginning with Great Britain in the late eighteenth century, parts of the world—primarily
but not exclusively in the West—came to see growth as the default condition. Today the word
as a whole is some ten times, and the United States some fifty times, richer than the world’s
average in 1800. How such growth emerged, and why it emerged when and where it did, is
one of the core questions of economic history. In his new book, A Culture of Growth: The
Origins of the Modern Economy, the eminent economic historian Joel Mokyr sets out to
answer it.

MODERN TIMES

Modern growth, as it is normally defined by economists, involves a substantial increase of

real income per capita sustained over a long period of time—that is, average people’s
incomes not only get better but also continue to do so. (In preindustrial times, periodic
increases tended to be wiped out in the long run by population increases, famines, plagues,
or war.) Most scholars agree that growth of this sort was unknown before the Industrial
Revolution in Great Britain around 1800, which led to a virtuous cycle of increasingly more
and better products, services, and technologies. Internationally, this led to what historians
have called “the Great Divergence,” in which the West economically and technologically
pulled away from the rest of the world during the nineteenth and much of the twentieth
century.

Why the Great Divergence happened is one of the great questions of world history. Some
scholars, such as Jared Diamond in his bestseller Guns, Germs, and Steel, have attributed
different developmental paths to various geographic endowments. But although geography
may be helpful in explaining static differences between regions, it cannot account for the
emergence of long-term regional disparities in growth. In the end, as Mokyr claims, modern
economic growth can be sustained only by permanent innovation, and so any theory that
does not deal with innovation misses the point.

The most popular explanations for innovation have to do with institutions. Scholars such as
Douglass North, Daron Acemoglu, and James Robinson have argued that good institutions—
the legal protection of property rights, functioning markets, and what they have called
“inclusive institutions,” in which many people are involved in the governing process—
provide the necessary preconditions for innovation and thus sustained growth. This
approach tends to focus on the incentives that certain institutions create for economic
actors; if property rights are insecure, for instance, entrepreneurs will be less inclined to
invest in improving their property. 

Mokyr certainly does not deny the fundamental importance of institutional arrangements
for growth. But his thesis centers on the idea that growth and innovation of the magnitude
and permanence witnessed since the Industrial Revolution cannot be explained by economic
or institutional factors alone. Explaining innovation, and therefore growth, requires looking
beyond institutions—to knowledge and so to culture.

THE SMART SET

Although the Industrial Revolution is often dated by historians to around 1800, A Culture of
Growth concentrates on developments in Europe from roughly 1500 to 1750, in order to get
at the cultural roots of the dynamism of that later period. Mokyr defines“culture” early on in
the book as “a set of beliefs, values, and preferences, capable of affecting behavior, that are
socially (not genetically) transmitted and that are shared by some subset of society.” The
subset he is most interested in is the relatively small group of people (aristocrats, gentlemen,
merchants, educated professionals) who drove advancements in science and technology
during that time. In eighteenth-century Great Britain, for example, probably no more than
ten or 15 percent of the population was at all influenced by Enlightenment thinking. Mokyr
is especially concerned with their ideas about the physical environment, and how those ideas
were transformed intowhat he calls “useful knowledge”—knowledge that can be directly
applied to solve practical problems. 

Mokyr is inquiring, therefore, about the cultural origins of modern scientific thinking.
Indeed, science has become so important in the modern world that it is easy to forget how
strange it is. When Albert Einstein claimed that “the whole of science is nothing more than a
refinement of everyday thinking,” he was wrong. Modern scientific thought did not arise out
of common sense. It is, as Dengjian Jin has argued in The Great Knowledge Transcendence,
profoundly unnatural. People are not by nature systematically skeptical or prone to
experimentation; they do not naturally express themselves in numbers or assume the
existence of laws of nature that can be rendered mathematically. Nor do people
spontaneously assume that the world functions as a causal machine. These are all peculiar
hallmarks of Enlightenment thinking. Authority, tradition, and common sense are far more
typical than science as socially accepted sources of knowledge. Traditional societies featured
a close alliance among ideology, knowledge, and political power; that such thinking was ever
superseded in the West by the radical skepticism of science is in itself something of a

miracle. Science has become so important in the modern world that it is easy to forget

how strange it is.

Why did modern science emerge in the West and nowhere else? Although Mokyr studies the
early modern period, the cultural roots of scientific thought may in fact lay further in the
past. The Western tradition—with its Christian, Jewish, and Greco-Roman elements—was
inherently fractured and unstable to begin with. The cultural synthesis of the High Middle
Ages, which combined Christian religious beliefs with rationalistic Aristotelian philosophy,
was an uneasy melding of dogma, reason, and appeals to authority. Then, in the early
modern period, a number of sweeping developments (the Renaissance, the Reformation, the
discovery of the Americas, and the invention of modern scientific instruments) shattered the
convictions behind Europeans’ existing conceptual system, leading to widespread doubt and
controversy.

Yet in the long run, fundamental skepticism is not a practical worldview. Doubt led to a
crisis of the early modern European mind, which helps explain why the pioneers of early
modern science, such as Francis Bacon and Isaac Newton, made such a sustained effort to
establish the scientific method as a new foundation for knowledge—one based on empirical
observation, experimentation, and reason. In a world, moreover, that was often ravaged by
violent conflict, these men put an emphasis on developing peaceful and reasonable ways of
settling disagreements, such as by subjecting arguments to public debate and experimental
confirmation or disconfirmation.

Mokyr repeatedly stresses that there was nothing inevitable about the emergence of modern
science: cultural traditionalists were certainly not doomed to lose. This is where the
enlightened elite was so critical; although Enlightenment thinking was always a minority
viewpoint, in early modern Europe, it was one held by a culturally influential elite. This elite
became convinced that general progress through increased knowledge was both possible and
desirable and that their new knowledge, obtained through the methods of science, should be
spread in order to enlighten the people. “Cultural entrepreneurs,” as Mokyr calls them—
people such as Bacon and Newton—were especially successful in promoting their scientific
views, a rather surprising success considering that science, in its early years, not only was
counterintuitive but also often failed to produce any practical results.

For Mokyr, then, the key development in early modern Europe was what he calls “the
market for ideas,” in which intellectual suppression was difficult and better rewards for
intellectual innovation were developed. Protective institutions in which ideas could be
discussed, and through which they were ultimately spread, flourished. One of the most
important institutions for this market was “the Republic of Letters.” This republic, which
developed in the late seventeenth and eighteenth centuries, was a nonhierarchical,
transnational community of scholars who corresponded with one another about new
developments in the arts and sciences. The republic created a social arena in which
reputations were built on the development and dissemination of new knowledge, knowledge
that other people could test, contest, and use. It had an organizational infrastructure of
universities, learned societies, and salons, and it profited enormously from the development
of a pan-European network of publishers, booksellers, and postal services following the
introduction of the printing press in the fifteenth century.

The market for ideas that Mokyr describes was pluralistic and politically fractured yet at the
same time intellectually integrated. It was therefore difficult to suppress offending ideas,
since scholars could always offer such ideas to the highest bidder, ranging from the rulers of
states to local entities such as towns, universities, guilds, or estates. The Republic of Letters,
as Mokyr emphasizes, was a uniquely European phenomenon. Mokyr compares
developments in Europe with those in China. Although China was highly advanced in many
regards, no comparable culture of growth ever developed there, in part because it lacked a
true market for ideas. That was a result of China’s political structure: China was a
bureaucratically centralized empire that was much more effective than Europe’s competing
states in enforcing ideological orthodoxy. 

BLINDED BY SCIENCE

Yet even for those historians who would be willing to accept Mokyr’s thesis that early
modern Europe alone developed a competitive market for ideas, there remains the question
of how such a market led to the concrete innovations that ultimately made modern growth
possible. It is not easy to pinpoint when exactly modern growth first occurred, but most
agree that it emerged long after the Enlightenment and the scientific revolution. The
Enlightenment, moreover, was a broad European phenomenon that involved places such as
Italy and central Europe, which did not see serious growth until the second half of the
nineteenth century. Finally, much of the new science discussed in the Republic of Letters
was abstract and complex, whereas the innovations that powered the Industrial Revolution
were tangible improvements made on the shop floor by practical craftsmen. 

It is thus not surprising that scholars such as McCloskey have attempted to qualify the role
of science, claiming that it did not matter for most of the economy until the twentieth
century. Science did, of course, play a role in the Industrial Revolution through the
development of technologies such as the steam engine and gas lighting. But the broader
point, stressed by Mokyr, is that science’s greatest influence may have been cultural. By
1800, when industrialization was truly taking off in Great Britain, there had already been a
widespread diffusion within British society of a Baconian scientific mentality that prized
tinkering, experimentation, and rational argumentation. More important, without some
theoretical underpinnings, even the most skilled craftsmen would have quickly hit a ceiling
in terms of innovation. And indeed, the Second Industrial Revolution, which began in the
second half of the nineteenth century with the spread of the railroads, would have been

unthinkable without science. Although Enlightenment thinking was always a minority

viewpoint, in early modern Europe, it was one held by a culturally influential elite.
But Mokyr is not simply a champion of the learned gentlemen: he rightly stresses that
without the practical knowledge of the craftsmen, science would have been a dead end
economically. Someone had to transform the abstract principles of science into functioning
machines that could be used profitably, and someone had to be able to maintain, repair, and
adapt those machines. Skilled craftsmen were the ones who turned the abstract
Enlightenment into an “Industrial Enlightenment,” to use a phrase from one of Mokyr’s
previous books. It was in this respect that Great Britain, the world’s first industrial nation,
was particularly advanced. It had more and better-skilled craftsmen and mechanics than any
other European nation, and also an industrial culture in which, for reasons that are still not
entirely clear, there was more interaction among scientists, tinkerers, artisans, and
entrepreneurs than anywhere else.

WHITHER GROWTH?

A book such as Mokyr’s, which explores the origins of modern growth, inevitably raises the
question, Where do we go from here? According to scholars such as Larry Summers, Tyler
Cowen, and Robert Gordon, the future of economic growth looks rather bleak, especially in
the West, and talk about “secular stagnation” or “the rise and fall of growth” is
commonplace. Much of the pessimism rests on a belief that growth-promoting innovations
are becoming increasingly scarce. Mokyr, however, is not a stagnationist when it comes to
technological innovation. “I take a very optimistic view,” he stated in a recent interview. “I
think if you want to summarize the future of technology, the short summary is, you ain’t
seen nothing yet.”

Yet there are reasons to be less optimistic when it comes to the future of growth. Science, of
course, will continue to progress—scientific research has become too large and competitive
an enterprise for one to expect otherwise—and there is no reason to believe that
technological progress as such will disappear or even slow down. But that does not mean
that economic growth will keep pace or that technology’s effects on income and wealth
inequality will not hamper growth. It is easy to imagine a future in which innovation
destroys more jobs than it creates. In the West, the great majority of the population works in
services, where the economic effects of innovation have always been less impressive than in
industry or agriculture.
There are further doubts about the future of the core idea of the Enlightenment: progress.
Historically, the idea of progress was based on the assumption that consensus was possible
about what counts as knowledge and how to acquire it. But in the postmodern West, this
ability to reach consensus may well have disappeared, as has the idea of progress more
generally. Expertise, which was so prominent in the Enlightenment culture of growth, is now
suspect, and the conviction has been raised that most theoretical knowledge—once
considered a good in itself—is in economic terms actually quite useless. The spread of
education, too, played a central role in Enlightenment thinking about social improvement,
but as the number of uneducated people has decreased, the West may be approaching a
point of diminishing returns. Mokyr also points out the fundamentally constructive role
played by mass media in disseminating knowledge in early modern Europe. Although the
modern mass media, including online and social media, circulate unprecedented amounts of
information, it is unclear how much this contributes to the spread of knowledge in the
Enlightenment sense. Finally, Mokyr emphasizes the importance of an institutional setting
that guarantees equality and freedom. But today in the West, inequality has reached
dangerous levels and anti-Enlightenment authoritarianism is on the rise.

Near the end of A Culture of Growth, Mokyr writes, “The question that will inevitably be
raised is whether the Enlightenment in Europe was a necessary or sufficient condition for
the great breakthroughs that led to economic growth and the modern economy.” He
considers it highly unlikely that modern economic growth could have come into existence
without the Enlightenment and its cultural preconditions. In that sense, it was a necessary
condition. But the question of whether it was a sufficient condition—a much harder case to
make—is left unaddressed.

There can be no doubt, however, about the huge importance of culture in explaining the
emergence and spread of modern economic growth. And yet culture has been ignored far too
often in recent scholarly debates about the Great Divergence and the origins of the modern
world. Someone needed to write a book like this, and there could have been no better author
to do so than Mokyr.