The Lever of Riches

1. Technological progress is the primary driver of economic growth and human prosperity

Technological change involves an attack by an individual on a constraint that everyone else takes as given.

Technological progress is the key factor behind sustained economic growth and improvements in living standards throughout history. It allows societies to produce more with the same or fewer resources, creating what economists call a "free lunch." This progress manifests in various forms:

• New or improved products
• More efficient production methods
• Novel applications of existing knowledge

While other factors like capital accumulation and trade expansion contribute to economic growth, they eventually face diminishing returns. In contrast, technological progress has the unique ability to continuously push the boundaries of what's possible, enabling societies to overcome resource constraints and achieve unprecedented levels of prosperity.

2. The history of technology is marked by both gradual improvements and radical breakthroughs

Macroinventions are seeds sown by individual inventors in a social soil.

The evolution of technology is characterized by two distinct types of advancements:

1. Microinventions: Incremental improvements to existing technologies
2. Macroinventions: Radical breakthroughs that create entirely new possibilities

Microinventions are typically the result of deliberate problem-solving efforts and are more predictable. They often arise from:

• Learning by doing
• User feedback
• Systematic research and development

Macroinventions, on the other hand, are less predictable and often stem from:

• Serendipitous discoveries
• Cross-pollination of ideas from different fields
• Insights of individual geniuses

Both types of inventions are crucial for technological progress. Macroinventions open up new avenues for innovation, while microinventions refine and optimize these breakthroughs, making them practical and economically viable.

3. Cultural, social, and institutional factors shape a society's technological creativity

The question is not why some individuals are more creative than others, but why were and are there societies that have more creative individuals in them than others?

A society's capacity for technological innovation is deeply influenced by its cultural, social, and institutional environment. Key factors include:

1. Attitudes towards nature and material progress
2. Religious beliefs and values
3. Political and economic institutions
4. Education systems and knowledge transmission
5. Social mobility and openness to new ideas

Technological creativity thrives in societies that:

• Encourage experimentation and risk-taking
• Value practical knowledge and its application
• Protect intellectual property rights
• Foster competition and entrepreneurship
• Maintain open channels of communication and knowledge exchange

Conversely, societies that are overly rigid, hierarchical, or resistant to change tend to stifle technological progress. The interplay of these factors explains why some civilizations have been more technologically dynamic than others throughout history.

4. Western Europe's unique conditions fostered unprecedented technological progress

The Old World of Eurasia and Africa contained five comparable regions of advanced civilization: China, India, the Muslim world, Byzantium, and Latin Christendom. Only in the last of these did technological innovation accelerate.

Western Europe's emergence as the global leader in technological innovation from the Middle Ages onward can be attributed to a unique combination of factors:

1. Political fragmentation: Competition between states drove innovation
2. Judeo-Christian worldview: Encouraged mastery over nature
3. Strong property rights and rule of law
4. Relative social mobility and meritocracy
5. Development of scientific thinking and empiricism

These conditions created an environment where:

• New ideas could flourish and spread rapidly
• Inventors and innovators had incentives to pursue their work
• Practical knowledge was valued alongside theoretical understanding

The result was a self-reinforcing cycle of technological progress that eventually led to the Industrial Revolution and Europe's global dominance.

5. The Industrial Revolution represents a pivotal moment in technological history

The Industrial Revolution was not primarily a macroeconomic event that led to a sudden acceleration of the rate of growth, although growth eventually became its inevitable corollary.

The Industrial Revolution, centered in Britain from roughly 1760 to 1830, marked a watershed in technological history. Key aspects include:

1. Clustering of major innovations across multiple industries
2. Shift from organic to inorganic sources of energy and materials
3. Development of the factory system and mass production
4. Dramatic increases in productivity and economic growth

Transformative technologies of this period included:

• Steam power
• Mechanized textile production
• Iron and steel manufacturing
• New transportation systems (railroads, steamships)

While the full economic impact took time to materialize, the Industrial Revolution set in motion a process of accelerating technological change that continues to shape the modern world. It demonstrated the potential for sustained, innovation-driven economic growth on a scale never before seen in human history.

6. Technological change can be understood through an evolutionary framework

Like mutations, new ideas occur blindly (Campbell, [1960] 1987). Some cultural, scientific, or technological ideas catch on because in some way they suit the needs of society, in much the same way as some mutations are retained by natural selection for perpetuation.

Viewing technological change through the lens of evolutionary theory provides valuable insights:

1. Variation: New ideas and inventions arise, analogous to genetic mutations
2. Selection: Market forces and social needs determine which technologies survive and thrive
3. Retention: Successful technologies are preserved and refined over time

This framework helps explain:

• The cumulative nature of technological progress
• The coexistence of continuity and discontinuity in technological history
• The role of environmental factors in shaping technological trajectories

Key differences from biological evolution include:

• Intentionality in the creation of new technologies
• The possibility of combining elements from different "technological species"
• Faster transmission of information compared to genetic inheritance

Understanding these dynamics can inform policies and strategies for fostering innovation and managing technological change.

7. The future of technological progress is uncertain but critical for continued human advancement

Technological creativity is like a fragile and vulnerable plant, whose flourishing is not only dependent on the appropriate surroundings and climate, but whose life is almost always short.

While the historical record demonstrates the transformative power of technological progress, its future trajectory is far from guaranteed. Several factors will shape the course of technological advancement:

1. Environmental challenges and resource constraints
2. Social and ethical concerns about new technologies
3. The pace of scientific discoveries in fundamental fields
4. Global economic and political conditions
5. Investment in research and development

Key challenges for sustaining technological progress include:

• Balancing innovation with environmental sustainability
• Addressing potential negative consequences of new technologies
• Maintaining a diverse ecosystem of ideas and approaches
• Ensuring broad access to the benefits of technological advancement

The ability of societies to navigate these challenges will determine whether technological progress continues to drive human prosperity or faces stagnation. Maintaining the conditions that foster technological creativity—openness, competition, and investment in human capital—will be crucial for realizing the potential of future innovations.

Last updated: August 15, 2024