How Eggheads Laid the Golden Egg


Historical Origins of the Knowledge Economy

By Joel Mokyr

Princeton University -- 359pp -- $35

From the fierce conflict taking place over federal budgetary questions, you might deduce that government actions are the key determinants of economic health. Yet, according to Joel Mokyr, the impact of fiscal policy pales in comparison with that of ideas and innovations. Indeed, there's barely a mention of taxes or deficits in Mokyr's fascinating, magisterial investigation into the wellsprings of modern economic growth and improved living standards, The Gifts of Athena: Historical Origins of the Knowledge Economy. What's truly important, he says, are the institutions, policies, and networks that generate and disseminate "useful knowledge."

Mokyr, a professor of economics and history at Northwestern University, is hardly a household name, but he's a key member of an influential group of economic historians that includes Douglass North, Richard Nelson, David Landes, Nathan Rosenberg, and Paul David. They have been grappling for years with the most compelling questions in economics: How does long-run economic growth occur? Why did the Industrial Revolution take place in the West? What factors explain why some nations are rich and others are poor?

Not surprisingly, The Gifts of Athena is a big-idea history book, a complex tale that interweaves science, technology, economics, sociology, and political science. Early on, Mokyr makes a distinction that frames the rest of his discussion: the difference between "propositional" knowledge and "prescriptive" knowledge. The first comprises beliefs about natural phenomena, such as scientific discoveries and practical insights into the properties of materials, heat, motion, and the like. Prescriptive knowledge is all about techniques--the manipulation of recipes, such as how to write a piece of software. The growing interplay between these two forms of knowledge, says Mokyr, transformed the world economy after the 1800s. "The historical question is not whether engineers or artisans `inspired' the scientific revolution or, conversely, whether the Industrial Revolution was `caused by science,"' says Mokyr. "It is the strong complementarity, the continuous feedback between the two types of knowledge, that set a new course."

The great divide in world history, of course, was the Industrial Revolution--or, as Mokyr calls it, the Industrial Enlightenment. To be sure, there was economic growth prior to the 1800s, and there were periods of remarkable innovation, as in medieval Europe and imperial China. But before the Industrial Revolution in the West, periods of growth would end in stagnation. Population growth caught up with raised agricultural yields, and fearful aristocratic and bureaucratic elites acted to block technological progress. What changed?

Mokyr focuses on scholars, philosophers, authors, scientists, and other intellectuals. In this era of scientific discovery, they believed in both comprehending and manipulating nature. But their ethos also supported the exchange of knowledge. The cost of gaining access to information plunged, thanks to the printing press, the formation of informal scholarly communities across European countries, and the creation of formal societies, such as the Institution of Royal Engineers.

While chronicling gee-whiz innovations and their impact on productivity, Mokyr shows how technology transformed the way people live and work. For instance, before 1750, most nonagricultural workers in Western Europe worked at home: The household and the plant were the same. Then came the rise of manufacturing, splitting the two. Behind the factory system was the fact that it proved cheaper to transport people to one location, where vital knowledge could be imparted, rather than to transmit such learning to their houses. Mokyr's book is mostly historical, but he does occasionally address issues of the present. For example, he sees the transportation/shared-knowledge calculus changing: "Modern communications and information technology are weakening the many advantages that the `factory' has had over the household," says Mokyr, leading to telecommuting. This is hardly a new idea, but Mokyr brings fresh authority to the notion.

Like most other economists, Mokyr is a big believer in the benefits of openness, from freer trade among nations to shared technical information. He also understands the obstacles, and he pays considerable attention to an examination of the forces resisting technological change. He doesn't consider such opposition irrational. After all, when the steam thresher threatened the livelihood of 1830s British farmers and gentry, they rioted. Similarly, an alliance of German blacksmiths, horse breeders, and railroad investors slowed the automobile's introduction in Germany, where it had been invented by Karl Benz and Gottlieb Daimler. Often, it is political power that determines whether a technology finds its way into the mainstream, and how quickly.

A couple of caveats: The Gifts of Athenais a dense and sometimes abstruse work. And even well-educated readers may grow peeved as they reach repeatedly for the dictionary. But when pondering questions of economic growth, I've found myself reflecting again and again on the book's wisdom. This is one that will stand the test of time. By Christopher Farrell

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