Twenty-Five Centuries of Technological Change

An Historical Survey

J. Mokyr

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781317834403
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Mokyr provides a long term perspective on the economic impact of technological change, surveying developments in production technologies between 500 BC and 1914.

1. Introduction

One of the most pervasive and pernicious half-truths economists teach their students is the hackneyed aphorism that there is no such thing as a free lunch. It is the purpose of this essay to highlight the greatest counterexample to this statement.¹ Economic History is full of examples of free lunches, as well as (more frequently) very cheap lunches. At the same time, there are endless instances of very expensive meals that ended up inedible and in some cases lethal. Progress and growth are the subjects of this essay, but human history is laden with waste and inefficiency; the past has rarely been an example of economic efficiency. To phrase it differently, technological change is primarily the study of outward shifts of the production possibility frontier. Yet often societies have not been on the frontier, but at a point far from any economic optimality.

Roughly speaking, economic growth can occur as a result of four basic causes:

a) Growth that derives from capital deepening, or Solovian Growth (named after Robert Solow, who laid the foundation of the theory of modern economic growth). Because output per capita depends on the capital-labor ratio, net capital formation at a rate faster than population growth leads to economic growth, defined as an increase in output per capita. This type of growth involves no free lunch: in principle, all future benefits are paid for by abstinence in the present.

b) Growth that derives from commercial expansion leading to a more efficient allocation of resources. Any economist can show how the emergence of exchange (of goods or factors of production) can be beneficial to all partners involved, whether the gains are from international or local trade. A finer division of labor leads to productivity growth through specialization and the adaptation of skills to tasks. This process may be termed “Smithian Growth” (following Parker (1984)). Abstracting from the cost of transacting, the emergence of Smithian growth is a good example of a free lunch. It is, however, not the kind of free lunch I shall be much concerned with below.

c) Growth that derives from scale effects other than the division of labor. It is sometimes maintained that population growth can lead to per capita income growth, e.g. Simon (1977) and Boserup (1981). Such scale effects may clash with the economist’s intuition of diminishing returns, but up to some point at least there are fixed costs and indivisibilities such as roads, schools, property-rights enforcement agencies, and so on, which can be deployed effectively only for large populations.

d) Growth that derives from increasing the stock of human knowledge, which includes technological progress proper, as well as changes in institutions. By technological progress, I mean any change in the application of information to the production process resulting either in the production of a given output with fewer resources (i.e., lower costs), or the production of better or new products. Again following Parker, I shall refer to this type of process as “Schumpeterian Growth.” The choice of the words “application of information” is deliberate: much growth is derived from the employment of previously available information rather than the generation of new knowledge (Rosenberg (1982), p. 143). Traditionally, economists have distinguished between “invention” (the creation of new information) and its implementation, usually referred to as “innovation”. Innovation is followed by “diffusion” in which more and more producers gain access to the new technique. In practice, these distinctions are not very helpful. During the implementation stages, inventions were usually improved, debugged, and modified in ways that qualify for the invention label. Diffusion, too, often required adaptation to local conditions and often implied further productivity gains due to learning by doing. Moreover, inventions that were not implemented remain little more than curiosa, of interest to intellectual but not economic historians. Some societies, such as the Hellenistic Mediterranean, were not especially technologically creative although they were capable of inventing. Their inventions for the most part remained amusing toys and had little or no economic impact. On the other hand, major gains in economic welfare were achieved due to exposure effects that occurred when previously disjointed civilizations came into contact with each other and learned to use each other’s technologies. It is not really material, then, whether the information applied is entirely new even if a proper definition of what “new” exactly means here could be agreed upon. In what follows, the main focus is on technological creativity, defined as novel ways to apply knowledge so as to improve production techniques, a shift outward of the supply curve. Some societies have a remarkable record of technological creativity. Most have not.

The historical record of technological change displays an uneven and spasmodic character. Some brief spans in the history of a nation, like Britain between 1760 and 1800, are enormously rich in technological change. These peaks are followed by periods during which technical progress peters out. Why does that happen? Economists, sociologists, and historians have written extensively about this question, and they have found that its explanation is far from easy (Heertje (1983)). This essay is one more exploration in that direction. Most of what follows, however, is more of a historical description than an explanation. The reader interested in making a point about the history of technological change is offered a grab-bag of examples taken from the records ranging between 500 B.C. and 1914. The richness of technological history is such, however, that almost any point can be contradicted with a counterexample. Picking up empirical regularities in this massive amount of qualitative and often very uncertain information is hazardous and must be deferred (Mokyr, 1989a, 1989b).

The literature produced by modern economists on technological change is vast.² It has not, however, been very successful in explaining why some societies are technologically more creative than others. It is rarely informed by economic history, confining itself mostly to the post 1945 period. It is rarely informed by technological history. When technological historians such as A. P. Usher are cited, it is more for his interesting but speculative application of gestalt psychology to invention than for his enormous knowledge of how machines actually evolved over time (see for instance Thirtle and Ruttan (1987), pp. 2–5). Economists typically approach the explanation of technical change by considering the relation between demand and supply variables, research and development, and productivity growth. In so doing, they implicitly treat technology as a input, albeit one with peculiar features, that is produced and sold in the market for research and development. Such a market may or may not be a useful description of the post-1945 period (Jewkes, Sawers, and Stillerman (1969)). It is clear, however, that for an explanation of the diffusion of wind- power in medieval Europe or the adoption of intensive husbandry in seventeenth century Britain, such a framework is inappropriate. Technological change throughout most of history can hardly be regarded as the consequence of an orderly process of Research and Development. It possessed few elements of planning and precise cost-benefit calculation. How, then, to explain it?

Once the economist ventures outside the safe realm of traditional microeconomics and agrees to consider extra-economic factors, he or she often discovers that events are hopelessly overdetermined. Theories of technical change based on geographic, political, religious, military, and scientific factors are typically easy to concoct and hard to reject. Many explanations make sense. But are they likely to be correct? This way of posing the question may not be very useful; perhaps it would be better to ask whether they are persuasive. Can we amass enough evidence to show that a particular theory is supported by facts in addition to logic? In what follows below I shall try to follow this kind of methodology.

By focussing on Schumpeterian growth I am not abandoning other forms of economic growth. Technological change unaccompanied by other forms of growth is rare. The four forms of growth aid and abet each other in many complex ways. For example, the embodiment hypothesis maintains that much technological change is contained in new capital goods. Thus in the absence of capital accumulation, technological change would be slow. Scale effects spurred by demographic growth lead to technological change, according to Simon (1977), because a large population implies a larger probability of a clever inventor being born. Schumpeterian growth in shipping leads to increased gains from trade by reducing transportation costs. The main focus here will be on technological change proper. The other forms of economic growth will be dealt with only insofar as they touch upon it directly. Technological change has a macro as well as a micro aspect. Even though the processes of invention and adoption are usually carried out by small units (individuals or enterprises), growth itself is an aggregate process. The economic historian is therefore directed to the macrofoundations of technological creativity, that is to say, what kind of environment makes individuals innovative, what kind of stimuli, incentives, hopes, and fears create an economy that encourages technological creativity?

It may turn out, as Heertje (1983, p. 46) has put it, that technological change cannot be explained. By that he means, I think, that standard economic theory faces a dilemma in dealing with technological creativity. It deals, after all, with rational choices subject to known constraints. Technological change involves an attack by an individual on a constraint everybody else takes as given. Yet most of the literature in the economics of technological change has viewed it as a process in which certain inputs (research and development) are transformed into an output called “productivity growth”. As a result, the economics of technological change has been side-tracked by secondary questions such as its direction (factor saving biases) and the effect of cyclical variation in demand on the rate of patenting.

An essay in the economic history of technological change inevitably contains dates, names, and places. By its nature, the tale of technological creativity requires mentioning who first came up with an idea, when and where. Yet in the past decades, economic historians have not practiced this type of history. As David (1987) asks, does technology not simply accumulate continuously from the incremental, almost imperceptible, changes brought about by a large number of anonymous people? Some historians insist that almost all technological change consists of this “technological drift” (as Jones (1981)) has termed it, consisting mostly of invisible, small, incremental improvements (Rosenberg (1982), pp. 62–70). This incremental and evolutionary view of technological change, originally proposed by Gilfillan (1935) has been a good antidote to the naive “great man” interpretations of coffee-table books on the history of inventions. But it is possible to go too far in the other direction and discount major inventions too much. Some, like the printing press, the windmill, and the gravity-driven clock contradict the generality of the gradualist model of technical progress. There were, and probably always will be, large and discrete changes in technology which sweep the world off its feet and make it rush in to acquire and imitate the novelty. Modern research has shown, to be sure, that most cost-savings are achieved through small, invisible, cumulative improvements. But improvements in what? Virtually every invention ever made was followed by a learning process, during which the cost of the technique fell; but for them to fall, the technique had to come into existence first. An adult weighing 150 pounds has acquired about 95 percent of his weight since birth—does that mean that conception is not important?

In discussing the distinction between minor inventions whose cumulative impact is decisive in productivity growth, and major technical breakthroughs, the history of technology may benefit from drawing an analogy with the modern theory of evolution.³ The biologist Richard Goldschmidt (1940) distinguished between micromutations, which are small changes in an existing species and which gradually alter its features, and macromutations which create new species altogether. There is considerable dispute whether the Goldschmidt scheme is appropriate for modern evolutionary biology (Eldredge, 1985, but see Dawkins, 1986), but in any event the distinction between the two is useful for our purposes. In analogy with Goldschmidt’s distinction, define microinventions as the small, incremental steps which improve, adapt, and streamline existing techniques already in use, reducing costs, improving form and function, increasing durability and reducing energy and raw material requirements. Macroinventions are those inventions in which a radical new idea, without clear precedent, emerges more or less ab nihilo. Whereas in terms of sheer numbers microinventions are far more frequent and from an economic point of view they account for most gains in productivity, the importance of macroinventions in technological history is crucial.

The essential feature of technological progress is that the macroinventions and microinventions are not substitutes but complements. Without subsequent microinventions, most macroinventions would end up as curiosa in a museum or in someone’s sketchbook. Indeed, in some historical cases the person who came up with the improvement receives more credit than the inventor responsible for the original breakthrough, as was the case with James Watt and his improvements to the Newcomen atmospheric engine. But without novel and radical departures, the continuous process of improving and refining existing techniques would run into diminishing returns and eventually peter out. Microinventions are more or less understandable with the help of standard economic concepts. They result from search and inventive effort, and respond to prices and incentives. Learning by doing and learning by using increase economic efficiency and can be related directly to economic variables, capturing myriads of infinitesimal inventions. Macroinventions, on the other hand, do not seem to obey obvious laws, do not necessarily respond to incentives, and defy most attempts to relate them to exogenous economic variables. Many of them resulted from strokes of genius, luck, or fortunate misunderstandings. Technological history, therefore retains an unexplained component which makes a purely economically oriented explanation difficult to maintain. In other words, luck and inspiration mattered, and thus individuals made a difference.

For that reason, a survey such as this one has to be concerned with a succession of unique actions and discrete historical events. The notion that if an invention had not been made by X it would have been made by Y, inferred typically from the large number of simultaneous discoveries, is a misleading overgeneralization. It may be true for the telephone, the incandescent lightbulb and other examples; it is false for scores of other important inventions. If there is any area in which a deterministic view that outcomes are shaped inexorably by forces stronger than individuals—be they supply and demand or the class struggle—is oversimplified, it is in the economic history of technology. Asking whether the breakthroughs are more important that the marginal improvements is like asking whether generals or privates win a battle; the processes are complementary. Yet it is useful to organize the narrative around the discrete event. Just as in military history we employ shorthand such as “Napoleon defeated the Prussians at Jena in 1806,” we may say that so and so’s invention occurred at this and that time. We do not imply that inventors are credited with all productivity gains from the invention any more than that Napoleon defeated an entire Prussian army single handedly.

One final point: history provides us with relatively few examples of societies that were technically progressive. Our own world is exceptional though not unique in this regard. Consequently, this study will necessarily draw from a small sample and be heavily biased toward Western economic history. I shall leave out the prehistoric and very early eras, and limit the discussion of the post-1914 period to a minimum. Between about 500 B.C. and 1914 there is a record so stupefyingly abundant in facts and evidence, that I can only scratch the surface of a deep and rich seam.

This monograph has benefitted throughout its long period of creation from the wisdom and wit of F. Michael Scherer. The additional comments of William Baumol, Reuven Brenner, Julia Burns, Charles Calomiris, Jan De Vries, Karl deSchweinitz, Stefano Fenoaltea, Jack Goldstone, C. Knick Harley, Dan Headrick, Jonathan R. T. Hughes, David Hull, Eric L. Jones, William McNeill, Cormac Ó Gráda, and William N. Parker, on earlier drafts have resulted in innumerable improvements. Mrs Barbara Karni provided her usual peerless editorial expertise. All remaining errors are mine and my sources’ alone.

¹ ‘For a similar statement, rare amongst economists, see Kamien and Schwartz (1982), p. 216. Kamien and Schwartz, too, regard technological change as a “trick” that makes it possible to avoid a choice and have “both” when faced with Samuelson’s famous query “which one.” Their analysis is cast largely in terms of a modern market in which research and development are embarked upon in a systematic way.

² For recent surveys see Thirtle and Ruttan (1987); Baldwin and Scott (1987); Coombs, Saviotti and Walsh (1987); Wyatt (1986).

³ For a more detailed exposition of this comparison, see Mokyr (1989a, 1989b).

2. Classical Antiquity

Invention occurs at the level of the individual. It is a game against nature, rather than against other players, what Von Neumann and Morgenstern call a “Crusoe game.”⁴ Yet the adoption and diffusion of technological change involve social interaction, and the kind of society in which the inventor lives decides whether the invention will be taken up by others. Many societies on record did not provide the right environment in which inventions would spread at a pace strong enough to affect output and thus living standards perceptibly. The consensus on classical civilization (Greek, Hellenistic, and Roman) is that these socie...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Introduction to the Series
• 1. Introduction
• 2. Classical Antiquity
• 3. The Middle Ages
• 4. The Renaissance and Beyond: Technology 1500–1750
• 5. The Years of Miracles: The Industrial Revolution 1750–1830
• 6. The Later Nineteenth Century: 1830–1914
• 7. The Historical Roots of Technological Creativity
• Bibliography
• Index