Book Summary: “Enlightened Economy: An Economic History of Britain 1700-1850” by Joel Mokyr


The Enlightened Economy

Title: Enlightened Economy: An Economic History of Britain 1700-1850
Author: Joel Mokyr
Scope: 4 stars
Readability: 4 stars
My personal rating: 5 stars
See more on my book rating system.

Topic of Book

Mokyr overviews the history of the Industrial Revolution in Britain and argues that it is best understood as an outgrowth of the Enlightenment and Scientific Revolution.

My Comments

While I disagree with Mokyr on the importance of science to technological innovation and economic growth, I always enjoy reading his books.

Key Take-aways

  • Industrial Revolution was the outgrowth of the Enlightenment and the Scientific Revolution.
  • The Enlightenment and Scientific Revolution led to what Mokyr calls an “Industrial Enlightenment” which focused on increasing human knowledge and making that knowledge accessible to those who could make use of it in production.
  • Britain was unique in having a network of highly skilled engineers, mechanics and craftsmen who networked with leading scientists and philosophers.
  • In other nation, engineers and craftsmen were beholden to the state or to wealthy patrons who purchased their goods.

Important Quotes from Book

This book “argues, in short, that in addition to standard arguments such as geographical factors and the role of markets, politics, and society, the beginnings of modern economic growth depended a great deal on what people knew and believed, and how those beliefs affected their economic behavior.”

“For much of recorded history, the arch-enemy of economic growth was not population pressure so much as predators, pirates, and parasites, often known euphemistically by economists as “rent-seekers… aggressive rent-seeking often led to the end of the economic activity that brought about growth. In this way growth, in truly dialectical fashion, created the conditions that led to its own demise. Wealthy towns such as Milan, Antwerp, and Magdeburg raised the envy and greed of strong neighbors, who besieged, sacked, and taxed them. Only a few areas with unusual geographical characteristics such as Venice or the maritime provinces of the Dutch Republic could avoid the worst of these ravages, but even they had to devote a large proportion of their economic surplus to defense.

Britain was unusually lucky in two respects. One was that as it was an island, the threats to its security were less pressing… British society became unusually good at restraining the greatest local bully of them all, namely the King. ”

“Much of the economic history of Britain during the period under discussion here cannot be properly understood without realizing that after the middle of the eighteenth century redistributive activities, inimical to economic development, were on the retreat. The attacks on mercantilism—which was the formal manifestation of rent-seeking—by liberal economists were one front on which this battle was fought.”

“Institutions did not change just because it was efficient for them to do so. They changed because key people’s ideas and beliefs that supported them changed.”

“And yet by itself institutional change would not have been enough. There was another element that held back pre-Industrial Revolution economies and prevented sustained growth. Their technological options were limited.”

“If the basic premise that the Industrial Revolution was the outgrowth of the social and intellectual foundations laid by the Enlightenment and the Scientific Revolution is correct, it was a European, not a British, phenomenon.”

“Britain at the end of the seventeenth century was no longer a traditional static economy. There was growth, but by modern standards it was slow, uneven, and often reversed.”

“A different negative feedback was rooted in the institutions of pre-modern economies. When some region or economy grew rich, it invited stronger and poorer neighbors to try to expropriate this wealth, either through outright plunder and piracy, or through more subtle means such as tariffs, Navigation Acts, and trade restrictions”

“Finally, technology was another binding constraint. The pre-modern economies were at times capable of creating radical inventions, but such advances tended to settle down rather quickly into a new dominant design largely because most inventions were arrived at through trial and error and hit-and-miss procedures. Systematic research and development based on something we would recognize today as scientific rigor was still highly uncommon. The continuous improvements, tweaking, and refinement of new techniques that we are accustomed to in the modern age, and that have yielded most of the productivity gains, were far slower and soon tapered off.”

“Seasonal unemployment was one of the main causes of low incomes in societies with poor transportation and communication facilities, ”

“perhaps 30 percent of British laborers in the early eighteenth century were at some point employed in a formal labor market, where they received a money wage”

“Britain’s day-to-day government in 1700 was decentralized and mostly run by local magistrates such as unpaid Justices of the Peace”

“The view of many scholars influenced by Douglass North’s interpretation is that by 1700 Britain had resolved what is known as the “commitment problem,” that is, it had created a society in which the state had a virtual monopoly on violence to protect its citizens, yet most citizens could be reasonably sure that the state would not abuse this monopoly (Dam, 2005, p. 84). The age-old query “who shall guard us from the guardians?” had been resolved.”

“The Enlightenment was a phenomenon that set Britain and north-western Europe apart from the rest of the world in the eighteenth century. ”

“The Enlightenment project, writes a leading modern philosopher for instance, consisted of two projects, a political one that would create a better society and a philosophical one “that would replace religion with rational thought and an understanding of nature (Rorty, 2001, p. 19). There was a third project, however, namely to make the economy produce more wealth and thus to increase what economists today would call economic welfare. Of the three projects of the Enlightenment, the third has been by far the most successful”

“intellectual innovation could only occur in the kind of tolerant societies in which sometimes outrageous ideas proposed by highly eccentric men would not entail a violent response against “heresy” and “apostasy.”

“Without Britain’s technological leadership, Europe would have had an Industrial Revolution: slower, later, and different in some important details, but sustained economic growth would have taken place in the nineteenth century all the same.”

“At the heart of social progress was the expansion of useful knowledge.”

“Where things were different was, above all, in the idea of useful knowledge which gave people power over nature and not (just) over other people. ”

“Another way that progress would be attained was through the perfection of institutions. Enlightenment thinkers thoroughly rethought the role of the state in society, and formulated proper rules for government and law based on such ideas as a “social contract” and “civil society” (the latter term was introduced by the Scottish writer and contemporary of Adam Smith, Adam Ferguson)”

 “It is reasonable to query how big a part of the population was influenced by Enlightenment thought. The answer must be, whatever the numbers, that it was a relatively small minority, somewhere between 10 and 15 percent of Britain’s population may not be far off the mark.”

“I have proposed the term “Industrial Enlightenment” to describe this aspect of eighteenth-century society (Mokyr, 2002). The Industrial Enlightenment refers to that part of the Enlightenment which believed that material progress and economic growth could be achieved through increasing human knowledge of natural phenomena and making this knowledge accessible to those who could make use of it in production. It was believed that social progress could be attained through the “useful arts,” what we today call science and technology, which should inform and reinforce one another. This belief spawned what has been called “the Baconian program.” The program consisted of three components. First, research should expand humanity’s knowledge and understanding of the universe by accelerating the pace of research into natural phenomena that had been of interest for a long time, armed with better research equipment and scientific method. Second, the research agenda should be directed to areas where there was a high chance of solving practical problems—in medicine, manufacturing, navigation, and so on. Third, the access costs to this knowledge should be made as low as possible, not only by dissemination but also by organizing and classifying what was known (Mokyr, 2005a).

The name is apt: the influence of Francis Bacon was central to the Industrial Enlightenment”

“To be successful, the knowledge generated by the Baconian program had to meet three criteria concerning useful knowledge (that is, knowledge concerning the physical world): it had to be cumulative, consensual, and contestable”

“in most of recorded history, the communication between intelligent, educated, literate people who knew things and the working people in the fields and workshops had been weak or non-existent. Separated by social class, political power, and often language and legal status, it rarely occurred to either that they could learn a great deal from one another.”

“The Industrial Enlightenment thus not only represents a utopian belief in a more comfortable and secure world thanks to the increase of useful knowledge, but was quite specific in its recipe as to how such a world was to be achieved, namely through specialization and the division of knowledge.”

“To summarize the argument: Enlightenment thought was all along deeply concerned with political economy. In the second half of the eighteenth century, most important intellectuals became increasingly hostile to what modern economists would call rent-seeking, namely the use of political power to redistribute rather than create wealth. The influence of this movement affected the long-term evolution of the British economy in that it redirected creativity and energy away from rent-seeking and toward activities that increased national prosperity and social welfare.”

“A significant and not often recognized effect of the changes in European ideology due to Enlightenment thinking is the Pax Britannica, that prevailed in Europe in the century following the fall of Napoleon. Britain had emerged from the French Wars as the most powerful nation in Europe, yet now it rarely used these advantages to impose its will and hegemony on its European neighbors. Predatory wars, such as were fought in the eighteenth century, were becoming rare in Europe. It did not have to be this way: Britain was probably powerful enough to impose its economic will on other European countries, but it had concluded that its interests were best served through peaceful commerce. ”

“the experience of Latin America and Russia have demonstrated to the world that access to modern science and technology without first changing the institutions that set incentives and define the rules of the economic game will not inevitably lead to the kind of economic growth experienced by the richest industrialized countries. The Enlightenment thus created a synergy of two sets of transformation that supported and reinforced one another. It is in that synergy that the roots of modern economic growth can be found.”

“Daily material life in Britain, outside a few key areas and regions, proceeded more or less as it had in the past, and the average Briton in 1800 was probably only dimly if at all aware that something very large was brewing on the horizon.”

“Even in societies in which markets were relatively free and developed, there was rarely any proportionality between the contribution of an innovator and the rewards he or she reaped. At least in that sense, the situation then was not different from what it is today: Nordhaus (2004) has estimated that in modern America only 2.2 percent of the surplus of an invention is captured by the inventor him/herself.”

“An important cultural feature of the European West, prominent in Britain but by no means confined to it, is the way useful knowledge was placed in the public realm. ”

“The economics of the accumulation of useful knowledge might be compared to what is now known as an “open source” system in which individuals work on components of a larger endeavor, trying to make significant contributions and thus a name for themselves”

“Effective use of knowledge, however, required not only access and incentives to create and access new technology, but also the competence to make use of it and to carry out the “instructions” contained in the blueprint of the technique.”

“On the eve of the Industrial Revolution, Britain could rely on a comparatively large number of skilled mechanics and technicians, people who had been selected for their dexterity and mechanical gifts and trained as apprentices. Of course, other countries could count on such people as well, but Britain seems to have been particularly well endowed with them”

“The difference between Britain and other nations was not only in the level or prevalence of mechanical skills but in their allocation as well. On the Continent, the state (primarily the military) absorbed the lion’s share of engineering talent… On much of the Continent, engineers served above all the state in the military, the civil service, teaching, and administration. An “engineer” in France was a military man. In Britain, men of comparable interests and abilities had to find employment in the private sector,”

 “To sum up: in Britain the high quality of workmanship available to support innovation, local and imported, helped create the Industrial Revolution. It was especially in their competence, in the application, adaptation, and tweaking stages of invention, that Britain’s skilled mechanics and engineers excelled. These skills were often tacit and could not be readily transferred from country to country.”

“But whence Britain’s advantage? To understand the British advantage we need to understand how manufacturing was carried out in Europe before the Industrial Revolution. The bulk of it was produced by artisans catering largely to a local market—bakers, millwrights, tailors, blacksmiths, thatchers, shoemakers, carpenters, traditional craftsmen who carried out their trades in traditional Europe between the Vistula and the mountains of Donegal. Another class of skilled craftsmen such as drawloom operators, perfumers, watchmakers, potters and porcelain-makers, mirror and glass producers, wigmakers, confectioners, and armorers had traditionally catered to the rich and powerful, the military, and the most fortunate of them to the courts. By 1700, however, their clients were increasingly drawn from a broader, less elite population. These skilled workers were carefully selected and well trained through long apprenticeships and embodied the state-of-the-art industrial human capital of the age.

By the early eighteenth century, Britain had raised a class of craftsmen with skills that turned out to be of great importance later on. Three sectors in particular were of central importance. One group was clock and instrument makers, many of whom had emigrated to Britain from France after the revocation of the Edict of Nantes in 1685”

“The pre-existence of such skills was essential if the machine was to become a serious competitor with human and animal strength, and if mass production of standardized goods was to take off.”

“What set Britain apart was the emergence of a substantial middle class before the Industrial Revolution, a large group of merchants, professionals, well-to-do farmers, and artisans who would vaguely fall into the modern notion of a middle class. These people consumed more consumer durables and other “middle-class goods” that demanded a high level of precision skills”

“Some modern scholars feel that artisans could have carried out most of the changes in technology needed for economic change (Berg, 2007; Hilaire-Pérez, 2007). Artisans were an essential ingredient in the growth of useful knowledge, and they were a large part of Britain’s advantage. All the same, by themselves they were unlikely to generate an industrial revolution. What was needed was just the right combination of useful knowledge generated by scientists, engineers, and inventors with the existing supply of skilled craftsmen and an institutional environment that produced the correct incentives for entrepreneurs. A purely artisanal-knowledge society will eventually revert to a technological equilibrium”

“Some scholars (e.g., Humphries, 2003; 2009, ch. 8) have maintained that the system of British apprenticeship was one of the institutions that set Britain apart and that explains the unique concentration of “practical skills” and dexterous craftsmen who helped make the Industrial Revolution.”

“It is important to stress that the Industrial Revolution was the creation of an elite, a relatively small number of ingenious, ambitious, and diligent persons who could think out of the box, and had the wherewithal to carry out their ideas and to find others who could assist them.”

“the bulk of British workers in the period may not have mattered much to the Industrial Revolution. The average “quality” of the majority of the labor force – in terms of their technical training—may thus be less relevant to the development and adoption of the new techniques than is commonly believed. The distribution of knowledge within society was highly skewed, but as long there was enough action in the upper tail of the distribution and as long as access costs to knowledge were sufficiently low, such a skewness would not impede further technological progress.”

“only in the second half of the nineteenth century did steam power have measurable effect on productivity in the British economy. Crafts (2004) estimates that the social savings due to steam engine improvements were still only 0.3 percent of GDP a year in the years 1830–50 and less before that, but jumped to 1.2 percent in the decades 1850–70.”

“progress in engineering was constrained by the ability of machine shops to turn inventions into hardware and that accuracy and high-quality materials were essentially self-propagating.”

“in the long run the main channel through which openness affected economic progress was via the salutary effects of useful knowledge and ideas that came from overseas,”

“Trade created so-called exposure effects, the importation of foreign products such as calicoes and chinaware, which served as a focusing device, showing the local people what could be done. The British first copied, and then improved. Openness was more than trade, it was British citizens traveling overseas, reading foreign books in translation, hosting foreign visitors, all the while learning how foreigners made things.”

“The British Industrial Revolution found technological inspiration everywhere, in China, South America, and Africa as well as in the rest of Europe. Yet the fact remains that by 1850 Britain had done far more with these ideas than their originators. John Farey pointed out with some pride that foreign inventions, after being improved in Britain, even when they were returned in improved state to the countries in which they originated, could not be worked as extensively and profitably as in Britain”

“Foreign trade was the one area in which the state made a big difference in the period 1700–1850. Trade was regulated, controlled, and taxed.”

“tariff protection embodied the very essence of mercantilism: the confluence of fiscal needs and special interests.”

“by most reasonable criteria Britain was not a free trade nation for much of the nineteenth century, and its overall rate of tariff protection was considerably higher than France’s”

“Control of empires, moreover, seems not to have triggered an Industrial Revolution elsewhere. Britain aside, Switzerland and Belgium, two non-imperial nations, were successful continental industrializers, whereas the Netherlands and Portugal, which controlled large and rich colonies, remained behind.”

“We could distinguish between a weak and a strong interpretation of the role of the foreign sector in the development of the British economy. The “weak role” emphasizes that the British navy and its policies allowed Britain to import colonial and other foreign goods at better prices, with lower freight and insurance costs, and supplied more reliably, while at the same time finding more dependable markets for British manufactured goods, supplied ever more cheaply and at higher quality. The British navy provided a secure environment for long-distance trade, and cleared the oceans of pirates and privateers.”

“Beside a post-hoc-ergo-propter-hoc logic there is little to recommend this interpretation. It fails to realize that war and protectionist measures, the inevitable results of these aggressive policies, were themselves the main element that disrupted and endangered normal trade. It also fails to recognize what Adam Smith and countless economists after him have seen, namely that voluntary trade between nations or regions benefits all sides and that political control did not normally enhance the overall gains from trade unless it was required to enforce contracts and property rights.”

“The belief that empire was a crucial factor in the success of the British economy may in part be based on a confusion between empire and openness. Openness did not necessarily require political domination, and whereas control did provide the colonialist nationals with some trading advantages, these were paid for dearly.”

“The logical dilemma for those who feel that the British Empire was the answer to the question “why Britain?” is that trade with the empire may have been of importance before the Industrial Revolution, but lost much of its primacy in the years after 1780”

“In every period Europe and the United States absorbed more than half of British exports.”

“around 1700 only about a third of all Britons were making their living from agriculture.”

“English farm output per worker in 1705 was twice what it was in France and farm output per acre 50 percent higher. By 1775, this gap had increased substantially, to a ratio of 4.3:1 in labor productivity and 2.5:1 in land productivity.”

 “All the same, by 1700 British farming was, on average, as good as could be found anywhere at this time. The concept of an eighteenth-century Agricultural Revolution, analogous to the Industrial Revolution, has become increasingly difficult to defend. ”

“Of the many “revolutions” that were supposed to have taken place in Britain between 1700 and 1850, the transportation revolution occupies a pivotal role,”

“Better transportation weakened and possibly eliminated local monopolies and forced producers and merchants to compete with one another, a process that enhanced efficiency and speeded up the diffusion of new techniques. By unifying large markets, good transport tended to encourage the creation of standardized products and through it mass production, and encouraged investment in marketing and management (Szostak, 1991). A good railroad is the mortal enemy of the monopsonistic employer in the “one-company-town,” who could exploit his employees. More subtly and harder to observe, better transportation meant that ideas and knowledge could flow more easily across space and thus that they affected access costs. ”

“as late as 1910, coastal ships carried 59 percent of all ton-miles of internal freight, with the railroad picking up 39 percent and canals only 2 percent.”

“the construction of the railroad network was by far the most costly and ambitious overhead investment project since the Pyramids.”

“The railroad network turned out to be a huge investment project. To provide some context, consider this: in the 1820s, transport investment—roads, harbors, and canals—absorbed about 15 percent of British Gross Capital Formation, whereas in the late 1840s, the peak of the railroad boom, this figure jumped to a lower bound of 40–45 percent, with some of the higher estimates reaching 54 percent.”

“The history of the Bank of England mirrors the institutional development of Britain between 1700 and 1850 from a mercantilist to a liberal economy. It started off primarily as a rent-seeking monopoly, relying on political clout to seek privileges and exclusionary rights…. Unlike other monopolies, the Bank of England survived in its protected position, but it slowly transformed itself into a public institution whose purpose was to lubricate the economic activities of others and to reduce the instability caused by free-market financial institutions. The history of the Bank of England, then, in some way reflects the impact of Enlightenment ideology.”

“Formal education in Britain before 1850 was, with the exception of a very small minority, confined to what we would consider today an elementary education. It was entirely voluntary and private.”

“Of considerable importance to the enlightened economy were the so-called dissenting academies, which were attended by lads denied entry to Anglican grammar schools and universities. These schools taught a great deal of heterodox religion, but also useful subjects such as geography, mathematics, and science. ”

“The other part of the kingdom where education was strong and valuable was in Scotland, which trained a disproportionate number of chemists, physicians, and engineers. Scottish grammar schools combined the obligatory Latin with mathematics, science, and commercial subjects. It is hard to imagine how the Industrial Enlightenment would have developed in Britain had it not been for the Scottish educational system. Originally set up to help convert the population to the Protestant Kirk, it became increasingly secular after 1660, a trend that accelerated after the Union of 1707”

“The University of Edinburgh, still a poor and provincial school in 1700, became world-renowned in the eighteenth century and a main center of the Scottish Enlightenment.”

“The universities added even less: Oxford and Cambridge taught little that was of value to a vibrant economy, and their enrollments declined in the eighteenth century… They catered to the military and clergy, and sent few of their graduates into business or the professions”

“The way in which technological knowledge was passed on from generation to generation was not through “formal” education (i.e., schools) but through the teaching of apprentices. Every British baker, thatcher, glazier, printer, and cooper was a potential teacher as well as a craftsman. Human capital, in such a society, is produced jointly with commodities, by osmosis and imitation. Those members of the technically literate public who wished for further instruction could find it in the many books and periodicals on technical subjects published at the time. Private commercial schools taught bookkeeping, arithmetic, and formal business letter writing. Popular lectures and evening courses were inexpensive and widely attended by members of the commercial and skilled classes who wanted to improve their skills or widen their horizons.”

“as far as formal human capital is concerned, Britain was obviously not in a leadership position. Literacy rates in England compared to the Continent were not particularly high and certainly do not point to a particular advantage. For the entire period between 1500 and 1800 literacy rose in all of Europe, and Britain was no exception.”

“Britain’s population appears not to have been more numerate than most of the nations of continental Western Europe, and there appears to be no evidence of improvement over the eighteenth century”

“During the Industrial Revolution, much inventive activity has been termed “de-skilling,” that is, the ingenuity and cleverness was front-loaded in a user-friendly design that reduced the skills necessary for implementation.”

“As a result, the demand for human capital became more skewed as the Industrial Revolution progressed: the economy demanded more highly skilled engineers and technicians, so as to reduce the demand for skills at the lower levels of the labor hierarchy. The role of educators and teachers in the development of the British economy was thus clearly circumscribed to produce highly competent mechanics and technicians, whereas the overall level of skills of most of the labor force may not have mattered all that much, as long as they were submissive and obedient.”

“the main source of manufacturing fixed capital was self-finance, that is, profits plowed back into the firm. This was possible to a large extent because the minimum viable size of firms was still relatively small,”

“One of the more robust findings is that eighteenth-century Britain was a high-wage economy, relative to other European economies, to say nothing of Asian ones (Allen, 2009). These high wages pre-date the eighteenth century, ”

“Higher wages in Britain may have reflected the higher level of skills and competence, due to better training, more able supervision, and a relatively high level of capital per worker. ”

“At some point in the middle of the eighteenth century, British population abruptly began to surge at a rate far more rapid than ever experienced before. This phenomenon was not unique to Britain: in other countries in Europe, too, there were signs by 1750 that the Malthusian constraints were becoming looser.”

“The decline in the age at first marriage of women during the eighteenth century was the driving force behind the rise in British fertility rates. The average age of first marriage of women was 26 in 1700, 24.9 in 1750, about 24.2 in 1800, and 23.2 in 1830”

“The great historical irony is that before 1850 living standards in Britain improved at a rate that can only be deemed disappointing by a historian writing in the twenty-first century. It would be too strong to state that the quality of material life in 1850 was still at the same level it had been in 1700.”

“The striking fact is, however, that in the three decades after 1815, when the Industrial Revolution spread from a local phenomenon confined to a few industries to large segments of the production economy, real wages rose”

“while actual conditions may not have improved much before 1850, the achievement of the first two generations of the Industrial Revolution was to prevent the growing population and the external negative shocks from creating the kind of pressure that could have caused living standard to fall dramatically. That such a decline did not occur despite these shocks is an indication of the strength of this economy. Without the Industrial Revolution and all it entailed, it is inconceivable that Britain would have been able to sustain in the long run simultaneous population growth, a rise in the capital/labor ratio, a series of major and expensive wars before 1815, and stationary or slowly rising living standards for the bulk of the population before 1850.”

“The idea of creative destruction can be extended to the realm of institutions. Economic growth requires the social and political capabilities of the economy to adapt. Institutional agility was thus necessary if growth was to be sustained. It still is. The same holds for informal institutions such as cultural beliefs and ideology.”

“Was the Enlightenment as defined here a “cause” of the British Industrial Revolution? It surely was not the cause. Other factors, from a favorable location and mineral resources to the pre-existence of a middle class and the skills of artisans, played a role in the story… Yet the Enlightenment is the 600-pound gorilla in the room of modern economic growth that nobody has mentioned so far… What matters for economic history, however, is that the enlightened age differed from the age of mercantilism in the way it accumulated, disseminated, and employed useful knowledge, and in the way its economic institutions operated to create rather than redistribute wealth.”

“The critical changes associated with the eighteenth-century Enlightenment were not specific to Britain, although in Britain the fruits of the Enlightenment tree ripened earlier than elsewhere in the Western world.”

“The Enlightenment was what set Europe on a different track toward economic modernity. Britain between 1700 and 1850 was the trailblazer in this achievement. ”

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