Intellectual Revolution

The Nature of Innovation

• Why does innovation happen?
• Humans have always innovated, but the pace was slow.
• Example: Oldowan stone tools used for 1.5 million years before Acheulean technology.
• Today, innovation occurs rapidly, sometimes overwhelmingly.
• Sustained innovation era:
• Began in the last 200 years.
• Driven by human institutions (formal and informal rules organizing society).

The Role of Human Institutions

• Egalitarian hunter-gatherer societies:
• As per Deirdre McCloskey, political egalitarianism characterized foragers.
• Leaders had little authority; people came and went freely.
• Equality, however, did not ensure prosperity.
• Agriculture’s impact:
• Mitigated food shortages by planting seeds.
• Led to sedentary lifestyles and food storage.
• Introduced trade-offs, such as inequality and private property.
• Free-rider problem:
• Farming required long labor, harder to track individual contributions.
• Led to the concept of private property to ensure fair effort and rewards.
• Created social hierarchies and economic disparities.

Emergence of Hierarchies

• Psychological shifts:
• As wealth disparities arose, humans justified them through beliefs in superiority.
• Concepts like kingship and slavery became acceptable.
• Justification through hierarchy:
• Bloodlines, divine rights, and superiority ideologies entrenched social classes.

The Impact of Hierarchies on Innovation

• Pre-modern governments:
• Predominantly extractive, benefiting elites at the expense of the majority.
• Provided security in exchange for labor and obedience.
• Equality before the law:
• Modern innovation flourishes due to legal equality.
• Diverse elites (farmers, industrialists) ensure fairer political-economic systems.

From Extractive to Inclusive Institutions

• Institutional evolution:
• Over time, governance evolved from extractive to inclusive.
• Greater inclusivity fostered sustained innovation.
• Examples of inclusive vs. extractive institutions:
• South Korea’s market-driven economy vs. North Korea’s state-controlled system.

The Role of Elites in Innovation

• Resistance to change:
• As Joseph Schumpeter noted, creative destruction threatens the elite.
• Historical examples: Luddites opposing industrialization.
• Geopolitical competition as a catalyst:
• European fragmentation forced elites to embrace innovation for national defense.

Intellectual and Economic Revolutions

• Impact of the Little Ice Age and Black Death:
• Reduced populations and food production.
• Led to competition, taxation, and wars.
• Military and economic developments:
• Gunpowder empires (China, Russia) vs. fragmented Europe.
• European nations promoted innovation to gain military and economic advantages.

The Gifts of Athena: Knowledge Revolution

• Joel Mokyr’s categorization:
• Propositional knowledge: Understanding fundamental truths (e.g., gravity).
• Prescriptive knowledge: Practical applications (e.g., farming techniques).
• Convergence of knowledge:
• Earlier disconnect between theory and practice.
• Scientific revolutions bridged the gap, leading to rapid progress.

The Role of Religion and Individualism

• Effects of the Protestant Reformation:
• Shift towards personal faith and skepticism of authority.
• Emergence of individualism:
• Renaissance and Protestant ideals emphasized personal identity.

The Ethical Shift Toward Innovation and Commerce

• Historical hostility to commerce:
• Ancient Greeks and Romans viewed profit-making with suspicion.
• Religious figures criticized merchants as dishonest.
• Changing perceptions in the 17th century:
• Shift in favor of merchants and innovators.
• Growth of a market-based economy.

Conclusion

• Innovation and economic growth intertwined:
• Commerce validates innovation through market acceptance.
• Modern prosperity arose from overcoming historical resistance to change.