The Cultural Engine of Progress: Joel Mokyr on Innovation, Institutions, and the Future of Prosperity

Joel Mokyr, a Nobel laureate in economics, challenges conventional economic thought by arguing that technological progress and sustained economic growth are profoundly reliant on culture, not solely institutions. He posits that cultural shifts, particularly those fostering positive attitudes towards the natural world and supporting the accumulation and diffusion of "useful knowledge," were instrumental in the explosion of technological progress in the West. While acknowledging the importance of institutions, Mokyr suggests a dynamic feedback loop where culture influences institutions as much as institutions shape culture, a nuanced distinction from the work of other Nobel laureates like Daron Acemoglu and Jim Robinson. He illustrates this with Israel's high-tech success, attributing it to policies and a culture that permits failure and values human capital, often driven by immigrants.

Mokyr also offers a critical perspective on traditional measures of economic progress, particularly GDP per capita, which he finds inadequate for long-term historical analysis. He argues that GDP fails to capture significant improvements in "consumer surplus" and the value of free goods and services (like anesthesia or GPS) that dramatically enhance welfare but have little or no market price. Instead, he emphasizes the "hockey stick" growth curve observed since the Industrial Revolution, driven by the convergence of science and technology—exemplified by advancements in electricity, cheap steel (Bessemer process), and chemistry—which collectively transformed living standards and trade.

Despite the remarkable progress, Mokyr highlights humanity's tendency to habituate to advancements, leading to diminishing returns in perceived satisfaction. However, he stresses that significant technological solutions are still needed to address pressing global challenges such as climate change, which he views as an existential threat primarily due to its potential for social disruption and conflict. He also discusses the transformative potential of artificial intelligence, seeing it as a revolution akin to the printing press, capable of personalizing education and medicine, fields he notes have been historically "sclerotic" (education more so than medicine) due to their labor-intensive nature, as described by Baumol's Law.

Mokyr offers prescriptive advice for fostering innovation and prosperity, advocating for a libertarian approach to immigration, arguing that immigrants are a vital source of human capital and innovation, often filing more and better patents. He also emphasizes the necessity of a culture that allows for failure, citing the historical example of England's Poor Law and modern US bankruptcy laws as mechanisms that encourage risk-taking. While optimistic about technological solutions, he expresses deep concern about the accelerating pace of technological change outstripping institutional adjustment, and identifies nuclear weapons proliferation as the most immediate and terrifying "asteroid" threat to human civilization.

"The good old days may have been old, but they weren't good. They were terrible."

"It is quite clear that progress is driven by a very small proportion of the population. I would say something around maybe two two and a half maybe 3% of the labor force are driving all the progress."

"The proposition I put forward here is that the explosion of technological progress in the West was made possible by cultural changes. Culture affected technology both directly by changing attitudes toward the natural world and indirectly by creating and nurturing institutions that stimulated and supported the accumulation and diffusion of useful knowledge."

"The thing you have to worry about is something we call consumer surplus. Consumer surplus may have very little to do with GDP."

"There's no single driver of economic progress. But clearly over time this interactive joint effect of science and technology becomes larger and larger."

"I am fully aware of the fact that AI could be misused and it probably is already being misused. At the same time, it's also quite clear that in terms of its potential in speeding up scientific development, AI is going to be one of the greatest revolutions maybe since the invention of the printing press or certainly since the invention of the computer."

"One of my big gripes against the Western world today is the attitude to immigration. I tend to be something of a libertarian about immigration."

"You need a society where people are allowed to fail."