Eric Lionel Jones
The Record of Global Economic Development

The staple argument of the industrial revolution school was that key inventions made in late eighteenth-century Britain were the pivot on which all economic history turned. More recently, it has been shown that the inventions of any great economic significance were largely confined to the textile and iron industries and did not yield their full results until well into the nineteenth century, as was certainly true of steam power. Innovation is more relevant to the productive system than the mere fact of invention. Even more important, I would say crucial, is the emergence of societies in which both invention and innovation can flourish. It may be a little extreme to urge that any needed technologies will follow almost automatically from the creation of conditions in which inventive and innovative activity can take place, but it is hardly an extreme proposition to note that without encouragement, or more to the point without the removal of discouragements, technological change will be hampered.

The central requirement is a lifting of disincentives, assisted perhaps by the actual creation of supportive institutions like venture capital markets. Direct government involvement in science and technology is beside the point, in the long run it tends to interfere with creativity and distort the directions in which change occurs. Despite the excessive claims made for state-supported science in late nineteenth-century Germany, this was not a major part of the European experience. It is in any case more important to concentrate on how Europeans managed to learn how to raise the rate of invention and innovation than to dwell on the history of particular clusters of inventions in particular industries. What was vital, to repeat, was the emergence of types of society in which technological activity was not discouraged. In this process the decentralized political structure of Europe again played a large role.

The technological category of explanation is probably a diversion. Technology is a sort of intermediate producer good. Once a society possesses advanced technologies it does have the opportunity of surpassing its neighbours and outdoing its own previous record. But the coming into being of new technologies like steam power, capable of multiplying Europe's productive capacity, is part of what we are trying to explain in the first place. We should concentrate on the institutions and social and political organization that lay at the root of inventive responses.

  The World was all before them, where to choose
Their place of rest, and Providence their guide:
They, hand in hand, with wand'ring steps and slow,

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Through Eden took their solitary way.