The Real Path to Prosperity

It lies in Philosophy more than in Economics. And it lies in you.

Photo by Silas Hao on Unsplash

It’s you

What principally drives economic growth is broad bottomed innovation. This is where people exist in a system such that, if they have an idea, they implement it. You, in your work and daily lives, can think of new ways to slightly improve things.

Simple.

It requires legal and economic freedoms to give the incentives to actually implement the ideas. But when in place, you access a pool of innovation which results in incredible improvements everywhere.

This is because, however clever you might be, it is people who actually ‘do’ by making something or working somewhere who can think of the ways to innovate in an industry. Modern containment shipping, resulting in an incredible expansion of international trade and goods, was not a great scientific achievement, but the application by a trucker in the 1950s some existing ideas to the industry they knew.

Economists, with fancy mathematical models focusing above all on prices and equilibrium, tend to miss this in favour of investment, saving and the price mechanism.

Thus it is those who study how individuals operate and innovate who understand how the world is growing quite so rich. I live in the UK: in the UK we are about 3000% richer than our ancestors from 500 years ago.

Hiding in plain sight

To try and persuade you – particularly that riches was never primarily a question of Science – consider this. The Romans, 1000s of years before the industrial and agricultural revolution in the UK, had access to the farming techniques which could have massively improved agricultural yields. They also knew how to use coal – which we then forgot.

China and the Arabic world were hugely more advanced and prosperous than Northern Europe for hundreds of years. In fact, China went through centuries of internal peace with a Scientific understanding not matched in the West until the 1700s.

However, rigid societal structures and the lack of markets to sell and use innovations meant that advances were not used in practice. What is the point in innovating if you have nothing to do with the extra crop as you can’t sell it? Or if the Lord who owns the land buys extra at forcibly low prices?

With the correct legal and economic liberties, there are improvements in every field, taken for granted. Concrete was invented by a French Gardener who wanted stronger pots!

The Appliance of Science

Yes, Scientific advances played an important role. But these are already acknowledged.

There is also a greater interdependence of Science with broader innovation than people realise. It is through broader innovation that both the wealth existed for greater research and education and the tools were created to allow better experimentation.

The Soviet experience also shows that technical knowledge can create sophistication within narrow parameters (such as blowing things up), but when it comes to the millions of tiny innovations which makes life better, there system could not provide.

A time for reflection

Consider how fortunate we are for all these improvements, reliant on so much widespread ingenuity.

When voting or engaging in politics, consider how those who promise an easy fix and want to attack civil liberties and rights are also attacking your prosperity.

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