Someone who runs a consultancy called Enlightenment Economics, specializing in the economics of new technologies, was bound to love this magisterial new history of the late 18th and 19th century British economy. And so I do. I’m completely persuaded by Joel Mokyr’s argument in The Enlightened Economy that behind the extraordinary dynamism we sum up as the Industrial Revolution lay, not only technological innovation, but innovation in the realm of ideas and institutions. This is an important book for economic historians, and a fascinating read for the many more people who are interested in this unique period, including for the light it sheds on our own, continuing technological revolution.

Mokyr writes: “Useful knowledge was central to the British Enlightenment,” and goes on to explain that ‘useful’ had two mutually reinforcing aspects, practical utility and moral improvement. (p35)  He sees the intellectual agenda of the Enlightenment, in its full breadth, as the driving force of the social and economic changes which transformed Britain and the world. After all, other countries had ample resources of coal and metals, others had inventors of great technical ingenuity. Yet there was something about Britain that made it the centre of the transformation of its own and the global economy. He argues that the explanation lies in the connections between intellectual beliefs and economic developments, and the particular genius of the British was for embracing and applying the Enlightenment spirit of scientific discovery in the cause of progress.

He identifies two key elements that made Britain the most fertile nation for industrial growth. One was the institutional context, the other the skills and aptitudes of the people. On the former, Mokyr writes: “People …. have a view of the way society ought to work, of what institutions make sense and what appeals to their notions of fairness and logic. In the end, these beliefs help determine what kinds of insitution are chosen and which survive. Beliefs, however, are not constant: people are open to learning, to persuasion, to new methods of understanding reality.” (p63). In 18th century Britain, the elite ‘bought’ the Enlightenment in the marketplace of ideas and the country’s political, economic and social institutions adapted accordingly. A small group had an impact far out of proprotion to their size (p88).

The second element favouring Britain’s leadership was the existence of a group of skilled entrepreneurial craftsmen and technicians who had both the interest in leading scientific ideas and the tacit knowledge which enabled them to tinker with processes and products to turn science into manufacture. A network of personal contacts between men of industry and men of science played a part, and so did a rich institutional landscape of scientific societies which diffused the frontier knowledge to a wider audience. Mokyr gives advances in geology as one example. The era’s geological discoveries – such as the competing geological maps published in 1815 and 1820 – and other discoveries such as Sir Humphrey Davy’s safety lamp were spread via provincial societies. “It is no exaggeration to say that a reciprocal relationship developed between the young science of geography and the mining and transportation sectors in Britain.” (p140)

The Industrial Revolution was not only about industry – Mokyr has informative chapters on agriculture, finance and services, and on the family and society – nor was it a revolution in the sense of a complete departure from the past. And as Mokyr writes, “While in hindsight it seems like the towering event of the time, for contemporaries the importance of technological change was only becoming clear very slowly, and it was by no means clear to all in 1850 that a new economic age had dawned.” (p144) This is part of the phenomenon Paul David termed ‘technological presbyopia’ – over-expectations for short term change and under-expectations for thelong term transformation.

He is also very interesting on the role of the state. As he points out: “The relations between the state and its citizens were at the heart of the Enlightenment discourse, embodied in ideas reflected in famous book titles such as The Social Contract and The History of Civil Society.” (p392). I would speculate that the dramatic technological shifts as much as the flow of ideas caused thinkers to re-evaluate the role and boundaries of the state – with the great expansion of the scope of markets came an expansion in the necessary role of the state, in order to ensure they worked effectively. Mokyr notes, citing Will Baumol (in The Free Market Innovation Machine), that: “The institutional structure of the state helps determine whether incentives and payoffs are properly lined up to direct efforts toward productive or redistributive activities, and the fate of the economy is often determined by this structure.” This challenge is all the more acute in our own day because the fact that today’s general purpose technology is an information technology means the efficient structure of state organisation has itself changed.

All in all, Mokyr’s assessment is compelling and rather cheering too. He believes in the scope for improving the human condition through ideas and effort. There’s never a clear parallel between the past and today; but at times like ours when many of us have the strong sense that hindsight will show ours to have been genuinely dramatic and decisive times, this is exactly the right kind of history to be reading. This is a long and dense book, packed with detail – I think it's a must for anyone of historical sensitivity and an interest in the impact of technology on the human condition.