It is that time of the year when the Nobel foundation recognises outstanding work with the principle of ‘for the greatest benefit to humankind’ by awarding the prestigious Nobel prize across physics, chemistry, physiology or medicine, literature, peace and economic sciences. This year’s prize of Economic sciences was awarded to Joel Mokyr, Philippe Aghion and Peter Howitt for their work on how innovation drives economic growth. In this piece for the Mint, Niranjan Rajadhyaksha focuses on Mokyr’s work in particular.
“One of his most influential ideas is the distinction between what he calls ‘propositional knowledge’ and ‘prescriptive knowledge.’ The former is general theoretical knowledge. The latter is knowledge of technique. Propositional knowledge serves as the epistemic base for prescriptive knowledge. Both are important, and Mokyr has demonstrated in his work that economic accelerations, such as the Industrial Revolution, occur when both types of knowledge build upon each other through feedback loops.
In the ancient world, people often knew how something worked, but had little idea of why it worked. That restricted the scope for innovation. As Mokyr put it, it was “a world of engineering without mechanics, iron-making without metallurgy, farming without soil science, mining without geology, water-power without hydraulics, dye-making without organic chemistry, and medical practice without microbiology and immunology”. The result was intermittent rather than sustained technological improvements, and thus short bursts of economic growth rather than a steady rise in productivity.
…it was the prescriptive knowledge with engineers, instrument makers and millwrights that helped put into practice the new propositional knowledge that came from the scientists of that era in Europe, the catalytic marriage of the how with the why. The result was the Industrial Revolution. The importance of new ideas—and the ability to use them in daily economic life—is often underestimated in standard narratives about economic growth.”
Rajadhyaksha connects the dots between Mokyr’s application of his work on the Industrial revolution to modern day China’s progress in science and technology. He refers to a recent essay “on China’s economic model by Dan Wang and Arthur Kroeber brought Mokyr’s ideas to mind. The two authors wrote about how one of the most subtle sources of strength in that country is the process knowledge embedded in its vast industrial labour force. This was practical knowledge that has been learnt from the experience of how to make things and keep improving them.
“This process knowledge enables iterative innovation, or constantly tweaking products so that they can be made more efficiently, at better quality, and with lower costs,” wrote Wang and Kroeber. It also allows Chinese companies to build at scale.
However, the most interesting observation of Wang and Kroeber was that process knowledge allows China to create entirely new industries: “A factory worker in Shenzen might assemble iPhones one year and Huawei Mate phones the next year and then move on to build drones for DJI or electric vehicles for CATL”.”
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