The Economist's Lessons From the Great Depression

“I tell my students, ‘If somebody utters the sentence that starts with the words, “History teaches us” the rest of the sentence is probably wrong.’ History has no direct lessons for almost anything. Our own age is sufficiently different, sufficiently unique, from what happened in the past that any facile lessons from history are more likely to mislead than to enlighten.” That series of caveats comes from Joel Mokyr, who, perhaps counter-intuitively, is an economic historian. And in fact, the Robert H. Strotz Professor of Arts and Sciences and professor of economics and history at the Chicago-area Northwestern University shows in this Social Science Bites podcast that there’s quite a bit to learn from history if you keep your expectations in check.

For example, he explains that “the good old days weren’t all that good and that the very best time to be born in human history is today. That sounds hard to believe in an age where we’re all running around with face masks and facing quarantine, but it’s still true.”

For his own part, Mokyr tells interviewer Dave Edmonds, “I use economics to understand history, and I use history to understand economics.” Mokyr’s ties to economic history are deep: he was president of the Economic History Association in 2003-04, spent four years in 1990s as senior editor of the Journal of Economic History, was editor-in-chief of the Oxford Encyclopedia of Economic History, and is currently editor-in-chief of the Princeton University Press Economic History of the Western World series of monographs.

From that perch, he explains, presumably with a smile, that his peers work with ‘expired data.’ Economic historians “scour the past looking for large data sets that we can use in some way to make inferences. The issue of causality becomes somewhat of an obsession in economics these days, and economic history is very much a part of this.”

In this interview, Mokyr details how the improvement in the human condition he cited above is connected to the Industrial Revolution. “The Industrial Revolution is particularly important because that’s where it all started -- before 1750 almost nowhere in the world were living standards approaching anything but miserable and poor.”

Economic activity before the year 1750 was mostly the story of trade, he explains, while after 1750, it became the story of knowledge. “The Industrial Revolution was the slow replacement of trade and finance and commerce by another thing, and that is growing knowledge of natural phenomena and rules that can be harnessed to material welfare of people.”

To demonstrate this approach, he offered the example of steel. While it has been made for centuries it wasn’t until 1780 that anyone knew roughly why  this alloy of iron and carbon resulted in such a useful metal, and therefore could exploit its properties more by design than by chance. “If you don’t know why something works,” Mokyr said, “it’s very difficult to improve it, to tweak it.”

Mokyr’s scholarship has earned him a variety of honors, including the biennial Heineken Prize by the Royal Dutch Academy of Sciences for a lifetime achievement in historical science in 2006. He has also written a number of prize-winning books, including The Lever of Riches: Technological Creativity and Economic Progress, The Gifts of Athena: Historical Origins of the Knowledge Economy, and most recently, A Culture of Growth.