S2 E6: Inventors/Engineers, Directed Technical Change, and the British Industrial Revolution with Walker Hanlon from Northwestern University
Mar 7, 2025
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Walker Hanlon, an Associate Professor in Economics at Northwestern University, dives into the fascinating world of the British Industrial Revolution. He explores whether necessity is indeed the mother of invention and discusses theories on directed technical change. Hanlon highlights the crucial role of engineers in this transformative era and examines how increased government intervention emerged from market failures. The conversation also touches on pollution's impact during the revolution and concludes with a playful dinner game featuring iconic inventors.
Directed technical change illustrates how shifts in input availability can drive innovation direction and affect economic growth.
The transition from manufacturer-inventors to specialized engineers during the British Industrial Revolution significantly enhanced productivity and technological advancement.
Deep dives
Walker Henlon's Journey into Economic History
Walker Henlon's path to becoming an expert in economic history wasn't direct, stemming initially from an interest in international trade during his graduate studies. His curiosity grew as he explored the significant effects that trade could have on economic growth, ultimately recognizing that historical perspectives might provide valuable insights into long-term growth trends. This realization propelled him toward empirical research within the realm of economic history, where he discovered the richness of data and context that could illustrate the connections between trade, growth, and innovation. Influenced by notable advisors like Don Davis, Walker learned to bridge historical events with economic theories, enhancing his understanding and appreciation for historical methodology.
Directed Technical Change and Innovation
Directed technical change refers to how shifts in the supply of production inputs can influence the direction of innovation in market economies. According to the theory, innovators tend to economize on inputs that are becoming relatively scarce or leverage those that have become more abundant, depending on the substitutability of inputs. For example, the paper discusses how, during the U.S. Civil War, British innovators diverted from scarce American cotton to more abundant types of cotton, highlighting the practical implications of directed technical change. This situation also demonstrated that the relative prices of abundant inputs could paradoxically rise as innovation focused on maximizing their utilization, supporting the complex dynamics of technological advancement.
The Role of Government in Innovation
The evolution of Britain's laissez-faire government system from 1800 to 1914 illustrates how market failures prompted increasing government intervention in the economy. Initially, the government adhered to a minimal intervention strategy, but as urbanization and globalization progressed following the Industrial Revolution, various market failures emerged, such as pollution and information asymmetries. These failures necessitated more active governmental involvement to address inefficiencies, gradually leading to a shift away from laissez-faire principles. Henlon's research indicates that this shift laid the groundwork for modern government functions and interventions based on pragmatic responses to economic challenges.
The Rise of Engineers and Their Impact on Innovation
The Industrial Revolution marked a significant transformation in the nature of inventors, shifting from a predominance of manufacturer-inventors to specialists known as engineers. This change indicated a move towards recognizing invention and design as its own professional discipline, which allowed for greater productivity and innovation in creating new technologies. Henlon posits that as engineers emerged as a specialized class, this not only elevated the overall rate of technological advancement but also contributed to sustained economic growth during this period. The success of engineers is representative of how specialization in innovation is critical to managing complex technological systems and fostering enduring economic progress.
In this episode, our guest is Walker Hanlon who is an Associate Professor in Economics at Northwestern University. We talked about if necessity is the mother of invention, different theories about directed technical change, why the British Industrial Revolution specifically persisted and more!
06:40 Necessity: the mother of invention?
08:20 What is directed technical change?
09:50 Theories on directed technical change
15:10 Laissez-Faire and Walker’s New Book!
20:00 Why did The British Industrial Revolution persist?
32:25 Cheezy Question and “This or That” Game!
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