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The Great Waves of Industrial Innovation

Here is a great and profound question:

How did the world of lord and serf, horse and carriage, superstition and disease, turn into the world of boss and worker, steam and steel, science and medicine?

Jonathan Steinberg asks us to ponder this in his lecture series “European History and European Lives: 1715 to 1914.” We can add to his question, among countless other things previously unimaginable, “and the world of jets and space probes, computers and Google searches, antibiotics and automatic washing machines, and sustained long-term economic growth per capita?” Relative to all previous human life, this new world, the one we live in, is truly astonishing. As Steinberg asks us to wonder, “How and why did what we call the modern world come about?”

The answer at the most fundamental level is through the creation and harnessing of scientific knowledge. Far and away the most important event in all of history was the invention of science based on mathematics by the geniuses of the seventeenth century. This is symbolized above all by Isaac Newton, whose masterwork, Philosophiae Naturalis Principia Mathematica, we may freely render into English as “Understanding Nature on Mathematical Principles.” The invention of mathematicized science was the sine qua non of the modern world. Other important modernizing developments in government, law and philosophy are handmaidens to it.

As Alexander Pope versified the impact:

Nature and Nature’s laws lay hid in night:

God said, Let Newton be! And all was light.

Of course, the translation to the modern world was not quite that direct. The new and multiplying scientific knowledge had to be transferred into technical inventions, those into economically useful innovations, those expanded into business ventures by entrepreneurial enterprise, and with the development of management processes for large-scale organizations, those spread around the world in great waves of industrial innovation.

We may picture these great waves over the last two and a half centuries like this:

Waves of Innovation

The result of these sweeping creations by the advantaged heirs of the Newtonian age is the amazing improvement in the quality of life of ordinary people like you and me. As measured by real GDP per capita, average Americans are about eight times better off than their ancestors of 100 years ago. (They in turn were far better off than their predecessors of the 18th century, when the modern world began to emerge.)

In 1897, average industrial wages per week have been estimated at $8.88. That was for a work week of about 60 hours (say six ten-hour days—and housewives had to work 70 hours a week to keep home life going). The industrial wages translate to 15 cents an hour. Correcting for inflation takes a factor of about 25, so 15 cents then is equivalent to $3.75 today. Current U.S. average hourly manufacturing wages are $21.49, adding benefits gives total hourly pay of over $30. In other words, real industrial hourly pay has multiplied about eight times. While this was happening, over the course of a century a lifetime’s average working time per day fell in half, while average leisure time tripled, according to estimates by Robert Fogel.

Along the way, of course, there were economic cycles, wars, recessions, depressions, revolutions, turmoil, crises, banking panics, muddling through and making mistakes. But the great waves of industrial innovation continued, and so did the improving standard of living on the trend.

Joseph Schumpeter memorably summarized the point of economic growth as not consisting in “providing more silk stockings for queens, but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.” The Federal Reserve Bank of Dallas demonstrated how more goods for less effort indeed happened—showing how prices measured in hours and minutes of work at average pay dropped dramatically during the twentieth century. Their study, “Time Well Spent—The Declining Real Cost of Living in America,” is full of interesting details—here are a few notable examples. The time required to earn the price of milk fell 82%; of a market basket of food, 83%; of home electricity, 99%; of a dishwashing machine, 94%; of a new car, 71%; and of coast-to-coast airfare, 96%. Of course, no amount of work in the early twentieth century could have bought you an iPhone, a penicillin shot, a microwave oven, a ride on a jet across the Atlantic Ocean, or a myriad of other innovations.

These advances in the economic well-being of ordinary people are consistent with a famous prediction made by John Maynard Keynes in 1930.  In the midst of the great global depression, which might have led to despair about the future, Keynes instead prognosticated that the people of 2030, of 100 years from then, would be on average four to eight times better off due to innovation and economic growth. As 2030 approaches, we can see that his forecast will be triumphantly fulfilled near the top of its range.

How much can the standard of living continue to improve? In 1900, according to Stanley Lebergott, the proportion of Americans who had flush toilets was only 15%. Only 24% had running water, 1% had central heating, 3% had electricity, and 1% owned an automobile. The people of that time could not imagine ordinary life as it is now. Correspondingly, it is exceptionally difficult for us to imagine how hard, risky and toilsome the average life was then.

And if we try to imagine the ordinary life of 100 years into the future, can we think that people will once again be eight times better off than we are? Can the great waves of innovation continue? Julian Simon maintained that since human minds and knowledge constitute “the ultimate resource,” they can. “The past two hundred years brought a great deal of new knowledge relative to all the centuries before that time,” he wrote, “the past one hundred years or even fifty years brought forth more than the preceding one hundred years,” and we can confidently expect the future to continue to “bring forth knowledge that will greatly enhance human life.”

Reader Discussion

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on June 04, 2018 at 13:21:12 pm

So you are telling me that at the end of this next wave of innovation, I'll be able to buy a Masserati. cool - NOW can you tell me how to live another 100 years?

Then again, wait until the SJW's read this; no doubt we will be subjected to unrelenting wailing and lamentations over the *inequality* of it all.

"Oh, THE Inequality, The Inequality!!!

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Guttenburgs Press and Brewery
on June 05, 2018 at 10:07:26 am

"Nature and Nature’s laws lay hid in night:
God said, Let Newton be! And all was light."

To Be That "Light That Shines In The Darkness", is not to be someone who discovers some element (s) about the principle of light. All that Is Good, and Beautiful and True, does not exist on account of Newton, although some of the elements of the principle of light which appeared to be hidden were uncovered by Newton.

This does not change the fact that although the darkness will always attempt to overcome light, all one needs is That Light That Shines In The Darkness, and Darkness, which is the abscence of light, can be transformed into that which is Good, Beautiful, and True.

Knowledge, devoid of "That Light That Shines In The Darkness", and thus devoid of meaning, can never serve to enhance human life; while our knowledge of The Laws of Physics may be evolving, The Way, The Truth, and The Light (Life) of Love, Was In The Beginning, Is Now, And Forever Will Be.

Technology is merely and instrument that can serve to bring light or darkness into this world, depending if that particular instrument of technology serves for that which is Good, Beautiful, and True.

One cannot serve The Common Good, if one does not desire to serve God first and foremost.

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Nancy
on June 05, 2018 at 11:51:03 am

Alex,
What a great read It puts our children’s future in perspective during these tumultuous times. Glad you are still thinking about the big picture.
Best wishes, Ed

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Ed Means
on June 07, 2018 at 10:01:47 am

Alex, I liked your article, but I disliked your use of “handmaidens” as a mild put-down to “government, law and philosophy”. Compare the growth of innovation in the competitive USA with its lack in consensus-seeking collectively governed China & Russia to realize that innovation needs a supportive, nurturing, carefully tended, rules-based environment where the rough & tumble of competition can be safely unleashed for the collective benefit of all in our society, with spillover into nations like China & Russia. Regards, Bill

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Bill Lawless
on June 07, 2018 at 18:04:31 pm

China's government policies over the past three to four decades have driven growth faster than US government policy from about 1860 to 1930, a period of GOP industrial policy. Government funding of rail transportation, regulation to ensure the masses had fair access, mandated education, labor safety, ending child labor, building roads everywhere, delivering mail and parcels everywhere, promoting advanced education and research with land grant universities, just to name a few policies China has embraced over the past recent decades.

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Mulp

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.