Brad DeLong on Intellectual and Technical Progress

Brad DeLong — Berkeley economic historian and author of Slouching Towards Utopia: An Economic History of the Twentieth Century — joins Tyler Cowen in Ep. 172 to trace how humanity escaped the Malthusian trap, why the escape did not deliver the utopia it promised, and what makes intellectual and technical progress accelerate or stall. Recorded 1 November 2022.

Key ideas

1. The ‘long 20th century’ (1870–2010) is humanity’s one era of sustained, rapid growth. Before 1870, world technology advanced perhaps 0.5 per cent a year at its fastest, and population growth ate most of it — a Malthusian economy in which half of all babies died and adult male height ran to 5 foot 3. After 1870 the rich world locked in roughly 2 per cent a year in income and productivity growth, a rate DeLong calls ‘completely unprecedented’. Total factor productivity — output per unit of all inputs combined, the part of growth not explained by simply adding more labour or capital — jumped to a level with no precedent in any earlier ‘efflorescence’, not even the British Industrial Revolution.
2. Growth multiplied wealth but did not deliver utopia. The first leap mattered most because it was visceral: from no indoor plumbing and chronic hunger to public health, low infant mortality, and abundant calories — ‘you only do that once’. Later growth (mass production, global value chains, the info-biotech economy) makes us materially far richer, but means less to us because ‘our needs are biologically much less urgent’. Following Richard Easterlin, DeLong suspects modern growth is ‘not a triumph of humanity and technology over material want, but of material want over humanity and technology’.
3. Three institutions made the post-1870 acceleration: the industrial research lab, the modern corporation, and globalisation. Earlier waves of progress depended on lone tinkerers and fragile communities of practice; what is new after 1870 is the rationalisation of discovery and deployment. German universities trained chemists to manipulate molecules while Britons learned to write verse in the style of Macaulay. Large intermediaries — Deutsche Bank, the J.P. Morgan partnership — turned the matching of ideas to capital into routine, ‘intermediating information’ between savers and inventors. Britain’s relative decline traces to letting its ‘communities of engineering practice’ thin out.
4. Hayek versus Polanyi: the market giveth, the market taketh away, and the market knoweth not. DeLong uses the two thinkers as hooks. Hayek’s deep truth is that a well-functioning market is the only way to harness ‘the eight-billion-brain anthology intelligence of humanity’ — decision-making pushed out to the periphery, where the information and the brains actually are. Polanyi’s answering truth is that society demands the economy serve human values, and the market answers only to property rights. Align prices with social values, manage every externality, and distribute property rightly — or ‘you get yourself into huge trouble’.
5. DeLong’s own practice: economic history as forecasting under deep uncertainty. He works the 20th century at close range — he is ‘70 per cent sure’ the pre-1870 growth story does not simply continue, because cheap surface coal and the gains from a one-off globalisation were exhausted by 1870, leaving an underlying invention rate too slow to escape Malthus on its own. He is candid about running out of explanations for the persistence of the middle-income trap, and about how quickly technological leadership can ‘ebb away’ within a generation or two.

Content

What ‘big progress’ meant before 1870

Cowen opens on the fragmentary late-19th-century productivity numbers, which ‘don’t look that good’. DeLong’s answer is that the numbers are the progress: John Stuart Mill in the 1870s could reasonably believe working-class real wages had not risen at all since 1800. The 2 per cent a year that the rich world later took for granted ‘really is completely unprecedented’. DeLong’s preferred summary statistic for the 1870–1913 world takes real income growth and adds half of population growth, calling the sum ‘technology’ growth: about 1.7 per cent a year globally, four times the rate of the century before. That fourfold shift is ‘one of the things that makes the modern world even vaguely possible to imagine’.

Why the first leap mattered more than the second

DeLong resists Cowen’s framing that the last fifty years ‘did not change everything’. They changed a great deal — the underlying forces of production keep transforming, from steam to the Second Industrial Revolution to mass production to global value chains to today’s info-biotech economy. But the meaning of growth has fallen even as its rate held. The escape from hunger, child death, and stunting was a once-only transformation of human experience; everything since is more wealth chasing needs that are no longer urgent. He illustrates with himself: irritated that an eighteen-month-old laptop is slow, while that laptop is carved from sand by ‘the most complicated human manufacturing and division of labor process ever accomplished’, dependent on exactly two organisations on Earth — the Dutch maker of extreme-ultraviolet lithography machines and the Taiwanese firm that knows how to use them.

The research lab, the corporation, and globalisation

Asked why German universities blossomed so spectacularly — Göttingen alone for mathematics — DeLong calls it astonishing and confesses he does not fully understand it: a society ‘just beginning to crawl out of the Malthusian agrarian age’ choosing to spend its new wealth on knowledge, ‘not paralleled, not equaled anywhere else’. The flip side is Britain’s relative decline. By 1913 the largest British electrical manufacturer was the English subsidiary of Germany’s Siemens. DeLong’s best guess is institutional: Americans and Germans built large intermediaries — universal banks, the Morgan partnership — that made a business of ‘intermediating information between people who had money and people who had ideas’. Once a country lets its concentrations of engineering practice dissipate, the decline compounds in ‘a vicious spiral’.

The Scientific Revolution as a moral accident

DeLong’s most striking historical claim concerns why useful knowledge ever began to compound. Before 1870 the economic pie could never be baked large enough for everyone, so politics was necessarily ‘some elite constituting itself’ to run ‘a force-and-fraud domination and exploitation scheme’. In that world, whether an idea is true is secondary to whether it is useful to the propagandists of the ruling machine — a point he credits to Ernest Gellner. The Royal Society’s decision to settle questions ‘nothing except through experiment’ is therefore ‘a miraculous and completely unexpected transformation’. He traces the changed intellectual air to 1500–1600: the discovery of the New World, the Columbian exchange, the first globalisation’s collapse in shipping costs, and Western Europe’s tinkering culture meant that by 1600, for the first time, a person could look back a century and say honestly, ‘things are a lot different.‘

Against Romer: progress is not monotonic

DeLong rejects Paul Romer’s view that growth rates simply rise across the long run. Something ‘falls off a cliff’ after 150 CE: an enormous destruction of the mechanisms pushing ideas forward, not only in the Western Roman Empire but in Persia, India, and Han China. He cannot convince himself that world technology grew any faster between 800 and 1500 than in the age of classical Greece and early Han, despite a far larger population. The Romer story holds up to 150 and resumes after 1500, but the long interruption between is real. Progress, in DeLong’s telling, comes not from ‘two heads are better than one’ but from finding and building ‘much better institutions in fairly discrete steps’.

The steampunk counterfactual

DeLong’s central wager about his own book: the pre-1870 acceleration would have run out. Of the half-per-cent-a-year technological progress from 1770 to 1870, he attributes roughly a third to glaciers having scraped northwest Europe bare and left coal lying on the surface for steam engines, and another third to a one-off globalisation that pulled manufacturing into its most efficient districts. By 1870 the cheap surface coal was gone and the manufacturing was already concentrated, leaving an underlying invention rate of perhaps one-sixth of a per cent a year — enough only for a ‘steampunk economy that looks pretty damn Malthusian’. What actually happened instead was ‘the one big wave’ (Robert Gordon’s phrase): a sudden jump to 2 per cent, plus Schumpeterian creative destruction doubling human technological competence every generation.

Hayek, Polanyi, and the limits of the market

Cowen presses DeLong on his portrait of Hayek as a champion of laissez-faire, noting that the Constitution of Liberty endorses a welfare state, single-payer health insurance, and antitrust. DeLong concedes ‘there’s Hayek, and there’s Hayek, and there’s Hayek’ — he uses the name as a hook for a set of ideas, Polanyi for another. The Hayek worth keeping saw the deepest truth in economics: the market crowdsources the problem of using dispersed knowledge, pushing decisions to ‘the periphery of society, where the information and the brains really are’. The catch is alignment. In a real market ‘the only rights that matter are property rights’, so unless the distribution of property accords with what utopia requires — and unless every externality, informational, direct, and macroeconomic, is handled — the result is ‘huge trouble’.

Stagnation traps and the advice to Liz Truss

On the middle-income trap, DeLong offers a dark mechanism: as the technology of governmental appropriation improves alongside everything else, there comes a point where joining ‘some force-and-fraud, exploitation and domination machine’ pays a young person better than positive-sum entrepreneurship. He admits to having ‘run out of excuses’ for why such traps persist, and worries that Xi’s China and Modi’s India suggest the trap is stronger than he had hoped. Asked (the episode was recorded days into the Truss crisis) what he would tell a UK government whose tax cuts had spooked the markets, his first answer is to rejoin the European Union to raise British total factor productivity; failing that, a large public-investment boost timed to the coming recession — ‘when private spending sits down, public spending should stand up’ — financed by credible long-run wealth taxes that, he doubts, the Conservatives can promise.

Related

• What Makes Economies Grow — theme; DeLong supplies the long-run frame for the institutions camp — the post-1870 acceleration as the rationalisation of discovery (research lab, corporation, globalisation)
• Brad DeLong — speaker; Berkeley economic historian, author of Slouching Towards Utopia
• Tyler Cowen — host
• Daron Acemoglu — fellow institutions-and-growth economist; see his own Conversations with Tyler
• Daron Acemoglu on the Struggle Between State and Society — companion episode on how institutions, not geography, drive long-run prosperity
• Abhijit Banerjee on Theory, Practice, and India — companion Conversations with Tyler on development economics
• Dani Rodrik on Premature Deindustrialization and Why the World is Second Best, at Best — companion Conversations with Tyler on growth, trade, and second-best policy