The Most Powerful Idea in the World

by William Rosen

  Thus, from the first century, when the world’s population was around 128 million and its GDP about $105 billion,* to 1500, when population was 438 million and GDP $238 billion, the various growth equations demonstrate that all of the components of economic growth—land per worker, capital per worker, and therefore the residual—increased at a constant rate. More workers, more income, and, by inference, more invention. Moreover, the country-by-country numbers are relatively close in per capita terms; in 1500, each of the 48 million residents of Western Europe was producing, on average, about $772 annually, while China’s 103 million were good for about $600 a head.

  The year 1500 is significant because it’s the one that marks what the economic historian Kenneth Pomeranz calls “the Great Divergence.” Up until 1500, the difference between GDP per capita in the world’s poorest countries and the richest was in general less than 50 percent; by 1820, it was more than 300 percent. After 1500, the lockstep increases in population and knowledge ended. From 1500 to 1820, China’s population nearly quadrupled, and so did its GDP, with no increase in per capita GDP. During the same period, the population of France doubled, but its per capita GDP increased 56 percent; that of Great Britain quintupled, and its per capita GDP increased nearly two and a half times.

  Kremer’s theory was intended to explain productivity growth over a very long time frame; his article was entitled “Population Growth and Technological Change: One Million B.C. to 1990.” However, for growth and change after 1500, and especially after 1700, it presents a pretty serious problem for the idea that inventiveness is directly proportional to population. Over the last five centuries, the theory only works by assuming that one can usefully calculate an average for the entire world; but, especially since 1820, the worldwide growth rate has been severely distorted by the huge acceleration in productivity in Europe and North America, which is a little like calculating the average wealth of the patrons in a restaurant before and after Bill Gates enters it.

  It’s not as if Kremer was unaware12 of the problem; he acknowledged that for centuries, poor but populous countries like China and India had experienced decidedly low research productivity, which at least suggested that inventiveness is a function of income rather than population, but not enough to change his basic thesis. That thesis, however, is considerably more persuasive when the time span is more than a million years than when one is examining a single century or a single country. But if a large population alone doesn’t improve the chances of the steam engine’s being invented in any particular nation, what does? Why did none of China’s 138 million people invent a working steam engine, while Thomas Newcomen, one of fewer than nine million Britons, did?

  China’s size, its extraordinary technological head start, and its relative isolation have made it, for centuries, an irresistible laboratory for theorizing about industrialization and invention. Most of the resulting theories end up emphasizing either China’s geography, science and technology, demography, or political culture.

  Geography first. Geographical determinism is the notion that mineral resources, topography, and climate are the key drivers of human history. It remains eternally popular as an explanation for everything from political conflict to pandemics; but China’s missing Industrial Revolution looks like a poor example of it. Pomeranz attributes a good deal of his “Great Divergence” to the relative ease with which British coal was extracted and therefore iron produced. But China had, and has, huge coal deposits,13 just as close to the surface, and China’s forges were using coal to produce as much iron in the year 1080 as all of Europe did seven centuries later. They even did so for the same reason: the Yangtze delta had been deforested by the same demands as were the English Midlands, namely, construction, heating, and smelting. And even though the barbarian invasions14 of the twelfth and thirteenth centuries pushed China’s center of gravity south to less coal-rich areas (China’s nine southern provinces have less than 2 percent of contemporary China’s coal reserves), iron production rebounded almost immediately and by 1700 was certainly larger in China than Europe. Neither Europe nor Britain truly had, to an objective eye, any advantages in mineral wealth, climate, or navigable waterways.

  The state of Chinese science relative to the West seems a more promising explanation than its geography. It seems plausible, for example, to argue that if Chinese scientists failed to uncover the foundation principles unearthed by Torricelli and Boyle, Chinese inventors would have found it far more difficult to replicate the work of Newcomen and Watt. This is a small part of what the eccentric Cambridge don Joseph Needham spent his life investigating and chronicling in the two dozen volumes of his masterwork, Science and Civilization in China. Needham’s conclusion,15 unfortunately, doesn’t do much to confirm this particular diagnosis: he argues that the basic understanding of both vacuum and adiabatic pressure—the phenomenon that causes a gas to cool when it expands and heat when it is compressed—was present in China from the thirteenth century onward. Even if this overstates the case, a reasonable consensus exists for the belief that by the sixteenth century China had enough awareness of atmospheric pressure to produce not only a Newcomen-style reciprocating steam engine, but one that produced rotary motion.

  Chinese engineers had already shown remarkable cleverness in transforming rotary into reciprocating motion. By 400 CE they had developed a system of water “levers,”16 which used a waterwheel to fill a chute with water, tipping it first in one direction, then in another. Even more significant, and well known, was China’s twist on the blast furnace, which, as the careful reader will recall, was being used to make cast iron in China by 200 CE, at least a thousand years before one appeared in Europe. The Chinese version of this device, called a box bellows, used a piston to pump air in and out of a cylindrical box. Early box bellows were hand-operated, but, in legend at least, sometime around 30 CE a Chinese inventor named Tu Shih hooked the piston up to a waterwheel-driven crank, thus facilitating the transfer between reciprocating and rotary motion seventeen centuries before Watt and Pickard. But it was an English historian named Ian Inkster, writing in 1842, who realized the potential for a box bellows piston that produced force on both strokes, writing, “let it [the box bellows] be furnished17 with a crank and flywheel to regulate the movements of its piston, and with apparatus to open and close its valves, then admit steam through its nozzle, and it becomes the double-acting engine.” Pomeranz agreed: “The Chinese had already recognized18 the existence of atmospheric pressure, and had long since mastered (as part of their “box bellows”) a double-acting piston/cylinder system much like Watt’s, as well as a system for transforming rotary motion to linear motion that was as good as any known anywhere before the twentieth century. All that remained was to use the piston to turn the wheel rather than vice versa.”

  That was all that remained. It still remained when the first steam engines in China were being imported from Britain. The box bellows was undeniably an inventive leap, but not in any useful direction. The bellows, it turns out, is not a mirror image of the piston, but its opposite. To the degree that it works as a bellows, it cannot work to drive a piston. The Chinese could have a bellows,19 or a vacuum, but not both, at least not without a strong theory of the behavior of gas and pressure like the one articulated by Boyle in the seventeenth century.

  And they didn’t have one. Chinese science had taken a very different path than its analogue in the West; most especially it lacked the strong historical foundation—no Descartes, no Galileo, no Bacon—needed to develop the experimental science of the Enlightenment. Even worse: When a scientist like the polymath Fang Yizhy attempted to import Western methods into China in 1644, producing a mammoth collection of works on mathematics, engineering, and natural philosophy entitled The Small Encyclopedia of the Principles of Things, it lacked any readership outside the aristocracy; China’s master artisans were so severely handicapped by illiteracy20 that eighteenth-century Chinese literacy rates never got much higher than 40 percent, at a time when 60 percent of Brit
ish men were able to read.

  If the Chinese handicap was neither geographic nor scientific, was it demographic? Even with Chinese literacy rates barely two-thirds that of Britain’s, by 1700 there were still more literate Chinese than the entire populations, literate and otherwise, of France, Germany, Italy, and Britain combined. How is it possible that not one of them was capable of inventing a spinning jenny? The only difference between Hargreaves’s invention and the machine used by Chinese cotton spinners, for example, was the draw bar, a device whose “fingers” could pull a large amount of softly wound cotton. The draw bar was not a complicated device,21 and yet even though at least five times as many Chinese as Britons were spinning fibers into yarn, there is no evidence that any of them invented one.

  Instead, it appears that China’s huge population, and its powerful central government, both of which would seem to be advantages for industrialization, were liabilities when combined. The population’s demands for food were a tiger by the tail for the imperial court for centuries; so many mouths to feed meant that the investment capital available demanded single-minded focus on agricultural innovation. Just as contemporary scientists and inventors “follow the money,” writing proposals in the subjects that granting agencies currently favor, so Chinese innovation pursued those avenues for which support was available. The difference is that contemporary scientists can select from many patrons; in China there was only one.

  As with Tudor England, government monopoly of patronage meant control. Virtually all copies of the seventeenth-century Chinese encyclopedia, the T’ien Kung K’ai-wu or Exploitation of the Works of Nature, which included illustrations of everything from hydraulics to metallurgy, were destroyed because, according to Joseph Needham, much of the material touched on industries that had been granted monopoly status by the Qing emperors: “The absence of political competition22 did not mean that technological progress could not take place, but it did mean that one decision-maker [i.e. the Emperor] could deal it a mortal blow.” It is therefore no surprise that a high percentage of both the inventions and inventors we associate with China from the time of the Han Dynasty to the Qings were government sponsored and employed.

  Another liability of a strong central government is that it is, well, strong. Europe’s fragmented system of sovereign states23 made it possible for innovative minds such as Paracelsus, Leibniz, Rousseau, and Voltaire to “shop” for more congenial places whenever they skated too close to heretical or otherwise challenging notions; in China, one had to travel a thousand miles to a place where the empire’s writ ran not. And since China, perversely, was able to keep from plummeting down a Malthusian hole by using its enormous geographic extent to expand land under cultivation in the southern and western territories, technological stagnation, until contact with the West, seemed to have few if any costs.

  In the end, however, neither territory, nor politics, nor even science is as powerful as culture in explaining China’s inability to produce its own steam engines, puddling furnaces, or spinning jennys. Bertrand Russell translated the Chinese term24 wu wei (usually “doing without effort”) as “production without possession”—a simplification, no doubt, but one with some powerful resonance to the notion that China’s great burden was a lack of the itch to own one’s own work.

  ON THE OTHER HAND, that itch was powerfully felt in the seven United Provinces of the Netherlands from their de facto founding in 1581, when the onetime Spanish colonies abjured the rule of Philip II. By the beginning of the seventeenth century, the Netherlands was home to Europe’s most cosmopolitan culture; the world’s first stock market; a large and powerful merchant class, including Europe’s largest bankers; access to millions of consumers through its enormous merchant fleet and colonies; the rule of law; and tolerance for every religious confession in the world, including the best established and assimilated Jewish community in the world. It had developed, out of deference to the North Sea, a huge network of windmills, canals, and waterwheels. It even had, from 1683 to 1688, the prophet of the concept of intellectual property, John Locke, who wrote most of the Treatise on Government while living in Utrecht, Linden, and Amsterdam.

  And it had a deep respect for inventions and inventors. Corneliszoon’s crank-operated sawmill was far from an unusual case. From 1600 to 1650, the Dutch government25 issued between five and ten technical patents annually. However, the pace thereafter dropped off precipitously—and the reasons are telling. Petra Moser, now a professor26 at MIT’s Sloan School of Management, spent four years examining more than 15,000 different inventions exhibited at nineteenth-century world’s fairs, and their equivalents, and discovered a fact that seems at first glance to discredit the idea that patent protection was essential for innovation: Nations without patent laws were in many cases just as inventive as those with them. Or even more inventive; some of the nations best represented at those industrial fairs actively discouraged the patenting of inventions.

  The reason seems to be that whether or not they enforced a patent law, smaller nations or domains, such as the Netherlands and Switzerland, were vulnerable to the theft of their innovations by competitors in larger nations. The bargain of patent protection runs two ways: The state, in return for making an idea public, offers legal recourse to its creator should someone within the state steal the idea. Since making one’s invention public in a nation with patent protection offered protection against theft only up to its own borders, only a large nation offered a large enough market to make the deal a good one, and (in Moser’s words) the small nations “would have been silly27 to patent [their] innovations.”

  This logic inhibited investment in entire categories of innovation. Those nations that relied on secrecy rather than patent tended to specialize in the sort of inventions that cannot be easily reverse-engineered, such as chemicals or dyes. One consequence is that almost all mechanical inventions—particularly, all steam engine innovations—were produced in countries that enforced some sort of patent law, since one can scarcely sell a compound engine and simultaneously keep its workings secret. Another is that any benefit from the cross-fertilization of ideas resulting from the public requirement of patent law, including publication of specifications, was lost.

  The result is that while the Netherlands led the world in per capita (really, per man-hour) GDP every year from 1700 to 1820, its average compound growth rate over that period was actually negative, falling more than 13 percent. From there on, Britain took over the lead,28 with a growth rate per man-hour of 0.5 percent—a rate that exploded to growth of 1.4 percent annually from 1820 to 1890. The remarkable growth of the Netherlands during the 1600s essentially stopped a century later, and the only persuasive reason is size, or rather scale. A small country can shelter the world’s largest banks, shipbuilders, and even textile manufacturers, but since it can protect inventors only from their own countrymen, growth that depends on the creation of new knowledge is fundamentally unsustainable, like a nuclear chain reaction with insufficient critical mass. Just as fission requires that a sufficient number of uranium nuclei be, in some sense, accessible to the others, a chain reaction of innovation sustains itself only if innovations are accessible to one another. A few thousand Europeans, no matter how inventive their work in chemicals, or metallurgy, could not create an Industrial Revolution unless they could inspire (or borrow, or even steal) from one another; a few thousand Britons, precisely because they concentrated their efforts on “public” inventions, most especially the steam engine, emphatically could. The consequence is that smaller nations, by avoiding large-scale mechanical invention out of fear that their own territory was too small to make them profitable, deferred industrial leadership to those large enough to take the risk.

  So if the Netherlands was too small, and China too big,* what nation was, in the immortal words of Goldilocks, “just right”? The most intriguing candidate29 would seem to be France, which had just about every advantage that Britain had, and a lot more Frenchmen to exploit them. France’s economy grew at almos
t precisely the same rate as Britain’s between 1700 and 1780, and from a far larger base; only about a tenth of one percent per year less growth in industrial (and, for that matter, agricultural) output in France during those eight decades. In 1789, the year of the Revolution,30 France’s foreign trade was 25 percent greater than Britain’s, and its population was nearly three times bigger.

  By the same year, however,31 Britain had a significant lead in any number of significant indices: a third more GDP per capita, far higher rates of urbanization (nineteen of every hundred Britons lived in cities, and only eight Frenchmen), nearly eight times as much money in the hands of banks, and a tax rate less than a third of France’s. Thus, in part because of lower interest rates32 from the middle of the eighteenth century forward, the availability of capital (as opposed to its absolute amount) was significantly greater in Britain.

  But it was not only, or even mostly, an advantage in business sophistication that gave Britain a head start on industrialization. Nor was it scientific sophistication, a yardstick on which France was way ahead: Watt was simultaneously a brilliant engineer33 and a gifted scientist, but he still needed to study French engineering texts because there were so few English ones available. His experience remained true through most of the nineteenth century, when French, and later German, scholars were giving a scientific foundation to the laws of thermodynamics and kinematics.