David Warsh’s Knowledge and the Wealth of Nations: A Story of Economic Discovery is one of the few books on economic modeling which is written well enough to be a page-turner. Warsh’s narrative deals mostly with endogenous growth theory, which focuses on innovation as being the primary driver of economic growth (as opposed to classical dynamics such as gains through trade and division of labor).
I’ve been thinking about this because people often ask me about why cultures go through various efflorescences at particular periods, or why there is stagnation at other times and places. One-size-fits-all answers are generally not ones I find appealing. What confluence of factors produced 5th-century Athens? The Athens of Aeschylus, Sophocles, and Euripides. The Athens of Thucydides, Hippocrates, of Plato and Socrates. A small city-state on the knowledge of the Eurasian oikoumene.
One of my favorite essays is James F. Crow’s Unequal by Nature: A Geneticist’s Perspective on Human Differences. Written 2002, Crow simply observes that if excellence in a particular field is conditional upon being at the tails of several independent distributions, then very few people will be excellent, and subtle differences in distributions across populations can compound rather rapidly. Reading the essay one likely thinks of mental and physical abilities and endowments of particular individuals, but what if one imagines this as a metaphor for sets of societies?
Our understanding of the details of how societies function and integrate into an “organismic whole” is primitive. But we do know that different societies differ in their endogenous and exogenous parameters. Some societies go through external shocks that differ in kind and frequency (e.g., the relative regularity of the Nile compared to the Euphrates and Tigris). Others experience tumult that is purely internal (the secular cycle of decay due to elite overproduction predicted by Peter Turchin). If cultural efflorescence is due to a range of interlocking factors, searching for magical necessary conditions may not be easy (especially if there are different parameter conditions that are sufficient to produce the same result).
All this was on my mind reading a new preprint, Cultural evolution by capital accumulation. The authors refer to endogenous growth theory, and their model shares a great death with micro and macroeconomic ways of viewing the world. From the abstract:
…cultural knowledge creates wealth that can then be invested into the production of further knowledge, generating a positive feedback loop allowing significant accumulation and acceleration. These results prompt us to change the way we see cultural evolution. Instead of an accumulation of unintended random “mutations,” as in genetics, cultural evolution should rather be seen as an accumulation of assets that gradually improve productivity and allow individuals to learn, master and create an increasingly higher amount of further assets.
The paper outlines a model of individual “growth” where one can invest in disposable capital (getting bigger and healthier) and non-disposable capital (stuff that persists beyond death), as well as social learning and innovation. Certain cultural conditions hold whereby social learning and innovation become much easier due to accumulated cultural capital. An example given is the difference between the Roman and Arabic numeral system. Math proceeded much faster under the latter system than the former. Another is the fact that science is cumulative and contingent, so that modern students take for granted as basic discoveries that which had been exotic and cutting edge in earlier centuries. Like a modular machine, the authors describe a cultural system where interlocking specializations of learning yield gains to overall productivity in a very Adam Smith-like manner.
Cultural knowledge resulting in even more capacity to produce knowledge and skill is important. The authors note that extremely dense and large polities are not usually known for their creativity. Rather, smaller units of culture and organization, such as Athens in the 5th-century BC or Britain in the 19-century, seem to shine brightly for a period, before a new equilibrium is reached (Peter Turchin has observed that innovation and change tend to occur on political and civilization frontiers).
The mathematical formalism in the preprint above is not trivial and needs to be checked. But the stylized empirical predictions of stable equilibrium states of poverty, and then periodic shifts to a state of higher productivity, ring true. But, the treatment is deterministic, when it seems likely that the true paths tend to be impacted by stochastic forces.