Context

• The 2025 Nobel Prize in Economics, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt, marks a turning point in the understanding of innovation, growth, and history.
• At its heart lies a quiet irony: while modern economics celebrates data and precision, the enduring foundations of progress are built through historical understanding and institutional learning.
• Mokyr’s quip that economic historians don’t win the prize exposes a deeper truth, prosperity depends less on mathematical models than on the social machinery that carries knowledge, develops experimentation, and restrains privilege.
• Growth, in this view, is a social technology before it is a mechanical one.

The Social Foundations of Growth

• Modern prosperity emerged not from a single invention or genius, but from civic institutions that enabled useful knowledge to travel.
• Coffeehouses, printing presses, guilds, dissenting congregations, and learned societies formed the networks through which ideas circulated and recombined.
• Apprenticeships, shop-floor heuristics, and rule-of-thumb engineering created a shared code of practical know-how.
• Where markets were contestable and cities porous, these networks incubated capability. Where institutions ossified, they blocked entry and throttled innovation.
• Schumpeter’s creative destruction operates only when this social infrastructure allows new ideas to challenge entrenched power.
• Economic growth, therefore, depends as much on the openness of civic life as on the brilliance of invention.

Dynamic Innovation and Institutional Design

• The work of Aghion and Howitt gives formal shape to this historical reality.
• Their Schumpeterian growth framework shows how innovation rents attract entrepreneurs, how incumbents defend their positions through lobbying or litigation, and how policy choices decide whether competition fuels progress or stifles it.
• Innovation thrives when experimentation is cheap and entry easy, and it falters when institutions harden into monopolies.
• Together, Mokyr, Aghion, and Howitt reveal that innovation is sustained not by privilege but by process.
• The vitality of an economy lies in protecting the engine of experimentation, not the owners of the last engine.

Economic History as a Living Laboratory

• Economic history offers the long view needed to understand how societies learn, adapt, and institutionalize progress.
• Its archives reveal incentives and behaviours that cannot be captured by regressions or identification strategies alone.
• Douglass North and Robert Fogel demonstrated that institutions and counterfactual reasoning belong at the core of economics.
• Claudia Goldin’s work traced how historical patterns of women’s labour participation shaped modern markets. Simon Kuznets’ national accounts were inseparable from the historical measurement of economies.
• Economic history, far from being a sideshow, is the laboratory where culture, rules, and technology interact. It illuminates how societies build the frameworks that turn invention into sustained prosperity.

Modern Challenges Through a Historical Lens

• AI and jobs
  • Technology shocks do not simply destroy employment; they reprice skills and reorganize tasks.
  • The critical issue is transition management, determining who bears the cost of adaptation.
  • Policies that ensure portable benefits, skills bridges, interoperable systems, and data portability protect workers and entry, not incumbents.
• Public debt
  • The Dutch and British states achieved credibility not through austerity but through institutional capacity, reliable taxation, representative government, and enforceable contracts.
  • Fiscal sustainability is institutional, not arithmetic.
• Inequality
  • History exposes how guilds defended privilege under the guise of quality control. True reform lies in contestability, lowering barriers so that capability, not pedigree, determines success.
  • In the digital age, open standards, pro-competitive procurement, and limits on self-preferencing echo the role once played by coffeehouses and cheap pamphlets in spreading opportunity.

Technology, Time, and the Caution of History

• Nick Crafts’ reinterpretation of the British Industrial Revolution shows that general-purpose technologies, steam, ICT, AI, appear late in productivity data because they demand complementary investments and institutional adaptation.
• Jared Diamond’s broader lens reminds us that technology unfolds within geographical and ecological constraints.
• Economic history tempers euphoria with realism and despair with patience, revealing that progress is cumulative, uneven, and deeply embedded in its social context.

Conclusion

• Recognition often arrives late, both for prizes and productivity, yet what endures is not acclaim but the machinery of openness that keeps innovation alive.
• Prosperity is the exception, not the norm. It survives only where societies argue productively, adapt institutionally, and defend contestability against the drift of privilege.
• The true legacy of Mokyr’s insight is not a celebration of the past, but a warning for the present: the wealth of nations depends on how fiercely they protect the process of discovery and diffusion.
• History’s verdict is clear, progress must be argued for, institutionally and incessantly.