Nobel Laureates Bring Clarity To Prosperity And How To Destroy It

This year’s Nobel Prize for economics was awarded to three individuals, Joel Mokyr, Philippe Aghion, and Peter Howitt, who have illuminated the origins of prosperity in modern society. Among them, Mokyr is likely the best known and most influential, due in no small part to his ability to think far beyond the borders of the standard economics box.

Though much of his work delves into history, Mokyr’s writing has profound relevant to the present. His thinking has key things to say about the current direction of the United States and what it portends for the future of America and, in no uncertain terms, the world.

Mokyr’s Lever And The Engine of Invention

Born in 1946 in the Netherlands and educated at Yale, Mokyr has spent most of his career at Northwestern University, where he is the Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History. His research, which stands at the crossroads of economic history, science and technology studies, and philosophy of knowledge, seeks to answer one seemingly short and simple question: Why did the modern world grow rich and first do so in the West?

In The Lever of Riches: Technological Creativity and Economic Progress (1990), Mokyr focused on the Industrial Revolution, rejecting the notion that it was a “lucky accident” or merely the result of natural resources. Drawing from historical studies of technological change, he argued that the roots of innovation lay in what he called the “microeconomics of invention”—the incentives, rewards, values, and social networks that shape how people generate and share useful knowledge.

Mokyr’s metaphor in The Lever of Riches is revealing: technology is the lever, but knowledge is the fulcrum. Machines and inventions matter, but people drive progress, people with the urge and intellectual capacity to experiment, question, and share discoveries. Technological creativity depends on a “supply of useful knowledge”—the codified, systematic understanding of natural phenomena that inventors draw upon to solve practical problems.

The Industrial Revolution, then, was not just about spinning jennies, steam engines, and coal. It was about the spread of a new epistemic attitude. It was about understanding that the natural world was knowable, manipulable, and applicable in practical ways.

Culture As The Invisible Hand

This argument would reach its fullest expression in Mokyr’s most widely read book, The Gifts of Athena: Historical Origins of the Knowledge Economy (2002). There, Mokyr turned to the relationship between what he termed “propositional knowledge,” scientific understanding of how the world works, and “prescriptive knowledge,” or practical knowledge of materials, techniques, how-to skills. He argued that modern economic growth arises when societies provide conditions to successfully link these two types of knowledge: when scientific understanding informs practical invention. What distinguished Europe after 1500, in his view, was a culture that not only produced new ideas but valued them, disseminated them, and rewarded those who applied them to human needs.

For Mokyr, culture is not a soft afterthought to the hard mechanisms of the economy. It is the very infrastructure of progress. He speaks of an “Industrial Enlightenment,” a period in which the intellectual values of the 17th- and 18th-century Enlightenment—rational inquiry, empirical testing, and openness to dissent—spilled into the workshop and the factory. This, he argues, was Europe’s true comparative advantage. Britain’s coal or its political institutions mattered, but without a supportive culture of curiosity and shared communication, they would have meant little.

In this sense, Mokyr stands apart from other giants of economic history, such as Douglass North or Daron Acemoglu, who emphasize institutions as the primary engines of growth. Mokyr does not deny their importance, but he insists that institutions themselves arise from the cultural and epistemic environment in which they operate. Rules can preserve order, but they cannot generate creativity. For that, a society must have a sustained belief in the value of knowledge and the need for it to grow.

The Role Of Knowledge In The Making Of Prosperity

Mokyr’s approach reframes what economists mean by “capital.” Traditional economic theory often treats growth as a function of accumulating physical or human capital—machines, skills, resources, infrastructure. Mokyr sees these as secondary. The true capital of modernity is knowledge, particularly the kind that is open, cumulative, and shared, i.e. science most of all. Economic progress depends on the capacity of societies to produce, store, and transmit useful knowledge across generations.

In a more recent work, A Culture of Growth: The Origins of the Modern Economy (2016), Mokyr looked further into the role of communication. The book explores the “Republic of Letters,” the informal network of scholars, inventors, and thinkers who exchanged ideas across Europe before and during the Enlightenment. This intellectual community, Mokyr says, created a competitive market for ideas. Though competitive on the one hand, it was cooperative on the other. It was a space in which thinkers not only vied for recognition and influence but celebrated and utilized each other’s achievements.

The Enlightenment, despite its faults, was essential for two fundamental and innovative ideas. In the book’s own words, these were: “the concept that knowledge and the understanding of nature can and should be used to advance the material conditions of humanity, and the belief that power and government are there not to serve the rich and powerful but society at large.”

Growth Is Conditional; No Matter How Rich, A Nation Can Fail

Mokyr’s ideas about the ultimate value and power of knowledge, while not pathbreaking in themselves, have been transformative in the context of economic thought and the understanding of prosperity. Historically, these kinds of ideas played a central part in the success of Japan and the so-called “Asian tigers”—Hong Kong, Singapore, South Korea, and Taiwan—to which we would add China in the current century.

Yet, the other part of Mokyr’s thought, and where it strongly agrees with the work on “creative destruction” by his fellow laureates, is that such success is never guaranteed. It can be reduced, reversed, even ruined. This happens when a nation’s knowledge-innovation enterprise becomes sclerotic or broken, overly controlled or dependent upon interests and policies that work against openness, freedom of ideas, and change.

It is this aspect that makes the work of all three laureates strikingly relevant to what is happening in the U.S. Their elucidation of how prosperity works throws light on the meaning of recent policies by the Trump Administration. These are policies to freeze and withdraw funding for university research, to eliminate large portions of federal R&D, to reject or ignore entire domains of medical science and technology, and to cut down the inflow of foreign intellectual talent.

Taken together, in the terms of Mokyr, Howitt, and Aghion, these policies define a campaign of profound historical regression, degradation, and self-harm. Mokyr’s work in particular would cast the actions of the current U.S. administration as an effort to seriously weaken the culture of research, innovation, and thus prosperity.

Whether the Swedish Academy had such perceptions in mind when selecting these three thinkers for the Nobel, it has done no less than advise that their work be more widely read even in the White House.