Mokyr’s contribution centres on a deceptively simple insight: sustained economic growth requires useful knowledge, and useful knowledge comes in two forms. The first is propositional knowledge – understanding why things work.
The second is prescriptive knowledge – knowing how to make them work. Think of propositional knowledge as the laws of thermodynamics; prescriptive knowledge as the technical manual for building a steam engine.
For most of human history, these two types of knowledge developed separately. Craftsmen knew recipes and techniques without understanding underlying principles. Scholars developed theories with no thought to practical application.
What changed? The Industrial Revolution happened when Britain created institutions that brought these two kinds of knowledge together. Scientific societies, journals, encyclopaedias and improved postal services created what Mokyr calls “the Republic of Letters” – a transnational community where knowledge flowed freely across borders and between practitioners.
Crucially, this was not a government programme. The Republic of Letters was voluntary, decentralised and international. It emerged from a culture that valued curiosity, tolerated dissent and rewarded innovation. Britain’s open society meant people were free to experiment. Its property rights and patent system meant they could profit from success.
Ming dynasty China, in Mokyr’s telling, shows the opposite path. China had led the world technologically for centuries. Yet sustained growth never emerged. Successive emperors halted geographical exploration in the 15th and 16th centuries, cutting their subjects off from the rest of the world.
Without openness to new ideas and foreign knowledge, innovation withered. Centralised control, however well-intentioned, strangled the very dynamism it might have hoped to foster.
For New Zealand, Mokyr’s work offers vital lessons. Not about what government should do, but about what conditions allow prosperity to emerge.
First, education must transmit useful knowledge. Both propositional and prescriptive knowledge matter. We need citizens who understand why things work – the scientific literacy to grasp thermodynamics, genetics, probability. We also need skilled tradespeople who know how to apply that knowledge – the engineers, technicians and craftsmen who turn theory into practice.
New Zealand’s education system has drifted from this purpose. Our curriculum emphasises competencies over content, process over knowledge. Yet without a rich base of factual knowledge, critical thinking is impossible. You cannot solve problems in fields you know nothing about. Fortunately, the current Minister of Education is changing this.
Second, we must remain radically open. Mokyr shows that Britain succeeded partly because it drew on knowledge from across Europe and beyond. The Republic of Letters was international by design. Ideas and skilled people must flow freely.
This has obvious implications for New Zealand’s restrictive foreign investment regime. Like Ireland, we should be treating foreign capital as a prize to be won, not a privilege to be rationed. But openness means more than investment. It means welcoming skilled migrants.
It means universities collaborating internationally. It means businesses and government adopting global best practice, not insisting on homegrown alternatives.
Third, the state must resist the temptation to direct innovation. This is perhaps Mokyr’s most pointed lesson. The Industrial Revolution succeeded because no one was in charge of it.
Knowledge emerged from competitive, voluntary exchange among thousands of participants. Scientists, inventors and craftsmen collaborated because it served their interests, not because a ministry coordinated them.
The modern temptation is to place government at the centre. Create agencies to attract investment. Reform research institutes to focus on commercialisation. Pick winners. Yet Mokyr’s work suggests this is precisely backwards.
Sustained growth comes from removing obstacles, not from state entrepreneurship. It comes from protecting property rights, enforcing contracts, maintaining competitive markets and ensuring the free flow of knowledge. It comes from a culture that celebrates innovation and tolerates the disruption it brings.
The great risk is that governments, armed with confidence and public resources, imagine they can engineer prosperity. They cannot. At best, they can remove the barriers that prevent it from emerging. At worst, they smother it with direction and control.
Mokyr’s Nobel reminds us that prosperity is a discovery process, not a planning process. It emerges from freedom – the freedom to experiment, to fail, to learn and to try again.
It requires institutions that allow knowledge to flow and reputations to be built on contribution rather than credential. It demands tolerance for the creative destruction that sees old products and companies displaced by better ones.
New Zealand’s challenge is resisting the seductive belief that the right minister with the right agency can unlock growth. Mokyr’s work shows otherwise. The role of government is not to lead the orchestra but to ensure the concert hall has good acoustics, the doors are open to the audience, and the players are free to perform.
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