Brad DeLong on Intellectual and Technical Progress

Episode Summary

Executive Summary: Brad DeLong argues that modern economic history is defined less by steady growth than by discontinuous leaps: the late 19th century and 20th century transformed living standards, technology, and institutions in ways the pre-1870 world never did. He emphasizes the role of science, globalization, industrial organization, and incentives, while warning that contemporary stagnation, Brexit, and weak public investment risk derailing prosperity.

Main Topics: Why the late 19th century was a historical break (Priority: 5/5): DeLong argues that 1870 onward marked an unprecedented acceleration in productivity and real income growth, especially globally, and that this period fundamentally changed material life through public health, nutrition, and consumption. Institutions and the rise of scientific and technological leadership (Priority: 5/5): He traces scientific progress to the printing press, the Royal Society, and the intellectual shift around 1600, then contrasts Britain’s relative decline with Germany’s university and engineering advantage. Malthusian history versus modern growth (Priority: 4/5): DeLong pushes back against overly Malthusian interpretations, arguing that much of premodern history was constrained by violence, institutions, and intermittent technological progress rather than simple population dynamics alone. 20th-century capitalism and Schumpeterian change (Priority: 5/5): He frames the 20th century as a period of industrial research, mass production, and creative destruction, followed by a newer infobiotech revolution that changes technology even if growth feels less dramatic. Markets, Hayek, and limits of laissez-faire (Priority: 4/5): DeLong presents Hayek as a complex thinker and defends market coordination as the best way to harness dispersed knowledge, while stressing the need to handle externalities, property-right distributions, and macroeconomic failures. Traps, divergence, and policy failures (Priority: 5/5): He links middle-income traps, resource traps, austerity, Brexit, and weak state capacity to distorted incentives and rent-seeking, arguing that public investment and institutional quality matter enormously. Personal taste, intellectual life, and publishing (Priority: 2/5): The conversation ends with lighter discussion of favorite books, movies, games, religion’s influence, and DeLong’s plan for possible sequels and continued public writing.

Key Arguments: Economic growth before 1870 was slow enough that major improvements in wages and living standards were often hard to detect, whereas post-1870 growth produced unmistakable changes in health, food, and family life. The dramatic global shift after 1870 is best understood by combining income growth with population growth to approximate technological change, showing a much faster worldwide pace than earlier centuries. Scientific and economic leadership can move quickly across countries; Britain’s decline and Germany’s rise illustrate how educational systems, engineering communities, and finance shape innovation. The scientific revolution depended on institutions like movable type and the Royal Society’s norm of experimentation, which helped separate truth-seeking from elite power and propaganda. Premodern societies were largely Malthusian, but the transition after 1770–1870 and especially after 1870 created a new regime where invention, diffusion, and mass production broke the old constraints. Markets are powerful because they aggregate dispersed information, but they fail without attention to property rights, externalities, and macroeconomic stability. The middle-income trap often reflects the rising attractiveness of state-linked or rent-seeking careers relative to entrepreneurship, especially where state power and appropriation technologies improve. Britain’s post-Brexit and austerity-driven underinvestment, in DeLong’s view, left the country materially poorer and in need of renewed public investment and European integration. DeLong is skeptical that Keynes simply “got it wrong”; instead, rising consumption standards and status competition may keep people working hard even in materially wealthy societies. He sees modern political economy as a contest between productive, positive-sum systems and force-and-fraud systems that appropriate wealth through hierarchy, state power, or rents.

Data Points: Real income growth (worldwide, 1870 to 1913): about 1.3% per year - DeLong’s estimate of average world real income growth from 1870 to the eve of World War I Approximate 'technology growth' (1870 to 1913): about 1.7% per year - Calculated as real income growth plus half of population growth Comparison to pre-1870 world growth: roughly 4x faster - The post-1870 global growth rate versus the century before 1870 World population growth after 1870: more than 1% per year - Used to explain why broad technological and income change became visible globally Steady technological progress, 1770 to 1870: about 0.5% per year - DeLong’s estimate for the pre-1870 industrial acceleration Underlying invention/innovation pace before 1870: about 1/6% per year - His estimate of the core technological advance after stripping out coal and globalization effects Population growth supported by steampunk-era productivity: about 1/3% per year - He says this would still leave the economy basically Malthusian Doubling of humanity’s technological competence: every generation - How he characterizes the Schumpeterian era after 1870 Possible British GDP loss from poor policy: 10% poorer - DeLong’s estimate for Britain from failure to invest Possible additional loss from Brexit: another 10% poorer - His estimate of Brexit’s economic damage to Britain Laptop age: 18 months - Used in a personal example about persistent material dissatisfaction Advanced chip process: 4 nanometers on a side - Example of modern manufacturing complexity in semiconductor production Industry concentration: 2 productive organizations - His claim that only two firms are essential to the extreme ultraviolet semiconductor chain Civilization decision point: late 1993 - He says he had to choose between Civilization addiction and a Treasury job

Pivotal Quotes: "The numbers then are what big progress meant back then." — Brad DeLong: On late-19th-century productivity data and why growth looked unimpressive before the second industrial revolution "There is no better way for harnessing the 8 billion brain anthology intelligence of humanity to achieving social goals we all want, other than to organize a well-functioning market system." — Brad DeLong: On Hayek, coordination, and the power of markets to aggregate dispersed knowledge "We did that, and we did that mostly in the 50 years after 1870, at least for the global north." — Brad DeLong: On the era when public health, nutrition, and living standards changed dramatically

Implications: Listeners should see modern prosperity as historically exceptional and institution-dependent. The conversation implies that public investment, scientific institutions, and open markets matter more than ideology alone, and that austerity, Brexit, and rent-seeking can still meaningfully reduce national wealth.