Aayushman Rajesh Nuwal

• Before 1750 economic growth in the west and elsewhere in the world had always run into ceilings.
• It had negative feedback as stated by Malthus.
• “Nothing failed like success” before the Industrial revolution.

• Mokyr states that there are two kinds of knowledge:
1. Ω- knowledge: catalogues and describes natural phenomena and regularities.
2. λ- knowledge: “how”--- how to do things we now call “production”.

• Mokyr describes Ω-knowledge as a union of pieces of knowledge possessed by the society.
• “beliefs”; not essential for the knowledge to be true
• Shortly put it was the scientific knowledge possessed by the individuals in the society.
• Not only was the size important but also its diffusion i.e. dissemination

• While λ- knowledge was the union of all feasible techniques known in the society.
• Technique: a list of instructions on how to produce a good or a service.
• Basically, ways and methods of manufacturing goods.

• In the period 1700-1850 there was a fundamental change in the characteristics of the Ω set and the way it interacted with
λ set.
• The continued development of the early inventions of the
1760s and 1770s was key.
• There was a profound transformation in the way useful knowledge was accumulated and communicated.
• Example: Diderot and d’Alembert’s “Grande Encylcopédie” published in France between 1751-1771
• Mokyr says that before the Industrial Revolution took place there was “Knowledge Revolution” that widened the epistemic base.

• Technical innovation in the Netherlands from the golden age never completely came to a halt but slowed down during the late eighteenth century.
• On the eve of the Industrial Revolution the
Netherlands was in some ways the most advanced economy in Europe.

• From 1780, the Netherlands was continuously at war with
England, and was subject to political turmoil and instability.
(Negative Institutional Feedback)
• Along with this the western provinces suffered severely from inflation and unemployment: manufacturing heavily depended upon imported raw materials, which became hard to come by as they had to arrive through neutral ports.
• There was a sharp decline in the demand for capital and much of the Dutch capital supply fled overseas or was hoarded.
• Also from 1795 onwards the Netherlands was also dominated by France, which didn’t have any clear aim at hand.

• In 1650 the Dutch were on the cutting edge of technology in
Europe and for this Mokyr uses Cardwell’s Law: Nations that are technologically creative are so only for a short time.
• Progress was also blocked by special interest lobbies and distributional coalitions such as guilds, informal employee organizations, and local government regulations that were trying to protect vested interests from new technology which were perceived to threaten livelihood and human capital.
• The Netherlands had to spend a lot of time and resources on reforms because of its antiquated fiscal rules, obsolete legal systems (land use & property rights), huge public debt & chaotic institutions. “These obsolete structures were not feudal but the relics of a commercial economy.”

• Labor market is another mechanism that Mokyr blames for the tardiness of the Industrial Revolution: The Netherlands was a rich urban economy with high wages and as stated by Adam
Smith, high wages, ceteris paribus, meant high labor costs and thus either a disadvantage in competitive world markets or lower profits thus a lower rate of capital formation and growth in the modern sector.
• Mokyr also argues that the “advanced” technology that helped the Dutch propel in the 17 th and 18 th centuries was mostly pragmatic knowledge: clever, well-designed but without much of an epistemic base in the deeper natural phenomena that made them work.
• A narrow epistemic bases of the techniques in the λ- set created a fixed factor that prevented sustained expansion.

• According to Margaret Jacob the Netherlands lacked venture capitalists rather they lost their interest in “mechanical arts”: the
Dutch commercial elites did not see profitable opportunities in the new technology during 1770-80 and hence did not invest in it unlike their British counterparts.
• Mokyr also says that towards the second half of the eighteenth century the research towards Ω-set in the Netherlands lacked usefulness, unlike British research that had the “Baconian
Impulse”, e.g. Petrus Camper who was famous for his studies in the geometry of the human face and the secret of beauty.
• Mokyr also mentions Dutch universities and the number of foreign students studying as a measure of reduced sophistication, because in the last quarter of eighteenth century Lieden had
3,164 foreign students which was reduced to 1,132 in the third quarter. By the end of the century the numbers were 10% of what they had been in the previous century.

• The Netherlands was not the exception, Britain was.
• Key to success in Britain was manufacturers linking up with innovators/scientists getting Ω & λ together on the shop floor.
• A small open economy like The Netherlands, it is difficult for institutions to keep progress out as long it is happening somewhere. The industrial revolution was delayed there because of the heritage of the golden age and political difficulties in the critical years between 1780-1815.