Free markets and innovation
“There is at least one miracle I do believe in – the miracle of free-markets. Why? How can I believe in this miracle and no other? Because I have seen the evidence and it is convincing. It looks like a hockey stick.” – Peter Lewin
Growing individual liberty was the common denominator of both the scientific revolution and the market economy; hand in hand they drove the gains of the last 250 years. The ideas of individuals free to innovate delivered us the scientific, technological and economic breakthroughs on which our standard of living is based. First among those has been the ability to harness energy. For almost all of humanity across all of our species’ history an individual’s output was constrained to the energy input of one human. The principle exception to that rule was the few individuals who could coerce the actions and belongings of others. Life was better for a warlord, but only relatively better. Today, the average Shanghai resident enjoys a much better life than most warlords of the pre-modern world.
Stepping back to the end of the Dark Ages, Leonardo Da Vinci glows with ideas in our imagination. Like a sun, Da Vinci was an individual around whom the very Renaissance seemed to spin. For us it appears Da Vinci dreamt much of our world into being. The marvelous machines of Da Vinci inspire us to this day. How many children visiting a museum near you have been amazed by his models and plans? Yet his ideas for human movement by machine could not be put into action. His world was trapped by its energy constraints.
Michael Faraday and the 19th Century’s global A team of intellects made the modern world in the image of their dreams. Not long before, living at the end of a world dominated by Kings, warlords and oppression, in The Wealth of Nations Adam Smith anticipated a prosperous world of free exchange. In the year of Smith’s passing Faraday was born, whose ideas gave us easy access to the energy on which that prosperity was to be built. Prosperity would come to mean we could afford higher standards of health and hygiene, and improving both of those gave us greater life expectancy.
In 2015, Economist Deirdre McCloskey used the following graph, demonstrating GDP growth per capita, to illustrate the cultural determinates of prosperity - that is, how social ideas drive economic activity.
Da Vinci and Adam Smith, along with almost everyone else for the 200,000 years prior to Faraday, had about 292 kW per annum of power output at their disposal. By 2013, from electricity alone the average human on earth had 108 times more power available. That is to say the global average annual electricity consumption per capita was 31,227 kW in 2013. Our freedom, prosperity and access to energy enable us to pursue an ever-increasing range of dreams. At the core of almost all the realities that were once dreams are technologies harnessing energy. Infant and mother mortality at their lowest levels in human history, lower levels of hunger than ever, better primary health, lower levels of death for the elderly from heat and cold - all have in common access to affordable energy.
Access to low cost reliable energy has freed billions from oppression and grinding poverty. They are now enabled to peacefully pursue their dreams. It wasn’t a warlord or any of their modern heirs that planned this world of relative health, happiness and prosperity. It was individuals like Adam Smith, Michael Faraday, and Steve Jobs with insights, ideas and plans that framed our world.
The graph of energy consumption above would look miraculously like Deidre McCloskey’s. It also shares the same curve as the one from NYU’s Development Research Institute below.
The visualization and graph represented by NYU’s Development Research Institute are the most fantastic representations of human dreams, thoughts, and life experiences that we would otherwise have never had. This shouldn’t be taken for granted, and yet we do. The ideas and actions of individuals matter; for good or evil they are both the cause and effect of our very existence. It is so easy to forget that without the determined actions of individuals so many of us wouldn’t exist in the first place, so many of us would have lived foreshortened lives.
P.S. Take the minute to click through to DRI’s visualization the time sequence of improving life expectancy should even lift an engineer’s spirits. Don’t let the economists claim all the glory.
