Fifty Ways to Leave Your Economy Fundamentally Transformed

Tim Harford, better known to some as the Undercover Economist, brings the dismal science to life through brilliant storytelling and lively prose in his books, articles, and radio shows. He is the best-selling author of several books, including Adapt, Messy, and the Undercover Economist series.

In his latest book, Fifty Inventions that Shaped the Modern Economy, Harford takes us on a journey through the history of world-changing inventions in a collection of 50 fascinating stories that illustrate fundamental principles of economics.

I spoke with him about some of the not-so-glamorous inventions that transformed the world as well as others that seemed to arrive before their time and had to wait for the world to adapt before catching on.

Dave Nussbaum: Why did you choose to write this particular book?

Tim Harford: It was partly the format—the realization that this could work really well as a radio show as well as a book. But the other thing was the realization that I’ve been really enjoying reading some technological histories. Mark Levinson’s book about the shipping container. Felix Martin’s book about money. William Goetzmann also has a great book about money. Steven Johnson’s book How We Got to Now.

These books are great, but there’s an opportunity with this sort of book to really explain ideas and economics. Not just “how air conditioning changed the world,” but the economics of how air conditioning changed the world. The economics of paper money as well as the history of paper money.

Very often the stuff that changes the world is not inherently remarkable. It’s just a cheap way of doing something.

When you put the two together you have a much more engaging way of describing ideas and economics, which are often very dry and very abstract. More classical economics, for all its power, is very hard to write about in an everyday and chatty fashion. But shining the spotlight on these different inventions is very powerful way to do it.

DN: There is certainly a drama in the way these ideas transformed the world in ways that were unexpected, or at least not obvious.

TH: Absolutely. And it was a joy for me to find out about them because my economic studies didn’t have a history component. To actually pick up these specific examples and go, Wow, this is the perfect illustration of this theory that I heard, it was great fun for me.

DN: Was there anything in particular that surprised you?

TH: There were quite a lot of things. The thing that I just had no idea about at all until I found out about it from William Goetzmann was that the first writing and the first maths was also the first accounts. So, accountancy gave us writing and maths as a technology—these Mesopotamian tablets with cuneiform on them. That was really fascinating because you imagine, well, what would writing have first been used for? Maybe literary purposes, to capture great poetics, or maybe it was sending messages to far off armies. Actually, when you think about it, writing is not really necessary for either of those things, but it is very necessary for record keeping. It was an invention designed for a straightforward economic purpose, which was to run these increasingly complex agricultural economies.

DN: One of the themes that came across in the book is that there are a lot of unglamorous inventions—barbed wire, batteries, and steel boxes—that you don’t typically notice but they profoundly reshape the world.

TH: Absolutely. I know I sound like an economist, but something being really cheap, that’s actually really important. Our attention is obviously attracted by the very sophisticated stuff, so we think about the smartphone and the computer. When we’re thinking about future inventions, we think about artificial intelligence, the cliché flying car, space travel, and nuclear fusion, a star in a bottle.

Writing was an invention designed for a straightforward economic purpose, which was to run these increasingly complex agricultural economies.

But very often the stuff that changes the world is not inherently remarkable. It’s just a cheap way of doing something. We had fencing before barbed wire. As the salesman who sold it said, barbed wire was stronger than whisky, lighter than air, and cheaper than dust. It was just a cheaper way of doing things.

My favorite example of this, of all the examples in the book, is paper. It’s a cheap writing surface. We have other writing surfaces. You can write on animal skin parchment. It works just fine. So, the Gutenberg Press is this glittering iconic invention, brilliant, sophisticated, that changed the world. Totally impossible without paper. You could print a Gutenberg Bible on animal skin parchment, and he did, and he went bankrupt. Economically you need paper.

DN: You write about the electric motor—a very useful invention but one that required systemic change before it actually became useful. Can you explain how this unfolded?

TH: If you had been a business guru in 1890 you would have looked at these steam powered factories and you would have predicted that electricity was really about to take off. Edison was already selling it as a commodity across the grid. Electric light was catching on. Tesla, Westinghouse, and Edison all were working on increasingly efficient electric motors. But the American manufacturing didn’t really electrify in a serious way until the 1920s. It’s quite a gap, three decades, and this was a time at which manufacturing was expanding hugely.

The classic analysis of this comes from the economic historian Paul David who said you need to radically reshape your factories. The factories that are powered by steam engines have these huge drive shafts. Everything in the factory is being powered by this one drive shaft, this one steam engine. The advantage that the electric motor gives you is initially it is a bit more efficient and maybe slightly cheaper. You rip out the steam engine and put in an electric motor in its place. Nothing changes.

But the electric motor is efficient at a smaller scale. Rather than having one steam engine we can have a hundred small electric motors with the same total power. Rather than having a factory that’s two or three stories packed around a drive shaft, the factories can be these big open plan single story structures. Much more natural light, more space.

You can also reorganize the factory around the productive flow. Previously, people who needed the most power had to be closest to the driveshaft and the people who needed less power would be further away from the driveshaft. And, on top of all that you’re giving more autonomy to the machinists in the factory. It’s an invention that will deliver returns after you have reconfigured your workflow, the architecture, the extra tools, the recruitment, the education, the training, and the pay of the workers. Once you’ve done that the electric motor will deliver for you. So it’s this technology that doesn’t work until the system changes to accommodate it.

This interview was edited for length and clarity.

Further Reading & Resources

  • Harford, T. (2017). Fifty Inventions That Shaped the Modern Economy. New York, NY: Riverhead Books. (Link)
  • Hardford, T. (2017). 50 Things That Made the Modern Economy. BBC World Service (radio). (Link)
  • Harford, T. (2015). How frustration can make us more creative. TED (video). (Link)
  • Harford, T. (2005). The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor—and Why You Can Never Buy a Decent Used Car! New York, NY: Oxford University Press. (Link)