BOOK REVIEW: 50 inventions that changed the world

Sep 13 2017 16:19
Ian Mann

Fifty Things that Made the Modern Economy, by Tim Harford

TIM Harford is an English economist and journalist. He has written four books on economics and writes the Financial Times column, The Undercover Economist, on the economic ideas behind everyday experiences.

This book, a short summary of 50 inventions that shaped the modern economy, shows how some inventions shaped, and still shape, our lives in profound and unpredicted ways.

Many inventions create winners and losers, so while solving a problem for someone, they’re often creating a problem for others. The original Luddites, for example, were weavers and textile workers who smashed mechanical looms in England 200 years ago. They did this because they rightly feared that machines would devalue their skills and make them poorer.

“Whenever a new technology emerges,” Harford notes, “it’s worth trying to ask who will win and who will lose out as a result. The answer can often surprise us.”

Some inventions change how we live, the systems we use to cope, the ideas we hold, and more.

Many believe that Elizabeth Billington, the world famous 18th-century opera singer, was the greatest English soprano who ever lived. In her lifetime, she earned possibly 1% (at today’s value) of the highest paid English pop singer, Elton John.

The explanation for the difference in value between Elizabeth Billington and Elton John is not talent – or Elton John would be worth 1% of Elizabeth Billington; it was the invention of the gramophone subsequent to Elizabeth Billington’s death.

This new technology allowed for wider fame, and more money. Now millions of people can listen to the best performers in the world. “Thomas Edison’s phonograph led the way towards a winner-take-all dynamic in the performing industry,” explains Harford.

Similarly, a few decades ago, the world’s best footballer could be seen by no more than a stadium-full of fans each week. Today, through internationally broadcast television, the same talent can be seen by millions of fans around the world, enormously multiplying the value of the game and its players.

Fifteen years ago, David Bowie warned musicians that their future would be very different as music becomes a utility like water or electricity. “You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left,” he said.

And live concerts changed from being a way to sell albums, and albums became a way to sell concert tickets. The top 1% of concerts make five times more money than the bottom 95% put together.

Technological change has, and will continue, to alter who wins and who loses.

Justus von Liebig, the 19th-century German chemist, made major contributions to agricultural and biological chemistry and was considered the founder of organic chemistry. Among other achievements, he pioneered the analysis of food in terms of fats, proteins and carbohydrates.

Breastmilk substitute saves babies

Liebig knew that not every baby has a mother who can breastfeed. In the early 1800s, only two in three babies who weren’t breastfed lived to see their first birthday. In 1865, Liebig’s Soluble Food for Babies was launched. It was a powder comprising cow’s milk, wheat flour, malt flour and potassium bicarbonate - the first scientific, commercial substitute for breastmilk.

It appeared at a propitious time. Germ theory was well understood, and the rubber teat had just been invented. Until this time, mothers would take more time off from work for both biological and cultural reasons. Baby food democratised a lifestyle choice – working or looking after your baby - that had previously been open only to the wealthy who could afford wet-nurses.

However, formula is not suitable for all babies, some of whom become more susceptible to illnesses. In Utah today, Ambrosia Labs pays Cambodian ‘wet-nurses’ to express breastmilk, screens it for quality, and sells it on to Americans.

“Justus von Liebig sounded the death knell for wet-nursing as a profession; perhaps the global supply chain is bringing it back,” notes the author.

In 1965 many married, highly educated American women spent a large part of their day catering for their families. Today, the same demographic spends only 45 minutes a day cooking and cleaning up. The symbol of this change was brought about by the introduction of the ‘TV dinner’ in 1954, a take-away food.

In 1960, only a quarter of food spending was outside the home. By 2005 the British spent more on food and drink outside the home than at grocery stores.

This type of food innovation didn’t begin with the ‘TV dinners’. Households were buying pre-milled flour in the early 19th century, and H.J. Heinz started to sell pre-cooked macaroni in the 1880s. However, the amount of time women spent on housework didn’t change much.

More willing to stink than to starve

Women’s ability to contribute to the workforce was less a function of the washing machine, as many believe, than of the arrival of pre-prepared food. If it took all day to wash and dry a few shirts, people would use replaceable collars and cuffs to hide the grime. People have always been more willing to stink than to starve!

The industrialisation of food, Harford explains, changed our economy, freeing women from hours of domestic chores, removing a large obstacle to their entering serious professional careers.

Some life-changing, economically propelling inventions were not tangible, but merely ideas. If one thinks of the most important invention of the industrial era, what comes readily to mind is steam or perhaps electricity. In fact, it was a legal invention, the limited liability corporation.

The origin of today’s corporations goes back to England in 1600. At the time, a corporation’s charter specifically defined what it was allowed to do, and often that nobody else was allowed to do the same thing.

Later, a legal body was created to handle all of England’s shipping trade east of the Cape of Good Hope. “Crucially, and unusually, the charter granted (to its 218 shareholders who were the merchants involved,) limited liability for the company’s actions,” Harford explains.

Until this decision was made, investors were personally liable for everything the business did, which essentially meant you could lose your home, and even land in prison if things went wrong. As such, one only invested with a close family member or a deeply trusted friend - someone you knew well enough, and saw often enough, to notice if they were behaving suspiciously.  

In the 1500s, when most business was local, that wasn’t much of a problem, but handling England’s trade with half the world was a very different and serious undertaking.

In the 19th century, industrial technologies such as railways and electricity grids needed huge amounts of capital. At the time governments did not invest in these massive projects, but limited liability companies could.

The “invention” of the limited liability company has done great things for humanity. By helping investors pool their capital without taking unacceptable risks, it enabled big industrial projects, stock markets and index funds to emerge. This invention has played a foundational role in creating the modern economy.

Each of the 50 inventions is described in a separate chapter one can read, in any order, in under 10 minutes. I have dealt with only 4. This book is a delicious intellectual smorgasbord! 

Readability:     Light --+-- Serious
Insights:         High +---- Low
Practical:         High ----+ Low

  • Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Executive Update. Views expressed are his own.

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