Dale Halling’s Source of Economic Growth is an excellent work making the case that innovation is the ultimate source of economic growth. As he wrote:
“Humans are different from every other organism on Earth in that they alter their environment to meet their neeeds while organisms alter themselves to adapt to the environment. The way man does this is to use his mind to create inventions that will solve a problem of his existence.”
Beginning with the Industrial Revolution, the pace of inventions allowed humankind to escape the Malthusian trap of ever greater population leading to stagnant subsistence levels of per capita wealth. He goes on to show that the reason why this revolution began in the English speaking world was because this was the first time that significant property rights were given to inventors vis a vis their inventions. These property rights provided both the incentive to innovate as well as a means of allocating capital in a free market environment to ensure that the inventions that would create the most wealth received needed capital. Halling goes on to demonstrate that the creation and enforcement of a strong system of property rights for inventions, is a strong predictor of national economic success into the modern age and, of course, advocates for such a system going forward. “Property rights in assets result in significantly improved returns from those assets” and since “inventions are the source of economic growth, it only makes sense that if you want to increase economic growth you will provide property rights for inventions.”
Whether you are a seasoned economist or a novice, somebody setting government policy or somebody else voting for such people, this work is an important contribution to understanding how to cause economic growth. If I had the money, I’d put one in the hands of every member of Congress. If you are interested at all in economic growth, you should get this book for yourself.
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Paperback: Source of Economic Growth
Kindle: Source of Economic Growth