AI Era Reflections: Lessons from the Industrial Revolution and Institutional Dilemmas

For the vast majority of human history, sustained economic growth was simply out of reach. To dig into the secrets behind economic growth and technological explosion, I sat down with Joel Mokyr — winner of the 2025 Nobel Prize in Economics — and produced a 60-minute deep-dive academic video.

The Malthusian Trap Before the Industrial Revolution

If you were born at a randomly selected point in human history, there's a 90.7% to 97.1% chance your fate would look grimly familiar. For thousands of years before the Industrial Revolution — whether in ancient Babylon around 1000 BC, Song Dynasty China in 1000 AD, or 17th-century France — life expectancy and GDP per capita barely moved. Humanity was locked in the Malthusian trap: any modest surplus created by technological progress was immediately swallowed up by population growth, like running full speed on a treadmill and going nowhere. The English philosopher Hobbes described this kind of life as solitary, poor, nasty, brutish, and short.

Then, sometime in the 18th century, that flat line suddenly lurched upward. In just two hundred years, humanity generated more wealth than in all the preceding tens of thousands of years combined. The miracle of modern economic growth had begun.

The Myth of the Lone Genius

Faced with this miracle, the mainstream view tends to credit civilization's progress to great visible machines and singular geniuses like Watt and Edison — the idea that technological breakthroughs come from a flash of inspiration in a brilliant mind. Mokyr argues this is fundamentally wrong. Human history has never lacked for geniuses or cutting-edge ideas. Leonardo da Vinci had technological visions far ahead of his time, yet his ideas remained isolated sparks in the river of history, never igniting a larger fire.

What actually drove economic growth wasn't any single technology, but an invisible epistemic infrastructure. Watt's success rested on a vast, unprecedented social contract that had never existed before. Within that contract, intellectuals across Europe were connected into a collective supermind through the institutional network of the Republic of Letters. The cost of accessing knowledge was driven to near zero, and scientists and engineers collaborated seamlessly. That, Mokyr says, is the true essence of the Industrial Revolution.

The Theory of Useful Knowledge and the Industrial Enlightenment

Mokyr divides human knowledge into two types: Omega — propositional knowledge, or knowledge about what nature is, meaning science and principles; and Lambda — prescriptive knowledge, or knowledge about how to do things, meaning recipes and techniques. For most of human history, these two types of knowledge existed like two isolated islands, never interacting.

Then in the 18th century, a new elite emerged — the "Enlightenment elite" — who realized that dismantling the old aristocratic order required tearing down the wall between these two kinds of knowledge. The Industrial Enlightenment arrived, and it wasn't just a technical collaboration — it was a wholesale reorganization of society's ideology. Diderot's Encyclopédie is the defining example: it brought together Omega knowledge like theology and philosophy with Lambda knowledge like crafts and techniques, turning industrial secrets into public blueprints and making knowledge genuinely useful.

The Republic of Letters: Institutional Innovation and the Advancement of Knowledge

The Republic of Letters is a specific historical term. At its core, it was a transnational, decentralized market for cognitive validation, driven by reputation rather than money. In this system, reputation replaced currency as the highest form of exchange. Members followed the principle of contestability, using evidence and logic as the standard for truth, and dissent was not just tolerated but encouraged. The Republic of Letters protected disruptive ideas, giving them room to survive and eventually translate into productive force.

The Institutional Challenge of the AI Era

On the surface, the modern AI industry looks like the ideal realization of Mokyr's theory — but a closer look reveals it is, in some ways, the Republic of Letters' mirror opposite. In the age of large language models, the power to validate truth is monopolized by a handful of giants. The cognitive barrier to entry has risen without limit. Universities have lost their capacity to function as independent third-party verifiers, and academia has become a downstream service provider for industry.

Beyond that, the elite driving the AI revolution are ideologically fractured, lacking any shared values grounded in rationalism and humanism — a dynamic that looks a lot like toxic tribalism. Dissenting voices like Geoffrey Hinton have faced soft purges, and the entire system has fallen into a state of path-dependent lock-in, with no real capacity for self-correction.

Institutional Failure and Its Risks

The hard incentive structures invented during the Industrial Revolution — patents, universities, peer review — along with softer norms like reputational standards, have largely broken down in the AI era. The patent system no longer guarantees the public disclosure of knowledge. Universities and academia have been captured by industry. There is no independent voice capable of saying "no" to the direction AI is heading. We have advanced technology but lack the right institutions to govern it. Soft norms have been replaced by narcissism; hard institutions have been overwhelmed by capital and compute. This is the ultimate dilemma humanity now faces.

In short, Mokyr's theory reveals the institutional foundations beneath economic growth and technological explosion. In the age of AI, we urgently need to reflect on the failures of our existing institutions and pursue new forms of institutional innovation — to ensure that technological progress genuinely benefits humanity, rather than tipping us into a crisis of growth.