The term “Enlightened Economy” most prominently refers to the economic history of Britain during the period of roughly 1700 to 1850, as argued by economic historian Joel Mokyr.
In this context, it emphasizes the idea that the Industrial Revolution and the beginnings of modern sustained economic growth were fundamentally dependent on the intellectual movement of the Enlightenment and its impact on knowledge, beliefs, and institutions.
Key aspects of this concept, often referred to as the Industrial Enlightenment, include:
- Focus on Useful Knowledge: A belief that material progress and economic growth could be achieved through increasing and applying human knowledge of natural phenomena, often referred to as the “Baconian program.” This involved the systematic pursuit of knowledge and making it accessible to those who could use it in production (engineers, mechanics, craftsmen).
- Rational Institutions and Policy: The application of Enlightenment principles, which emphasized reason and human welfare, to economic policy. This led to a hostility towards rent-seeking (using political power to redistribute rather than create wealth) and an increased push for economic liberalism, free markets, and free trade (e.g., the eventual repeal of the Corn Laws).
- Synergy of Ideas and Technology: The optimal combination of new ideas, culture, institutions, and technology that allowed for rapid, continuous economic growth, distinguishing the British Industrial Revolution from earlier, temporary bursts of technological progress.
- Beyond Material Wealth: Mokyr’s vision of an “enlightened economy” goes beyond narrow measures of wealth to acknowledge the value of scientific advancements that improve human welfare, such as vaccines and anesthetics.
More generally, the term “Enlightened Economy” or the economic thought of the Enlightenment is also associated with:
- Classical Economics: The emergence of modern economic theory, with key figures like Adam Smith (whose The Wealth of Nations advocated for free markets, the division of labor, and the “invisible hand”).
- Free Markets: A shift away from mercantilism towards ideas promoting individual liberty, self-interest, competition, and limited government intervention in the economy.
- Empiricism and Rationality: The use of observation, logical reasoning, and the scientific method to understand and improve how economies function.