http://www.enlightenedcaveman.com/2005/02/zero-sum-versus-wealth-creation.html

EC

China has moved increasingly toward market-oriented institutions, slowly but surely. Were they to do so more seriously, and were they to unleash similar freedoms in research and other places, there is no doubt that they would shoot up the growth curve.

Don’t know about the Chinese soc sci community, but given the repressiveness that regime still creates, I wouldn’t be surprised if that soc sci community is largely underground and very quiet about conclusions that threaten the power of the Party.

What to make of China’s recent economic success? A different path to wealth, or….? They might make it on modern economic institutions alone. Is there much of a Chinese social science community?

A lesser example of effective use of social science is the existence of an insurance/ risk management industry. The Cato types won’t agree, but I suspect that Keynes’ discoveries about aggregate demand have had similar beneficial impacts. If you count epidemiology as a social science, then there’s more.

Of course, there are also all the malign effects of false social scientific theories…

To be sure, a large portion of our prosperity is due to the scientists, engineers and tinkerers who developed the tools that created our affluence.

Many of the social structures required, like the English East Indies Trading Company, were already in place before Smith and Ricardo were born. In a sense, they just commented on what had already occurred.

My feeling is we would still be prosperous without them, we just wouldn’t be as sure why…

Sorry, but this won’t wash with history. Many cultures had the science etc before we did, but they haven’t achieved our affluence. The point is that wealth and its associated well-being comes from innovation, but innovation requires science *and market institutions.* You can have all the brilliant scientists you want, and all the tinkerers under heaven, but unless they have the freedom to explore their ideas and, just as importantly, the freedom to bring those ideas to the market to serve consumers, science will never lead to a higher standard of living.

Science is necessary but not sufficient for the West’s wellbeing. Science needs the institutions of capitalism for humans to flourish.

What made the West rich are those institutions, both economic and political, not the scientists. A good non-technical introduction to this argument is Rosenberg and Birdzell’s “How the West Grew Rich.”