How the Nobel Economics Prize Cracked the Secret of the Technology Explosion

Hi everyone, welcome to this episode of Cold-Knowledge Blind Box.

In the sci-fi novel The Three-Body Problem, one of the premises for the dark forest to hold is the "technology explosion." The idea is that within a very short time, a civilization can do what Earth did during the Industrial Revolution: in roughly 300 years, it creates the scientific and material wealth of the previous 100,000 years and moves toward a stage where everyone has enough to eat and is free of poverty and hunger.

Homo sapiens has been on Earth for about 300,000 years. For 290,000 of those years, the way humans lived was basically a flat, lifeless line. Whether you were a blacksmith in ancient Egypt, a stonemason in ancient Rome, or an ordinary person in China during the Tang, Song, Yuan, Ming or Qing dynasties, what you ate, what you wore and how long you lived didn't differ all that much.

In other words, "being poor" was a shared human experience that crossed civilizations and dynasties.

Now imagine you are a person from ancient Rome, a time machine picks you up, and you get dropped among the peasants of a 15th-century European town. You'd find that you've just traded one kind of poverty for another. It's nothing like those web novels where the time-traveler gets a happy, cheat-powered life in the future.

Then the truly wild part arrives. Around 250 years ago, global GDP data suddenly shoots up like a rocket. Economists call it the famous "hockey stick curve." In just over 200 years, the wealth and technological breakthroughs humanity created exceeded the total of all of history before that. The share of people living in extreme poverty dropped from about 80% to roughly 10% today.

So look at it this way: you and I, and the generations around us, are among the first in history to be born by default into an era of sustained growth. That sounds great.

But I think the question has only just begun: why us, these last few hundred years? Why did the rocket take off right around 250 years ago?

You might say: isn't that easy to explain? The Industrial Revolution, steam engines. We all learned that in middle school. What's so mysterious about it?

That's not wrong, but imagine it like a suspense movie. We know the man was shot. The real question is: who pulled the trigger? Why did they do it? And how did the gun end up in their hands?

You have to understand that technological innovation has always existed. Take the ancient Romans: they built aqueducts and made concrete, and that engineering still looks astonishing by today's standards. Then there are the pyramids of ancient Egypt, and even today nobody fully knows how they were built. And China's Four Great Inventions completely redirected the course of human civilization.

But why didn't these astonishingly brilliant inventions lead our ancestors to collectively live the lives of the modern middle class?

The answer is pretty brutal. Economic historians gave it a name: the "Malthusian trap."

In plain terms: before the Industrial Revolution, whenever our technology improved even a little, say we squeezed out a bit more grain, people didn't have time to get better off before they had more children. With more mouths, the resources per person got spread thin again, and after the loop closed, everyone was back at the edge of barely being able to eat.

It's like working hard until you finally get a 30% raise, and then your monthly expenses change: the mortgage goes up a bit, your kid signs up for two more interest classes... and in the end, you're left with only 2,000 bucks a month again.

So now you see what I really want to figure out: 250 years ago, what did humanity do right to collectively "break out" of the Malthusian trap that had held us for hundreds of thousands of years? How did we discover the secret of sustained prosperity?

This is no longer a "mystery of the ages." It's a "300,000-year mystery."

I'll tell you right now: you're lucky again, because this answer was solved in 2025, and the people who solved it won the 2025 Nobel Prize in Economics. So they are three economic "Sherlock Holmeses," and that's a pretty fitting way to describe them. They are Joel Mokyr, Philippe Aghion and Peter Howitt.

Over this 300,000-year history of growth, the "crime scene" was examined in different ways. Some people, like historical detectives, walked back through the scene, went through dozens or hundreds of years of records, and finally found that first spark. Some people, like engineers, took apart the mysterious engine that set off the growth, drew its internal structure, and wrote a user manual. And some people packaged that manual into a toolkit of modern policy, telling governments how to use the engine.

So let's follow the first detective, Joel Mokyr, back to the crime scene to find the spark that lit everything.

What Mokyr spent his life doing was, in short, studying economic history. He realized that if you want to understand the explosion of the Industrial Revolution, you first have to imagine the world before the explosion: what was that quiet state like? Why did it last for hundreds of thousands of years?

He described that world with a very vivid phrase: "a world of engineering without mechanics."

What does that mean? A blacksmith could forge iron, but he didn't understand metallurgy. A farmer could grow crops, but he didn't understand soil science. A doctor could treat patients, but he didn't understand microbiology. Everyone knew "this method works," but very few knew "why you do it this way."

Mokyr separated these two kinds of knowledge very clearly:

• One is "prescriptive knowledge": the kind of thing where "just follow the steps and you'll be fine," like a recipe, or the craft secrets passed from master to apprentice, or the trade secrets of a workshop. This is the world of craftsmen, farmers and artisans.

• The other is "propositional knowledge": explanations of why the world works the way it does, a summary of the underlying laws. This is the world of scientists and philosophers.

So for the long years before the Industrial Revolution, these two groups basically lived in parallel universes that didn't touch: philosophers thought getting their hands dirty was dirty, grunt work, and didn't bother to step into a workshop; and craftsmen couldn't make sense of papers and theories full of symbols.

As a result, what did innovation rely on? Only experience, luck and trial and error. Say a blacksmith didn't get the heat right one day, but by accident he discovered that "quenching makes this steel harder." Fine, he writes it down and does it the same way next time, and that counts as an innovation. But because he had no idea why it got harder, he had no way to systematically improve his craft or keep optimizing it. So innovation back then tended to "jump" once and then stay in place.

So where was the turning point? Mokyr believed the key period was the Enlightenment in 17th- and 18th-century Europe.

When people hear "the Enlightenment," they usually think of big words like "reason, freedom, individual rights." But in Mokyr's view, it had a very concrete byproduct: it finally got these two groups that had never talked to each other, the people who asked "why" and the people who handled "how to do it," to sit down at the same table.

If you want the most typical example of that "same table," it's probably a mysterious group in Birmingham, England, called the Lunar Society, or the "Moonlight Society."

Picture it: in late 18th-century England, on the night of every full moon, a group of the top tech nerds and academic eccentrics of the time would gather near Birmingham. They traveled by moonlight, which is why they were called the "Moonlight Society." They also joked that they were a bunch of "lunatics."

And who were these lunatics?

• James Watt, the engineer who improved the steam engine;

• Matthew Boulton, who commercialized Watt's technology and ran the factories;

• Erasmus Darwin, grandfather of Charles Darwin, a naturalist and physician;

• Josiah Wedgwood, the "father of English pottery";

• And a whole group of chemists, doctors and natural scientists.

What a lineup. You could call it the "18th-century version of the Avengers of science."

At this table sat the people who knew the "why" of the most cutting-edge scientific theory, and also the practical doers who mastered the most advanced production techniques and knew how to make money, the "how to do it" people. They ate and argued fiercely: How do you use the latest chemistry to improve pottery glazes? How do you use new physics to raise the efficiency of steam engines? How do you design canals to cut transport costs? They even talked about education and political reform.

This is what Mokyr called "a real-world experimental ground where knowledge undergoes chemical reactions." When the "why" line and the "how to do it" line finally twisted into one rope, a positive feedback flywheel started turning: scientific theory began guiding technological innovation, technology ran into new problems in practice, and those problems in turn forced science to upgrade its theories.

Once this flywheel starts spinning, it's very hard to stop. It went from relying on one genius's flash of inspiration to a system that could accelerate itself and keep iterating.

But note that this system didn't appear out of thin air. It needed a special social soil: one that tolerated failed experiments, allowed people to question authority, and didn't rush to burn new ideas as heresy. That's why England and the Netherlands were able to take off first. To a large extent, it's because at that point in time they happened to have exactly this kind of soil.

That is the spark Mokyr helped us find.

Okay, so we've roughly found the spark that ignited growth. But that's only the first half of the story.

Plenty of "spark-flash" moments happened in history: ancient Greek philosophy and mathematics, or Song-dynasty China's technology and commerce. They were all dazzling for a while, but most of them were fleeting. They flew for a bit, then slowly slid back to where they started.

So the question is: why didn't this spark go out this time? Why did it ignite an engine that could roar along for more than 200 years?

That's where the two "engineer-type" detectives come in, Aghion and Howitt.

If Mokyr's work was "finding the first scene of the crime," then what Aghion and Howitt did was take that scene apart and use math and models to tell you exactly how this thing actually runs.

The core secret of this engine comes down to five words: "creative destruction."

Alright, that's where we'll stop for this episode of Cold-Knowledge Blind Box. Next time, we'll talk about where this "creative destruction" came from.

Hi everyone, welcome to this episode of Cold-Knowledge Blind Box. Last time we talked about how the 2025 Nobel economists found the secret behind the human economic explosion of the past three centuries. They are Mokyr, Aghion and Howitt.

Mokyr's contribution was "finding the first scene of the crime," which is the "real-world experimental ground where knowledge undergoes chemical reactions." When the "why" line and the "how to do it" line finally twisted into one rope, a positive feedback flywheel started turning: scientific theory began guiding technological innovation, technology ran into new problems in practice, and those problems in turn forced science to upgrade its theories.

Aghion and Howitt took that crime scene apart and used math and models to tell you exactly how this thing actually runs.

The core secret of this engine comes down to five words: "creative destruction."

In fact, they didn't invent the term. It was first proposed by the economist Joseph Schumpeter. But what Aghion and Howitt contributed was turning this poetic intuition into a rigorous framework that could be calculated and used for prediction.

So what does "creative destruction" mean? In plain language, every real technological breakthrough is a "tear it down and rebuild" rather than "add a brick here and there." It creates new products, new industries and new models, and at the same time it inevitably destroys everything old.

This sounds abstract, right? Let's start with a few examples you'll understand right away:

Do you remember the cabinet at home where you used to stack DVDs and even VHS tapes? In the 1990s and early 2000s, a company called Blockbuster was the undisputed "king of video entertainment." It had more than 9,000 stores around the world and a market value of several billion dollars. Renting discs on the weekend to watch movies was a ritual for many families.

Then a small company called Netflix appeared. At first it only did a niche business: mailing DVDs. Through trial and error, it gradually turned into today's online video streaming. You know what happened next: Blockbuster filed for bankruptcy in 2010, and the blue signs that once lined street corners now survive in just one "living fossil" store. Netflix's creation, meanwhile, uprooted the entire DVD rental industry.

Now let's look further back. When cars were first invented, who was the happiest? Certainly not the carriage drivers. Every Ford Model T on the road meant one fewer carriage driver with a fare. The efficiency and convenience of cars steadily destroyed thousands of years of the carriage industry: carriage makers, harness craftsmen, stable owners, and even the workers who cleared away horse dung were all wiped out.

You don't even have to look that far back. Over the past 20 years, we've watched feature phones get wiped out by smartphones. Nokia went from "forever king" to a "nostalgic display" in the corner of a store counter. Video arcades, internet cafes and traditional department stores were nibbled away piece by piece by e-commerce, short videos and mobile games.

From a macro perspective, this is called "improved productivity" and "more choice for consumers." But for an ordinary person in their forties who could only repair feature phones or stack DVD shelves, this process comes down to one word: "unemployment."

In Aghion and Howitt's model, every technological revolution like this doesn't just add a bit of GDP to the world. It also hands a certain group of people a cold "notice of unemployment."

It sounds cruel, right? But that's their conclusion: if you want long-term economic growth, this is the only path. If an economy doesn't allow destruction, it also can't achieve real creation. Such an economy is like a stagnant pond: on the surface, everyone seems well protected, and no old species is being eliminated from the water, but the price is that it can never evolve new species.

So since destruction can't be avoided, the next big question is: how should we regulate this engine? Should we let it grow wild, or should we hit the brakes hard?

Here, Aghion and Howitt proposed a second, very key insight: they found that there is an "inverted U-shaped" relationship between innovation and the market.

Imagine an upside-down U-shaped curve in your head:

• At the far left of the curve is "monopoly," where competition is weakest. Picture a market with only one big boss, like a dominant state-owned enterprise or a nearly monopolistic tech giant. Does it have any motivation to innovate? Not really, because it can make money just by lying there. Any big innovation could overturn its comfortable life.

• At the far right of the curve is "perfect competition," or you could think of it as a market where "everyone sells cabbage at rock-bottom prices." Say you open a small restaurant, and you finally come up with a "signature dish." The next day, the restaurants next door all copy it and make it even cheaper. Would you still be willing to put effort into researching new dishes? You'd probably have no mood for it: "Why would I research something just for others to copy?"

• So when competition becomes so fierce that profits are as thin as paper and no innovation can keep its rewards, naturally nobody wants to spend money and time on innovation.

So where is the most vigorous innovation? At the top of this inverted U-shaped curve. It's not zero competition, and it's not a life-or-death brawl. The best state is "moderate competition." You can imagine it as: "You have a little lead in your hands, but someone is watching behind you, so you don't dare to lie back and relax. Yet you also have enough profit to invest in R&D."

After Aghion and Howitt drew this graph, they gave governments a very clear role: the government's job is to keep the market honestly sitting in the middle of this inverted U-shaped curve.

And how do you do that? By relying on two things: an "accelerator" and a "brake."

What's the accelerator? It's patents and intellectual property protection. It tells innovators: go ahead and take the risk. If you really do come up with something, I will allow you a period of "legal monopoly," so you can recover your R&D costs and earn a large sum on top. This is the reward for "creation."

A very typical example of this era is Nvidia. It spent more than a decade and huge amounts of money and engineering talent building CUDA, an ecosystem that tightly integrates software and hardware. At the time, it was a huge gamble, betting on an architecture nobody could guarantee would "definitely win." But once it paid off, the ecosystem became its exclusive moat. In AI computing, it gained a near-monopoly position, and that was followed by a profit explosion that comes once in decades.

That's the logic of the accelerator: if you dare to gamble, and you win, you get to enjoy a period of excess returns.

But here's the problem: if you keep stepping on the accelerator, and a company gets so fat with profit that it starts deliberately blocking others' way, what then?

That's when you need the other hand: the "brake," meaning antitrust and competition policy. The brake isn't saying "you're too successful, you can't make money." Instead, it tells giants who have become "road hegemons": you can enjoy the fruits of your lead, but you can't use your advantage to block the road for those behind you.

So you may have seen many news stories recently: huge fines on big tech companies, orders to spin off certain businesses, or blocking certain mergers and acquisitions. Essentially, they're all doing the same thing: pulling that "inverted U-shaped curve" back toward the middle, so the market doesn't dive into the "oligopoly" end.

So within this framework, a dynamic economy is one that carefully "walks a tightrope" between "encouraging innovation" and "encouraging competition." Walk it well, and the engine can roar smoothly forward. Walk it badly, and it either stalls or dies.

So now we have two key keys in hand:

• Mokyr's key tells us that the spark of continuous innovation comes from the deep fusion of "theoretical knowledge" and "practical knowledge";

• Aghion and Howitt's key gives us the structural diagram of the growth engine: "creative destruction," along with the balancing act between "the brake" and "the accelerator."

With these, we've basically laid out the underlying logic of how humanity's wealth surged over the past 250 years.

But now the times have changed again: will this user manual, born in the industrial age and perfected in the information age, still work when faced with AI, this new species?

The answer actually goes against your intuition. Not only is it not outdated, it has become more important than ever.

Because AI pushes both of these forces, "knowledge fusion" and "creative destruction," to the extreme.

Let's look at Mokyr's line first: knowledge fusion.

If the Industrial Revolution was an era when scientists and craftsmen finally sat at the same table, then what is AI doing? It has built its own table, locked "why" and "how to do it" together in a small black room, and let them talk nonstop for 24 hours a day: translating theory into executable "prescriptions," even digging new patterns out of data that humans hadn't noticed, and turning those back into new "propositional knowledge."

At the frontier of science, the intensity is even more extreme. Take AlphaFold, which predicts protein structures. It takes in the sequences and structures of hundreds of thousands of known proteins, and outputs high-precision predictions for hundreds of millions of unknown proteins. You can picture AI as a "tireless knowledge-fusion machine." From this angle, the growth it may bring could very well be an amplified version of the Industrial Revolution, many times over.

But at this point the risk also arrives: remember our second theory? "Creative destruction."

On this line, the power of AI is just as unprecedented. This time, what gets drawn into "creative destruction" isn't only the distant carriage drivers or the owners of long-gone DVD stores, but the people around us, and even ourselves. White-collar workers and knowledge workers, who used to be considered "iron rice bowls"...

Some international organizations have already released data that is quite direct:

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