Intellectual history of this idea

The fundamental insight conveyed by the Idea Diagram is an idea itself. And like many ideas, it is one that has been discovered, at least in part, several times in the past, at times being appreciated as a deep insight and at times being forgotten.

William Petty, an early expert on the economics of taxation, identified in 1682 one of the key benefits of a larger population:

As for the Arts of Delight and Ornament, they are best promoted by the greatest number of emulators. And it is more likely that one ingenious curious man may rather be found among 4 million than 400 persons. [Quoted by Simon (1998), p. 372.]

More than a century later, Thomas Jefferson came closer to characterizing the nonri- valrous nature of an idea:^[7]

Its peculiar character... is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condi­tion, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density at any point... [LetterfromThomas Jeffersonto Isaac McPherson, August 13, 1813, collected in Lipscomb and Bergh (1905), pp. 333-335.]

But it was not until the 1960s that economists systematically explored the economics of ideas. Kuznets (1960) intuits a link between population, ideas, and economic growth, and Boserup (1965) emphasizes how population pressure can lead to the adoption of new technologies.

One can hardly imagine, I think, how poor we would be today were it not for the rapid population growth of the past to which we owe the enormous number of technological advances enjoyed today... If I could re-do the history of the world, halving population size each year from the beginning of time on some random basis, I would not do it for fear of losing Mozart in the process. [Pp. 511-512.]

This implication then becomes central to the popular writings of Julian Simon in the debates over the merits and drawbacks of population growth, as in Simon (1986, 1998).

The formal literature on idea-based growth falters considerably in the 1970s and early 1980s. Much of the work that is carried out involves applications of the basic Solow (1956) model and the growth accounting calculations that subsequently followed. By the mid-1980s, many of the insights gleaned during the 1960s were no longer being taught in graduate programs. In part, this period of neglect seems to have stemmed from a lack of adequate techniques for modeling the departures from perfect competition that are implied by the economics of ideas [e.g. see Romer (1994b)]. This theoretical gap gets filled through the work on imperfect competition by Spence (1976) and Dixit and Stiglitz (1977).

Idea-based growth models are thrust to center stage in the profession with the pub­lication of a series of papers by Romer (1986, 1987, 1990). These papers - most especially the last one - lay out with startling clarity the link between economic growth and ideas.^[9] Shortly thereafter, the models of Aghion and Howitt (1992) and Grossman and Helpman (1991) introduce the Schumpeterian notions of creative de­struction and business stealing, pushing idea-based growth theory further.^[10]

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