Three Views on "Two Paths to Prosperity"

Scholars have long debated what sparked Europe’s economic surge in the mid-18th Century. That debate took center stage recently at the Keller Center, home of the Harris School of Public Policy, where experts from Harris and Northwestern University—including two Nobel laureates—held a wide-ranging and pointed discussion on history’s lessons for growth.

Hosted by Harris’ Stone Center for Research on Wealth Inequality and Mobility, the April 14 event featured Steven Durlauf, the Frank P. Hixon Distinguished Service Professor at Harris and the Stone Center’s director; University Professor James Robinson; and Joel Mokyr, Northwestern’s Robert H. Strotz Professor of Arts and Sciences and a Professor of Economics and History. He is also the Sackler Professor at Tel Aviv University's Eitan Berglas School of Economics.

The event offered a rare opportunity to hear three leading academic voices examine the origins of the modern economy and forces shaping its future. The Forum filled quickly, leaving standing room only for the panel moderated by Veronica Guerrieri, the Ronald E. Tarrson Distinguished Service Professor of Economics at the UChicago Booth School of Business.

Mokyr stepped to the podium first to describe his sweeping work, including his recent book, Two Paths to Prosperity: Culture and Institutions in Europe and China, 1000–2000, which he co-wrote with Stanford University’s Avner Greif and Bocconi University’s Guido Tabellini. The book stretches across a millennium and hinges, simply put, on two paths taken. It argues that Europe and China diverged largely due to differences in social structure and culture roughly midway through that 1,000-year period, with China turning inward and Europe becoming the birthplace of the Industrial Revolution.

As China emerged from the Middle Ages, Mokyr explained, extended families, or clans, grew stronger, binding people through kinship. In Europe, the opposite happened. Family ties loosened, replaced by what he called “alternative institutions”: guilds, monasteries, universities, and autonomous cities. These “corporations,” or associations of unrelated people, were built on a shared purpose, not on shared ancestry.

That created space for strangers to collaborate, for ideas to circulate, for institutions to evolve, Mokyr argued. Europe became an innovative place where people could challenge authority, question tradition, and imagine something entirely new. China remained intellectually vibrant as well, but was less inclined toward radical change.

“You see a very active intellectual community in China, but you don’t see radical ideas or people saying, ‘Let’s overthrow everything and start anew,’” said Mokyr, who won the 2025 Nobel Prize in Economic Sciences for his research on the historical origins of sustained economic growth.

Durlauf and Robinson followed him to the podium with critiques that sharpened the debate over how lessons from history connect to economic growth. Both discussed the difficulty of drawing clear conclusions across so many years.

“It's extremely difficult to disentangle a kind of causal relationship over such a long period of time when so many other things are going on,” said Robinson, whose work on the link between political and economic institutions and prosperity was honored with the Nobel Prize in Economic Sciences in 2024.

He pointed to “other things” not central to Mokyr’s thesis, such as the voyages of European explorers and the 17th Century English Civil Wars (during which King Charles I was beheaded), as critical turning points.

The mid-1600s were “a period of tectonic political change,” Robinson said. “Radical new ideas came on the table as the fixed and daunting structures of the external world—monarchy, lords, church—crumbled.”

“This was a world turned upside down,” he said. “And from that world turned upside down, all sorts of things started happening: economic things, political things, institutional things, cultural things.”

Durlauf framed the discussion around time, contingencies, and inequality. 

Different forces, he argued, operate on different timescales. Short-term growth may be driven by factors like technology or savings rates, but deeper forces unfold over centuries. And unpredictable “shocks” can reshape trajectories for generations.

“There are shocks to systems that are so persistent that the theory has to do with the shocks, rather than to the mechanisms themselves,” he said.

Plus, he added, “growth changes everything.”

“It creates all these possibilities, but it also creates capacities for stratification,” keeping wealth and power stuck in the same hands.

When conversation turned to the present, Guerrieri noted that China’s  rapid economic rise was not such a surprise. What is surprising, she said, is the extent to which Europe is lagging. The institutions and cultural traits that once drove its success may not be as effective at the frontiers of innovation.

Europe lacks a true counterpart to California’s Silicon Valley, Durlauf noted. In areas including artificial intelligence, the landscape has shifted and advantages of the past may not translate.

What does translate, panelists argued, was exploring how major long-term historical trends connect to explain what’s happening today.