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… is from page 89 of Thomas Piketty’s 2014 volume, Capital in the Twenty-First Century [2]; (footnote excluded; the interior quotations describing the bicycle are Piketty’s own, I believe from his 2001 book Les Hauts revenus en France [3]):
It is important to note that equally impressive examples [of “the introduction of radically new goods and spectacular improvements in performance”] can be found throughout the long history of industrial development. Take the bicycle. In France in the 1880s, the cheapest model listed in catalogs and sales brochures cost the equivalent of six months of the average worker’s wage. And this was a relatively rudimentary bicycle, “which had wheels covered with just a s strip of solid rubber and only one brake that pressed directly against the front rim.” Technological progress made it possible to reduce the price to one month’s wages by 1910. Progress continued, and by the 1960s one could buy a quality bicycle (with “detachable wheel, two brakes, chain and mud guards, saddle bags, lights, and reflector”) for less than a week’s average wage. All in all, and leaving aside the prodigious improvement in the quality and safety of the product, purchasing power in terms of bicycles rose by a factor of 40 between 1890 and 1970.
Regular Cafe patrons might be reminded here of my use of Sears catalogues from the past to document the increased – in many cases enormously increased – purchasing power of ordinary Americans [4].
I will, though, pick a nit with the above quotation. Technological progress doesn’t just happen. Technological progress isn’t a force of nature. It doesn’t rain down on us from the sky or bubble up spontaneously from city sidewalks. Technological progress is not automatic. Technological progress is not the ultimate source of our prosperity.
The ultimate source of our prosperity is a set of institutions and cultural attitudes (along with what Deirdre McCloskey calls “habits of the lip” that give dignity to the bourgeoisie [5]) that encourage innovative commercial and industrial activities. The bicycle was improved not principally by “technological progress,” but by relatively free and innovative entrepreneurial markets that created much of the capacity for technological progress and that directed and prompted countless innovators and entrepreneurs along the way to do their thing and to share the fruits of their productive activities with consumers.