For almost all of human history, life was a grind. Most people lived and died poor, generation after generation. Then, about 250 years ago, everything changed. In a few corners of the world – first Britain, then others – wealth began to grow – slowly at first, then unstoppably. Why there? Why then? 

This year’s Nobel Prize in Economics went to three scholars who solved that mystery. Joel Mokyr, an economic historian at Northwestern University, uncovered what triggered modern growth. Philippe Aghion and Peter Howitt built the mathematical models showing how it keeps going. Together, they explain how prosperity sustains itself. 

Mokyr’s insight was that progress depends on two kinds of knowledge working together: science, which explains why things work, and practical skill, which explains how to make them work. For centuries, these worlds barely touched. Scholars studied nature. Craftsmen built machines. The two rarely spoke. 

Then, in 18th-century Britain, something astonishing happened. Thinkers, tinkerers and tradesmen began exchanging ideas through what Mokyr calls ‘the Republic of Letters’ – a web of societies, journals and encyclopaedias where curiosity was currency and dissent was tolerated. A scientist’s discovery sparked a new technique, which raised new scientific questions. Knowledge began to feed on itself. 

No government designed this. It grew from a culture that prized curiosity. Freedom and competition were not obstacles to progress – they were its engine. 

That is where Aghion and Howitt’s work fits in. They showed that growth depends on what Joseph Schumpeter called ‘creative destruction.’ Netflix kills Blockbuster. The iPhone buries the BlackBerry. 

This process rewards risk-takers and punishes complacency. Each innovation creates temporary monopoly profits – but the prospect of being displaced forces firms to keep innovating. The churn lifts productivity, lowers prices, and shifts resources to where they create most value.  

Yet it only thrives when challengers are free to challenge and incumbents free to fail. When barriers rise – from monopoly power, heavy regulation or political favouritism – the race slows and prosperity fades. 

The Nobel Committee’s message could not be timelier. Growth does not appear by decree. It depends on institutions that protect property, allow knowledge to flow, and keep markets genuinely open. Governments cannot plan innovation into existence. They typically smother it. 

The lesson is both simple and radical: progress is born from freedom. The Republic of Letters may be centuries old, but its spirit still decides whether nations stagnate or soar.