Fifty Inventions That Shaped the Modern Economy

Best-selling author Tim Harford tackles these big questions in his latest book. He explores how our world has developed by telling the stories behind 50 key inventions. Some of these are products – like concrete, the barcode, TV dinners, paper, and the contraceptive pill. Others are concepts, such as intellectual property and market research. He investigates their origins, introducing us to the characters and stories behind each invention or idea. He shows us how some had surprising or unintended consequences, and how one innovation led to another. And he draws out some lessons for the future, to help us all be more innovative and creative.

This book has really broad appeal because of the eclectic mix of items Harford studies. So if you're interested in how the global economy works and how new ideas or inventions lead to progress and development, this book's for you. You'll read about the welfare state and robots, property registers and management consulting, and insurance and the S-bend.

It'll get you thinking about the items you use every day, from your smartphone to the shelves where you store your books, as well as the people who designed them. It'll also get you thinking about the innovations that could shape the future. For business leaders and entrepreneurs there are some good lessons on how to foster creativity, and it's all wrapped up in some excellent storytelling.

Tim Harford is an economist, an award-winning journalist, and the author of the bestseller "The Undercover Economist." He's a senior columnist at the Financial Times in the U.K., and he's written for Esquire, Wired, the Washington Post, and the New York Times. He's also a visiting fellow at Nuffield College, Oxford, a TED speaker, and a regular presenter on BBC radio. He's written five other books, including "Adapt" and "The Logic of Life."

So, keep listening to hear how barbed wire changed the face of the American West, and how a furniture retailer struck gold with a flat-pack bookcase, and to learn who really created the smartphone.

This book is divided into 50 short chapters of two to six pages, sorted into seven sections with titles like Winners and Losers, Reinventing How We Live, and Inventing New Systems. Each chapter tells the story of an invention – its origins, its creators, and the impact it had and continues to have, both the positive and negative.

This format makes for an easy read. You can pick up the book and put it down at your leisure, without losing your way. Readers can linger over the products or concepts they find most interesting, and skip over others.

Harford likes to challenge assumptions, which is why his list of 50 items isn't predictable. When we think of innovation, we often focus on things that are high-tech and brand new. But Harford argues that the items and concepts that have shaped the modern economy are predominantly simple, enduring and low-tech.

That's why he begins the book with the plow – an invention that made widespread farming possible and kick-started civilization, while also creating huge inequalities between masters and servants. He then goes on to discuss shipping containers, concrete, paper money, and the light bulb.

New technology has its place too, of course. It would be hard to ignore its impact on the way we live and work. Google search, robots, video games, and the iPhone get their own chapters, as does the mobile money system called M-Pesa, which 20 million Kenyans use to make payments on their phones.

But let's first look at the story behind a low-tech product that's barely changed since it was designed more than a century ago: barbed wire.

Back in 1876, a young man called John Warne Gates built a wire fence to keep a herd of Texas Longhorns – that's a breed of cattle – inside a pen in San Antonio. Gates began to take bets with the crowd as to whether the longhorns could break through the fence. He even got his Mexican sidekick to run at the cattle, but the wire held and the cattle didn't escape.

Farmers liked what they saw and orders for the fencing soon started to roll in. Joseph Glidden of Illinois designed and patented the barbed wire, but Gates led the marketing charge, describing it as "lighter than air, stronger than whiskey, cheaper than dust." Advertisers called it "the greatest discovery of the age."

That might sound like an ambitious claim, given that Alexander Graham Bell was about to get a patent for the telephone, but barbed wire had a huge impact on the American West and on land ownership, and it's still in use today.

A few years before Glidden designed barbed wire, President Abraham Lincoln had signed the Homestead Act, giving any American citizen – including women and freed slaves – the right to claim up to 160 acres of land in America's western territories. It sounded good in theory, but the prairie was a vast, limitless expanse, where Native Americans lived and cowboys herded cattle.

New settlers needed fences to mark their land and to keep the cattle from trampling their crops, but wood was in short supply and smooth wire fences weren't strong enough. Barbed wire was the perfect solution. It turned a boundless space into plots of privately owned farmland.

But there were downsides, too. Barbed wire allowed settlers to ring-fence land that had belonged to Native Americans. Tribes called the fencing "The Devil's Rope" and it led to upheaval and unrest. Twenty-five years after the Homestead Act, the Dawes Act forcibly allocated sections of land to Native American families and gave the rest to white farmers.

Cowboys didn't like barbed wire either. Until its appearance, they'd roamed free with their cattle across the plains. But when their livestock tried to head south to escape cold weather, many got stuck on the wire and died.

Some people used barbed wire to seize common land for themselves illegally. The result was the "fence-cutting wars," where gangs cut through the wire and threatened the fence owners. Eventually, things calmed down, but the barbed wire fences stayed in many cases, and some people lost out for good.

We like the way Harford explores both the upsides and downsides of this simple invention. This is a theme of the book, and the author suggests we maximize the benefits of any future ideas, while reducing the negative effects. We also like how Harford uses barbed wire to talk about the concept of land ownership, and of property ownership more broadly.

Let's now look at how Swedish furniture retailer IKEA hit gold with a simple set of shelves.

IKEA's Billy bookcase is everywhere. There are some 60 million of them in the world – that's almost one for every hundred people. They're so common that the financial news agency Bloomberg uses them to compare purchasing power across the globe. You might be familiar with the Big Mac Index, which compares the cost of a McDonald's hamburger in different countries. The Bloomberg Billy Bookcase Index performs the same function – it shows, for example, that the shelves cost more than $100 in Egypt, and less than $40 in Slovakia.

Harford tells the story of how IKEA grew into the retail giant it is today. Founder Ingvar Kamprad started his furniture business at the age of 17 with some cash from his dad – a gift for trying hard at school despite having dyslexia. After 10 years in business, selling products from a 100-page catalog, Kamprad stumbled on an idea that would revolutionize his company: flat-packing.

His fourth employee, Gillis Lundgren, suggested unscrewing the legs of a table to load it into a car. "This table takes up too much darn space," he told his boss. Kamprad was already fixated on the idea of cutting prices and he jumped on the idea of flat-packing – he'd no longer have to pay workers to assemble his furniture. Plus, smaller pieces of furniture took up less space in vans – and that meant fewer trucks.

As for the Billy bookcase, it's not changed much since it was first designed in the late 1970s, but it costs 30 percent less than it did back then. The big price drop is thanks to a series of tweaks to the product and to its production method, as well as to economies of scale. The Swedish factory responsible for the Billy bookcase makes 37 times as many units as it did in the 1980s, yet its staff has only doubled. Robots and machines have picked up the slack.

So why is the bookcase so popular? Well, it's cheap, of reasonable quality, timeless, and simple. It can be functional and anonymous, or you can dress it up to look more distinctive and high-end – by adding glass doors, for example.

But it's more than a useful piece of furniture, Harford says. It's a great example of how IKEA can cut costs and prices without sacrificing the quality of its products. And it's a symbol of how innovation in the modern economy is more about efficient supply chains and cost savings than shiny, new technologies. That's a good lesson for future inventors.

Nevertheless, it would be hard to write a book about the modern economy without touching on high-tech developments, so let's take a look at a product most of us use on a daily basis: the smartphone.

Many business writers have praised Steve Jobs and his Apple colleagues for their vision in creating the iPhone, which inspired a long line of rival smartphones. Harford takes a different approach. He dissects the iPhone, listing 12 key technologies that made it possible, from microprocessors, memory chips and solid-state hard drives, to code, touch screens and the World Wide Web. He then identifies a surprising common link between these items of hardware and software: governments poured money into all of them.

The individuals behind some of these technologies developed them while working on government-funded projects or while employed by the state. For example, Tim Berners-Lee, who invented the World Wide Web, worked at a European-funded particle physics research center in Geneva.

The inventor of the touch screen, an engineer called E. A. Johnson, worked at an agency that was part of the British government, while U.S. government funding helped American researchers develop and commercialize touch-screen technology. Global Positioning Systems, or GPS, began as a U.S. military technology, developed during the Cold War. The list goes on.

Harford accepts that Jobs was a genius and that private-sector entrepreneurship turned these technologies into the smartphones we know today. But he argues they might not have got off the ground if governments hadn't been willing to take risks and invest their cash. This is a point worth remembering as we wonder how to solve some of the world's big challenges in energy or biotechnology, Harford says.

We like the way the author challenges us to look beneath the iPhone's smart, stylish exterior, and the brilliance of Jobs, to the real origins of smartphone technology, and how he draws out lessons for the future.

Similar lessons pop up frequently in the book. Harford points out how new ideas and developments often have unintended consequences. He encourages us to try hard to create many more winners than losers when we make new things.

He advises leaders to give people plenty of space to indulge their creativity and play with ideas, because we never know where they'll lead. And he warns us not to be dazzled by shiny, new things – we need to learn to appreciate the simple stuff.

Are there any downsides to this book? Well, we like the short chapters, but they do mean Harford has to condense his stories into a few pages, and some readers might like more detail on the products he studies. You may also have your own ideas about what should have been included. But that's inevitable with any list, and Harford's picks are as eclectic as they are fascinating.

There's no question that this is a thought-provoking read, as well as an entertaining one. Harford is a skilled storyteller who pays great attention to detail, without getting bogged down in it. So, if you want some real insight into how our world has progressed, and how it might advance in the future, we highly recommend this book.

"Fifty Inventions That Shaped the Modern Economy" by Tim Harford is published by Riverhead Books.

That's the end of this episode of Book Insights. Thanks for listening.