Fifty Inventions That Shaped the Modern Economy

by Tim Harford

Statistics back this up. In the early 1960s, world merchandise trade was less than 20 percent of world GDP. Now, it’s about 50 percent.1 Not everyone is happy about this; there’s

corrugated steel box, eight feet wide, eight and a half feet high, and forty feet long. A shipping container.2 To understand why the shipping container

container had already been tried in various forms for decades, without catching on. The real challenge was overcoming the social obstacles. To begin with, the trucking companies, shipping companies, and ports couldn’t agree on a standard. Some wanted large containers; others

The man who navigated this maze of hazards—who can fairly be described as the inventor of the modern shipping container system—was an American, Malcom McLean. McLean

didn’t know anything about shipping. But he was a trucking entrepreneur; he knew plenty about trucks,

But McLean’s biographer Marc Levinson, who wrote the definitive history of the shipping container, argues

McLean saw the potential of a shipping container that would fit neatly onto a flatbed truck, but he wasn’t the first person to

propose such an approach. What made him different was his political savvy and his daring—attributes that were essential in bringing about a massive chance to the global freight

McLean managed to gain control of both a shipping company and a trucking company at the same time.7 This was, of

late 1960s, when Malcom McLean sold the idea of container shipping to perhaps the world’s most powerful customer: the U.S. military. Faced with a logistical nightmare

in trying to ship equipment to Vietnam to supply American troops, the military signed a contract

McLean realized that on the way back from Vietnam his empty container ships could collect payloads from the world’s fastest-growing economy, Japan. And so the trans-Pacific trading relationship began in earnest. A modern shipping port today

But for an ever-growing number of destinations, goods can now be shipped reliably, swiftly, and cheaply: rather than the $420

manufacturers are less and less interested in positioning their factories close to their customers—or even their suppliers. What matters instead is finding a location where the

workforce, the regulations, the tax regime, and the going wage all help make production as efficient as possible. Workers in China enjoy new opportunities; in developed

The retailers didn’t want to install scanners until the manufacturers had put bar codes on their products; the manufacturers didn’t want to put bar codes on their products until the retailers had installed enough scanners. But over time it became

For a small, family-run convenience store,

the bar code scanner was an expensive solution to problems the store didn’t really have. But big-box supermarkets

could spread the cost of the scanners across many...

It’s hardly surprising that as the bar code spread across retailing in the 1970s and 1980s, big-box retailers also expanded. The scanner data underpinned customer databases and loyalty cards. By tracking and automating inventory,

Walmart was an early adopter of the bar code and has continued to invest in cutting-edge computer-driven logistics and inventory management.9 Walmart is now

Ubico passed a law forcing indigenous Guatemalans to work for landowners—which is to say the United Fruit Company. The company owned most of Guatemala’s arable land. And it left most of it lying fallow, just in case it might

But then Ubico was overthrown. An idealistic young soldier, Jacobo Árbenz, later rose to power. And he called El Polpo’s bluff. If the land was worth so little, he argued, the state would buy it and let peasants farm it. The United Fruit Company didn’t like this idea. The company lobbied the U.S. government,

The CIA got involved. In 1954, Árbenz was ousted in a coup,

Guatemala descended into a civil war that lasted for thirty-six years.2

In 1876, Charles Tellier, a French engineer, fitted up a ship, Le Frigorifique, with a refrigeration system, packed it with meat, and sailed it from France to Buenos Aires as proof of concept: after 105 days at sea, the meat arrived still fit to

Argentinian beef exports could begin.5 By 1902, there were 460 refrigerated ships—or “reefers”—plying the world’s seas, carrying a million tons of Argentina’s beef, El Polpo’s

African American boy was facing up to life as an orphan. He dropped out of school at age twelve, got a job sweeping the floor at a garage, and learned how to repair cars. His name was Frederick McKinley Jones, and he grew up to be a prolific inventor. By 1938 he was working as a sound

new vibration-proof refrigeration unit led to a new company, eventually called Thermo King, which became the last link

the cold chain, the global supply system that keeps perishable goods at controlled temperatures. The cold chain revolutionized

health...

The cold chain now is how vaccines get around without going bad,

And just as with the development of the TV dinner, simplifying the process of feeding a family transforms the labor market. Fewer shopping trips means housewives face fewer obstacles

in China, it took just a decade to get from a quarter of households having fridges to nearly nine in ten.11 The cold chain is one of the pillars of the global trading

Economic logic tells us that specialization and trade will increase the value of production in the world. It doesn’t guarantee that the value will be shared fairly. Consider the state of Guatemala today. It still exports bananas—hundreds of millions of dollars’ worth.14 It grows a lot of other stuff, too: sheep and sugarcane; coffee and corn and cardamom.15 But it has the world’s fourth-highest rate of chronic malnutrition; half of its children are stunted because they don’t get enough to eat.16 Economists still

As Felix Martin points out in his book Money: The Unauthorized Biography, we tend to misunderstand money because

The artifacts in question were humble sticks of willow, about eight inches long, called Exchequer tallies. The willow was

The stick would be split in half, down its length from one end to the other. The debtor would retain half, called the “foil.” The creditor would retain the other half, called the

stock”—even

Because willow has a natural and distinctive grain, the two halves would match only each other. Of cour...

The tally sticks became a kind of money—and a particularly instructive kind of money, too, because

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garret

Without the density that the skyscrapers provide, it would be hard to run a subway system efficiently; without the subway

The humble elevator is a green mode of transport that moves billions

people every year—and yet is so overlooked that it can hide in plain sight as the answer to a lateral thinking puzzle.

hollow clay ball called a bulla.

But today Luca Pacioli is celebrated as the most famous accountant who ever lived. Pacioli

The double-entry system—known in the day as bookkeeping alla veneziana, in the Venetian style—was being used two centuries earlier, at about 1300.4 The Venetians

So what, a century later, did the much-lauded Luca Pacioli add to the discipline of bookkeeping? Quite simply, in 1494, he wrote the book.10 And what a book