On the afternoon of March 28, Joel Mokyr, the 2025 Nobel Laureate in Economics and Professor at Northwestern University and Tel Aviv University, visited Shanghai University of Finance and Economics. He delivered an academic lecture entitled The Market for Ideas - Then and Now at the University Arts Center. Liu Yuanchun, President of Shanghai University of Finance and Economics, attended the event and delivered opening remarks.
Liu Yuanchun extended a warm welcome to Joel Mokyr. He noted that as a leading scholar in economic history, Professor Mokyr has long focused on technological progress, institutional change and economic growth. His research offers profound insights for understanding the long-run development of human society.
Against the backdrop of an accelerating global technological revolution, how ideas are generated, disseminated and translated into forces driving economic and social development has become a critical question demanding answers. Combining SUFE’s recent practice of advancing the “Digital-Intelligent New Finance and Economics” strategy, President Liu emphasized that universities should nurture innovative talents capable of understanding and leading technological transformation, and develop themselves into open, vibrant “markets for ideas”. He added that Professor Mokyr’s visit brings cutting-edge academic perspectives and provides important inspiration for the university to deepen educational reform.
Liu Yuanchun presented Professor Mokyr with an honorary professor certificate.
The lecture was hosted by Chen Yuanyuan, Vice Dean of the School of Economics. The thousand-seat venue was fully packed. Mokyr’s inspiring talk sparked extensive discussions among faculty and students.
Supply in the Market for Ideas: The Logic of Knowledge Production Driven by Incentives
Mokyr argues that the market for ideas is a distinctive market. Unlike conventional markets, which centre on prices and clear via supply and demand, “exchange” in the market for ideas mainly takes place through persuading others to accept a viewpoint. When a new theory, discovery or concept gains recognition, it amounts to a completed “sale”. This form of transaction makes the market for ideas closer to an exchange system centred on influence.
The “commodities” traded here are ideas and knowledge, which bear typical public-good attributes. Knowledge generates strong positive externalities: once disseminated, it is hard to exclude others from using it and can be copied and shared infinitely. As a result, creators of ideas often cannot capture sufficient returns through market mechanisms and rely heavily on non-monetary incentives such as reputation, status and academic influence. Institutional arrangements — including norms for academic publication, citation practices and priority recognition — are essential to secure creators’ sense of belonging and reputational rewards. Meanwhile, the spread of ideas is often constrained by established authorities, interest structures and institutional environments, creating monopolies and frictions that slow the uptake and diffusion of new ideas.
To unpack incentives for knowledge, useful knowledge can be split into two categories: prescriptive knowledge, which guides “how to do things”, and propositional knowledge, which explains “why things are so”. The incentive structures for these two types differ substantially.
For prescriptive knowledge, incentives follow a more market-like logic, centred on earning economic returns through real-world application. Most inventors carry clear entrepreneurial traits; their innovation is often profit-oriented, motivated by patents and temporary exclusive gains, for instance by keeping technologies secret to maintain monopoly power or capturing first-mover advantages in the marketplace.
Propositional knowledge, by contrast, is rarely patentable or directly monetizable and therefore depends largely on non-market incentives. These fall into five main groups: first, patronage, namely financial support from governments, institutions or private sponsors; second, fame and peer respect; third, intrinsic motivation, the passion for inquiry and learning itself; fourth, religion, which played a major role historically; and fifth, altruism, the commitment to advancing social welfare. Together these non-monetary rewards sustain the continuous supply of propositional knowledge.
Demand in the Market for Ideas: Dual Drivers of Novelty Preference and Practical Value
Mokyr explained that the market for ideas is shaped not only by supply-side incentives but also by sustained social demand for new ideas, rooted in a growing appetite for novelty and a preference for innovation. Early modern Europe serves as an example: knowledge producers were curious about new concepts, while knowledge “consumers” — scholars, the general public and elites alike — also displayed strong demand for fresh thinking. Affluent elites further reinforced this demand by patronizing, socializing with and funding innovators, turning a taste for innovation into a powerful force shaped jointly by cultural fashions and social structures.
At the institutional level, the large number of successful knowledge producers integrated into patronage systems reflected society’s high valuation of knowledge and innovation. A deeper shift lay in systematic scepticism toward traditional authority. From roughly 1450 onward, European societies increasingly questioned classical bodies of knowledge in medicine, astronomy, geography, physics and mathematics, sometimes openly challenging ancient authorities. As trust in tradition eroded, demand for more accurate, useful new knowledge surged. This pushed the market for ideas away from inheriting classics and toward pursuing innovation, forming a key driver of the Scientific Revolution.
Demand structures also underwent major change. Demand was no longer confined to nobles and patrons, but expanded to broader knowledge communities: intellectuals, physicians, engineers, alchemists and practical mathematicians. They engaged actively in the circulation and consumption of ideas through book purchases, correspondence, and participation in “public science” spaces such as academic societies, academies, coffee houses and public lectures, forming geographically and occupationally diverse knowledge networks.
Crucially, this demand stemmed not merely from curiosity about novelty but also from expectations of practical value. Societies widely believed that useful knowledge could transform the real world, especially in production and technology. People equipped with scientific understanding and practical skills were seen as capable of lifting productivity and fuelling economic growth. Progressive landowners and innovative industrialists were therefore willing to pay for ideas and technologies that boosted output.
Overall, demand in this era came both from a cultural preference for novelty and from belief in the practical utility of knowledge. This dual demand expanded and deepened the market for ideas and laid important groundwork for early modern economic growth and technological progress.
Functioning of the Market for Ideas: Transaction Costs, Institutional Divergences and Contemporary Shifts
For Mokyr, the efficiency of the market for ideas hinges on transaction costs, the most critical of which are access costs — the costs incurred to acquire, understand and verify knowledge, including searching for information, storage, cross-linguistic comprehension and fact-checking. These costs directly shape market efficiency: if knowledge is too costly to access and interpret, ideas struggle to spread and gain acceptance.
Access costs are heavily determined by technology. Historically, the printing press dramatically lowered the costs of reproducing and circulating knowledge. Later, knowledge was organized through alphabetical indexing and encyclopaedias to improve retrievability. Eighteenth-century encyclopaedias functioned like early search engines and greatly streamlined knowledge access. Such technological advances spread useful knowledge and boosted economic and technological development. Innovation emerges when propositional knowledge that explains “why” combines with prescriptive knowledge that shows “how”.
Historical comparison reveals the Great Divergence between China and Europe. Though China possessed a sophisticated publishing sector and vibrant knowledge production, with outstanding scholars such as Shen Kuo and Su Song, its market for ideas faced tighter institutional constraints. Europe, by contrast, featured more open institutional competition and mobility; thinkers could move across borders, making breakthrough innovation easier to emerge.
The modern market for ideas displays new features. Academic papers have become the primary vehicle for knowledge dissemination, with their standardized structure of models, data and empirical tests greatly improving communication efficiency. Global research output keeps rising, signalling strong supply-side incentives, while social demand for useful knowledge remains robust.
Yet the contemporary market also faces new challenges. Digital technologies have drastically cut the costs of storing and searching information, yet verification and screening costs have risen. Misinformation and “post-truth” content spread more easily, making fact-checking harder and pushing access costs upward in new forms. Information overload also makes it difficult to identify genuinely valuable insights in a timely way.
On the demand side, global challenges including climate change and demographic transition will continue to sustain demand for science and technology. In sum, the functioning of the market for ideas rests on three pillars: the cost of accessing knowledge, the capacity to screen information, and institutional environments that constrain or incentivize innovation. Amid simultaneous technological advancement and information proliferation, the market for ideas has entered a new phase.
Q&A Session
Students raised questions around climate change, national development, institutions, culture and other themes. Mokyr interacted warmly and answered patiently.
Q: On scientific issues such as climate change, public discourse is often emotionally polarized and marked by rejection of evidence. How can we encourage people to accept scientific views more rationally?
A: There is no simple answer. The key to economic and technological progress is not transforming the whole population, but focusing on the upper tail of human capital distribution — core innovators such as scientists and engineers. These groups need to recognize the provisional nature of knowledge: what is known today may be replaced by new theories tomorrow, so they must stay open-minded. Institutional design can guide human behaviour toward scientific and technological advancement. Building institutions that reward openness, competition and verification enables knowledge diffusion and innovation without changing human nature itself.
Q: As many countries scale up basic research and frontier science, many systems rely on strong state coordination and centralized strategies. Can breakthrough innovation that depends on pluralistic thinking still emerge within such highly coordinated institutional settings?
A: Competition is essential and a core mechanism for sustaining innovation and keeping science and technology dynamic. It operates at two levels: within nations, among firms, cities, universities and research groups; and between nations. Domestic competition governed by rules can allocate resources efficiently and advance science and technology. Cross-border competition can also spur technological progress, yet without effective rules it may escalate into conflict or even war with devastating consequences. Competition is therefore not inherently positive; its outcomes depend on binding institutions and rules. Societies today must strike a balance between fostering competition and preventing conflict. Competition within a sound institutional framework unlocks innovative potential, but unconstrained competition can turn destructive. This issue is especially salient in today’s global landscape and merits continued reflection.
Q: In driving innovation and development, which matters more: institutions, culture or other factors?
A: Institutions and culture are like a person’s two legs. They are not substitutes but interdependent and interactive. Institutions can be understood as formal rules and incentive systems, while culture consists of beliefs, values and knowledge. The two share a deep symbiotic relationship and shape one another. The critical question is not which weighs more, but whether they are aligned. Severe misalignment between institutions and culture often leads to systemic imbalance or collapse. When institutional arrangements diverge from dominant social values, institutional stability is threatened and profound change may follow. Neither institutional design nor cultural shaping alone is sufficient for technological and economic progress; coordination and interaction between the two are vital. Over the long run, culture tends to change slowly, while institutions are more adjustable. If conflict arises, institutions are more likely to adapt to culture. This perspective sheds light on both historical institutional evolution and modern development.
