From the dawn of man until just a couple hundred years or so ago, humans lived a hand-to-mouth existence, with average global per capita consumption about $3 per day (in today's dollars). While there were important inventions over the millennia like the plow, paper, and gunpowder, and some of those inventions did boost production, they came relatively infrequently, and population growth kept humanity limited to its meager rations.
Suddenly, somewhere around 1800, the rate of innovation exploded, catapulting humanity away from the Malthusian limit and the average global per capita consumption is now $30 per day. And in the west, we've done far better, so much so that we consider consumption limited to a mere $30 per day to be mired in poverty!
The rapidity and magnitude of material progress can't be stated often enough or too strongly. At least an order of magnitude increase in average per capita consumption in less than a dozen generations! It's astounding and yet most people rarely consider it.
So how can we explain the creation of the goose that laid this golden egg of prosperity? Incredibly, nobody really knows and many narratives really don't fit history very well. As a result, we're each entitled to our own economic creation myth about where this prosperity came from. In fact, more than that, it's imperative that we form a framework to explain it because the Soviet Union and Communist China proved beyond a shadow of a doubt that it's possible to kill the golden goose.
Nobody knows what caused the exponential explosion of entrepreneurial endeavors, but there are a lot of things that we know didn't cause it. For example, it wasn't government funded education because there wasn't any; it wasn't government funded social safety nets because there weren't any; it wasn't socialism of any kind - Marx hadn't been born yet; it wasn't government funding of infrastructure - no increase (from very low levels) there; it wasn't government funding of research or development - no increase there either; it wasn't that suddenly civilization became stable or that urban population density reached a critical mass because China had both those characteristics for millennia; it wasn't because of an increased savings rate or capital accumulation - there's just no evidence for that; it wasn't just one or a handful of critical inventions - it was instead a massive number of incremental innovations in business process, trade, and lastly technology; it wasn't sudden discovery of natural resources as this was again very incremental; and it wasn't imperialism or slavery, in fact both waned as innovation exploded.
So what's your Economic Creation Myth?