Egypt under Ptolemy had much of the ingredients for the industrial revolution, including a functional model of a steam engine in 100 A.D. So why did it take until 1700 A.D. for the steam engine to actually start being used? The ancient Egyptians had a multitude of slave labor, so they had no incentive to spend lots of time and effort developing the steam engine. This highlights a major driving force of innovation that many people do not want to hear about: high wages.

The Capitalist orthodoxy has declared that expensive labor thwarts innovation. How can a business afford to buy all that fancy innovative technology if they are paying their workers well? I think a much better question is: how can we better utilize that well paid employee? So you could pay low wages and have a lot of people doing menial tasks. Or you could pay solid wages and have good, well educated people working very productively.

Each business would have to employ a lot less people in this model, but isn’t that the whole point? If each business can do the same work with much fewer people, then we’ll all be better off since we’ll all be so much more productive.

You can see a sign of this in how countries calculate produtivity per person. American employees get high productivity scores partially because they work long hours. When you look at productivity per hour, European workers are more productive.