SPEAKER_00: Amazing, fascinating stories of inventions, ideas and innovations. Yes, this is the podcast about the things that have helped to shape our lives. Podcasts from the BBC World Service are supported by advertising.
SPEAKER_01: Hello, I'm Emma Twin. I'm a virtual twin for Dassault Système. My job, simulate multiple medical conditions on myself to develop new treatments for all. Basically, I'm like a crash test dummy for healthcare. It may sound like science fiction, but in fact, it's just science. I explain it all on my LinkedIn account. Look up Emma Twin from Dassault Système.
SPEAKER_04: 50 Things That Made the Modern Economy with Tim Harford
SPEAKER_06: To this manufacture, the Queen was pleased to give her name and patronage, commanding it to be called Queensware and honouring the inventor by appointing him Her Majesty's Potter. At least that was Josiah Wedgwood's story. His biographer, Brian Dolan, reckons it's
SPEAKER_03: more likely that Queen Charlotte's command was Wedgwood's suggestion. She probably saw it more as flattery than shrewd self-interest. Why more likely? Because Josiah Wedgwood was a shrewd individual. He was perhaps the world's first management accountant, as we heard in this show's first series. He was a pioneering early chemist, endlessly experimenting with new ways to treat and fire clay, and noting his results in a secret code lest a rival steal his notebook. His first big breakthrough? The new kind of creamware or cream-coloured pottery from which he'd fashioned the tea service that so impressed the Queen. Quite new in its appearance, he noted modestly, covered with a rich and brilliant glaze.
SPEAKER_03: Wedgwood was a lobbyist. In the 1760s, North Staffordshire potters had to dispatch their fragile wares over miles of bone-shaking, pot-breaking roads to get to major cities. Wedgwood roused investors and persuaded Parliament to approve a canal connecting the Trent and the Mersey, two major English rivers. His fellow potters were delighted, until they realised that Josiah had cannily snapped up land and built his enormous new factory right on the banks of where the canal would pass. But perhaps Josiah's most impressive achievement was solving a problem in monopoly theory two centuries before it was even articulated. The man who put the problem into words was a Nobel Memorial prize-winning economist called Ronald Coase. Imagine, said Coase, that you're a monopolist. You alone produce a certain good. Many people want to buy it, some would pay a lot, others much less, but still enough for you to turn a profit. Ideally, you'd like to charge a high price to the first group, a low price to the second. But how can you get away with that? One possible answer is to launch at a high price, then lower that price to widen your market. That's what Steve Jobs tried with the first iPhone. It cost $600. After two months, he cut the price to $400. Not surprisingly, although it surprised Steve Jobs, the people who'd rushed to pay $600 were less than impressed. That's why Coase said this strategy can't work. The first set of buyers will see through the trick. They'll realise that if they only wait, they can get the good more cheaply. This idea is called the Coase conjecture, and Coase published his paper explaining it in 1972. Back in 1772, Josiah was putting into words the business model that had taken shape in his mind since his meeting with the Queen and his dabbles in management accounting. He had grasped the difference between what economists now call fixed costs, such as research and development, and variable costs, such as labour and raw materials. It initially incurred a great price he mused to his business partner to make the vases as steamed ornaments
SPEAKER_06: for palaces. But once he'd perfected the process and trained his workers, he could
SPEAKER_03: churn out copies cheaply. By this time, the great people have had their vases in their
SPEAKER_06: palaces long enough for them to be seen and admired by the middling class of people.
SPEAKER_03: You can almost hear the cash registers pinging as Josiah writes on. The middling people would probably buy quantities of them at a reduced price.
SPEAKER_03: Josiah had anticipated what later became known as the trickle-down theory of fashion. People tend to emulate those they consider to be above them on the social scale. Why else, for example, would the jeweller Anna Who reportedly pay the actress Gwyneth Paltrow a million dollars to wear her diamond bracelet to the Oscars? She must have hoped to recoup the cost by inspiring purchases from the middling people. Before we had movie royalty, there was only, well, royalty. In the 1760s, you couldn't get much higher on the social scale than the Queen of England. Josiah's Queens Ware gambit worked spectacularly. Sales were really amazing, he wrote. Queens Ware sold at twice the price of rivals' comparable goods. Josiah asked himself the key question. How much of this general use and estimation is owing to the mode of its introduction,
SPEAKER_06: and how much to its real utility and beauty? From now on, he concluded, he should bestow As much pains and expense On gaining royal or noble approval
SPEAKER_03: For his products as on the products themselves. But what should Josiah make next? He courted
SPEAKER_03: the virtuosi, wealthy art collectors who brought back pieces from their grand tours in Europe. The hottest new thing, he discovered, was the Etruscan pottery, now being a very popular Could Josiah make something similar? He got to work in his laboratory. Bronze powder, vitriol of iron, crude antimony, and concocted a pigment that let him imitate the Etruscan style to perfection. Aristocratic clients lapped it up. You shall exceed the ancients, gushed one elderly lord, ordering three vases. And Josiah kept experimenting. Traditionally, clay was fired and then painted or enameled. Josiah figured out how to dye the clay with metal oxides before firing it, producing an oddly translucent effect. Jasper Ware came in a distinctive light blue with white decorations in relief that's still associated with the Wedgwood brand. He made the wood in a very beautiful color. It was another huge success. But why did Wedgwood not fall foul of the Coes conjecture? After a while, his aristocratic clients must surely have figured out that whenever Wedgwood launched something they'd never seen before, they could simply wait to pick it up more cheaply. The answer lies in the trickle-down theory of fashion. If people are trying to emulate their social superiors, what do you do if you're already at the top of the scale? You try, of course, to look different to the people below you. Some economists now analyze fashion as an exception to the Coes conjecture. Even if you know you'll get something cheaper if you wait a while, sometimes you still want it right now. A few years after he wowed the Queen, Josiah observed that Queensware was now being rendered
SPEAKER_06: vulgar and common everywhere. If the great people wanted to set themselves apart from
SPEAKER_03: the middling people, they'd have to show off their wealth and good taste by buying something new. Josiah Wedgwood always had something new to sell them.
SPEAKER_05: We relied on Brian Dolan's book, Josiah Wedgwood, entrepreneur to the Enlightenment.
SPEAKER_04: For a full list of our sources, please see bbcworldservice.com slash 50things.
SPEAKER_02: The buildings like Spiderman saving thousands of lives. This is 30 Animals That Made Us Smarter. I'd like you to meet what I reckon are the toughest animals on Earth. The podcast which investigates the amazing things that animals have taught us. I was now completely out of my comfort zone. 30 Animals That Made Us Smarter. But now for the lightbulb moment from the BBC World Service. They are the stuff of science fiction. Catch up with the whole series now. Stay away. I don't taste good and I'm venomous. Just search for 30 Animals That Made Us Smarter wherever you get your podcasts.
