Surely, only a politician could think that:
“A free-market economy, operating under the right rules and regulations, is the greatest agent of collective human progress ever created.”
Or maybe a politician and an economist. For everyone else, a much stronger case can be made for mathematics and written language, or science and medicine, or the ability to cooperate rather than kill each other.
Even if we restrict ourselves to purely economic progress, still there is little evidence that the market is the thing. Economists know this but do not always say it. Prosperity roughly equals productivity and increasing productivity is the ability to do things faster. The thing that helps us do that is replacing human power (or horse power) with machine power which requires machines, and machines come from advances in science and technology.
For some history, have a look at this graph below of GDP per capita* in the UK over the last 300 years. [Data from BoE Three Centuries of Data (xls)]. Growth trundled along at 0.3% per annum until around 1830 and then took off. So what changed? Well, Stephenson’s rocket was built in the North East of England in 1829. The Liverpool and Manchester Railway opened in 1830. Suddenly people and goods could move around much faster increasing the velocity of trade. Railways needed coal and coal production also took off around 1830. After innovation comes the maniacal capitalists trying to profit from the new technology – railway mania in 1840s, or more recently the dot-com bubble or German Neuer Markt around 2000.
After railway mania, the next wave of new technology boom came with the automobile around 1910 but the associated growth boom was set back by the World Wars. Only after the end of World War II – with aeroplanes as well – did we see runaway growth. During this economic golden age between 1945 and 1975, GDP per capita in the UK grew at an astonishing 2.7% per annum. But this rate could not be sustained and we are now back on the 1.4% trend dating back to the time of Robert Stephenson.
Now you could argue that technology needs free markets to flourish but the evidence is not there for this. In fact between 1920 and 1980 GDP per capita rose much faster in the `non-free’ Soviet Union (by a factor of 12, data from the Maddison project) than in the `free’ USA (a factor of 3.4), albeit the Soviet Union started from a much lower base. The Soviet Union also led on many new technologies including space , cryogenics, and lasers however, politics often got in the way of recognising the achievements of their scientists.
To sum up. The market is not the thing and never was. If you want to improve living standards you need to improve productivity – doing more with less. To do this, you should invest in the type of research and development that will lead to productivity gains. In this respect, the UK (with 1.7% of GDP invested in R&D) is currently lagging far behind innovative countries like South Korea at 4.1%! Not my field, but may I suggest that we could make a good start by ramping up on sustainable technologies that could both address climate change and lower energy costs, plus AI for care and healthcare.
* GDP per capita is a measure of economic progress but does not include other forms of progress like advances in medicine and education.