Standard problem: humans lived like crap for thousands and thousands of years, then suddenly some two hundred years ago dramatic industrialization and economic growth happened, though unevenly even through today. Here’s an interesting proposal to explain all this. Gregory Clark found startling empirical evidence that, in the time around the Industrial Revolution in England, wealthier families had more children than poorer families, while middle-class social values — non-violence, literacy, work ethic, high savings rates — also became more widespread during this time. According to the article at least, he actually seems to favor the explanation that human biological evolution was at work; though he notes cultural evolution is possible too. (That is, the children of wealthier families are socialized with their values; as the children of middle-class-valued families increase in proportion in society, the prevalence of those values increases too.)
In any case, the argument is that behavioral changes, not institutional changes, drove the rise of capitalism. I know that some people define institutions to include cultural norms (and therefore human behavior, right?), so I’m presuming that for Clark and the academic debates vaguely mentioned in the article, “institutions” means something more boring like government structure or enforcement of property rights. (I’m reading Samuel Bowles’s microeconomics book off and on, where he likes to mix behavioral and institutional ideas; and I seem to recall this from Avner Grief too; this all apparently is too confusing for me. (Bowles is quoted in the article.)) The article mentions Max Weber’s Protestant ethic as related to Clark in its being a behavioral thesis.
I’m awfully skeptical of biological evolution claims without any actual genetic evidence (though I quite like cultural evolutionary claims), but the theory is very neat and the archival data gathered is incredible, as you can see in this shamelessly ripped off diagram/explanation from the NYT article about the Clark’s book on this.
The ‘genetic differences’ argument appears utterly unnecessary: all one needs to accept is a universal (‘thin’) conception of people as capable of behaving according to cultural norms and transmitting such norms intergenerationally. (Not necessarily from parent-to-child directly, but, as J. R. Harris suggested, indirectly from parent’s peer group to child’s peer group.) Given this, it follows that peoples with more adaptive (in a strict evolutionary sense) cultural values will out-reproduce those with less adaptive cultural values, and thus that a larger proportion of the overall population will be adherents to the ‘fitter’ culture. Though these people may differ genetically from other groups (as people are often reticent to adopt other groups’ cultures, and so the growth of culture-adherents will be due to growth in population size of that cultural groups), their adaptive advantage results not from genetic difference, but cultural differences coterminous with the genetic differences.