In the beginning, there were monkeys in Africa. These monkeys came down out of the trees, used tools, and top predator in packs, even though individually they were mostly weak. They lived in packs for 1-2+ Million years, and social competition in the group, requiring large social brains, became the primary method of survival. Society was frighteningly egalitarian, with social gaming and alliances providing only marginal advantages. Although status came almost entirely through alliances, though occasionally through expert skill, it was nonetheless true that status impacted survivability, and thus also mate-selection. It may have been the case that there was runaway sexual selection on social-brains. In those 2M years, the human monkey spread all over the world, and very recently to America.
Somewhere near 10K BC, Some humans found that they could support more humans by agriculture than by hunting. Since 1000 people have an easy time in a fight with 100 people, even if the 100 people are each bigger and stronger...Agriculture came to dominate. The Jared Diamond germ hypothesis is useful here somewhere, but I don't know where: as population densities began to rise, there was a notable increase in selection on immune-system. Also, with the rise of agriculture came the rise in inequality.
For most of human history, there has been a tenuous balance going on between food production, Malthusian famine and armed conquerors. Tribe X farms. They create a surplus of food. They use the surplus to feed extra babies. Then Tribe X has 3x as many people as tribe Y. So tribe X sends 1/10 it's people to tribe Y, and kills (or sometimes co-opts) the leaders...and starts extracting surplus from the population...usually, the amount of surplus extracted from conquered tribes eventually balances out at the malthusian equilibrium. Producers produce to steady-state...rulers take the rest.
Some places (China) become very good at agriculture, and manage to get 5x the food/acre as other places...which makes the highly populated, which makes them win fights. Centralized irrigation makes central control really easy. And it makes for zero technological (besides grain yield technique) advancement in 4000 years.
Other places (Europe) eventually become many neighboring tribes, with no effective centralization, and thus permanent war. Bob grows crops, Alex protects him, Carrie has babies, and D'Anton occasionally raids from next door.
Eventually, some Europeans sneak across the English channel, and find a location where the chance of being raided from next door becomes very low, what with the water being in the way. This founds the modern world. English folks farm nicely, have rulers, and have a king, but the king has less of an excuse to be a king than anywhere in Europe, because there's no (real) need for protection from external forces, which is the only real justification for a predatory king. Hence, the sub-predators (Barons, Dukes, etc.) eventually strip him of much of his power, and allow autonomy among the Barons/Dukes, but no (big) fighting.
This leads to a relatively peaceful place, much like China, but without much central control either. This leads to nuclear families, as clans are not as necessary any longer in a peaceful place...and folks optimizing for production/trading instead of for combat. In Jane Jacobs' terms, that's folks with trader (or producer) ethics, not protector ethics. Surprising result: This would predict that the Clarkian hypothesis (IQ by evolution) holds for any ethnicity with long stretches of peacefulness, where trade and productiveness at agriculture (wealth-aggregation) was higher-value than warrior skills. Hence the very high IQ of the ethnic Chinese and the Jews.
While several places experimented with short bits of freedom (Athens, Republican Rome, Florence, etc), there had never before been a free country.
Eventually, the only place on earth EVER to have high IQ, high freedom, freedom to exit, and low risk of war spawned trade-based capitalism, as the government's lack of ability to regulate allowed the English peasant weavers to experiment, fail, and share technique. A unique blend of no Intellectual Property + no (real) government ability to prevent the growth built an entirely new, positive sum game of practical knowledge creation in an entirely bottom-up fashion. Since it was a massively superior approach to everything else, it began to generate unreasonable wealth, and then it then proceeded to take over the world...flourishing best in other locations with nuclear families, high IQs, and low government interference. America was the best example of another location it flourished well.
Life proceeded as normal, with unreasonable growth rolling along...and then beginning to slow as growth enabled war on a global scale, and growth enabled governments to be restrictive in ways they simply could not do when folks were poorer. This culminated in the stagnation of the 1970s...as everything was regulated.
In the late 70s/early 80s, 2 things happened to change the world.
The Chicago school of economics won a fight, Milton Friedman leading the charge, thus enabling Thatcher, Reagan (+Carter), and Pinochet to each institute massive reductions in government intrusion into the economy. Later, other economies would adopt similar strategies, particularly other Anglo(Ireland, NZ), and Nordic countries, which in turn spurred their economic growth . Secondly, an entirely new field of computing opened up, in an almost entirely bottom-up fashion. This field was unique in that it was effectively absent intellectual property, it was run mostly by hobbyists, and it wasn't intruding on anyone else's privileges.
The problem facing us now is that
(a) governments attempt to increase their sphere of control, monotonically.
(b) the control is more about relative status than about pure economics.
(c) short term thinking dominates long term thinking most of the time (including in companies)
(d) bottom-up experimentation that becomes fabulous only happens in the absence of the ability of power-groups to prevent it. There's NOTHING that will prevent the guild of candlemakers from banning light bulbs except an inability to ban them.
(e) RE-UPDATE: incentives are pushing smart folks towards the parasitic classes rather than the productive ones.
How do we allow the random teenager on the street enough freedom to experiment with music in order to create a new genre/sound, entirely underground...which BMG can then co-opt.
How do we allow the random geek on the street enough freedom to experiment with chemistry in order to solve the battery problem, in the face of increasing government control.
How do we allow the random teacher on the street enough freedom to experiment with ideas in order to solve the education problem, in the face of public schools and their labyrinthine rules, and ossified structure.
UPDATE: How do we keep the smartest folks building useful value-creating systems like Napster, Google, Tesla rather than going to Harvard, and learning to be a lobbyist.
The game is bottom up, massive experimentation, most of which will fail. The genius of capitalism is large private costs and immense public benefit.