What did it? What was the cause of the Hockey Stick? No, we are not talking about Michael Mann's hockey stick, the spurious "hide-the-decline" surge in global temperatures in the last century. We are talking about the real hockey stick, the extraordinary surge in human well-being in the last two hundred years.
As Deirdre McCloskey reminds us, time and again in her Bourgeois Cycle, right through volume one, The Bourgeois Virtues, and volume two, Bourgeois Dignity, we are talking about a staggering change. In 1800 humans on average subsisted on about $3 per day in today's dollars. Today, in the United States, we each of us get to dispose of $120 per day. That is forty times the spending of two centuries ago.
And even that really underestimates the change. I recently watched the promo movie at the Boeing visitor center at Paine Field, Washington. They had a shot of a Mayflower-style ship. In the days of sail, it took thousands of hours to get from London to Seattle. Now you can do it in ten. And there are a whole bunch of other things we have today which weren't available to the richest and most powerful of humans two hundred years ago.
The key thing that changed, according to McCloskey, was not technological change, but a cultural, rhetorical change. About three hundred years ago, around the North Sea, societies started to respect the commercial bourgeoisie and the things that it did. It allowed, for the first time, the bourgeoisie to do what comes naturally, to innovate and change things.
That's why McCloskey would rather not call our present economic system "capitalism." The real essence of the modern era is not capital, piles of money, or ruthless accumulation. It is the spirit of innovation, of seeing an opportunity and taking it. "I seen my opportunity, and I took it," said the ward-heeler George Washington Plunkitt. We should call our modern system "innovation," she writes. What happened is that, about three hundred years ago, people stopped ragging on the bourgeoisie.
People stopped sneering at market innovativeness and other bourgeois virtues exercised far from the traditional places of honor [in religion, politics, and war].
All of a sudden, the traders and the merchants were according a dignity and a liberty they had never had before.
Even so, people really didn't realize what was happening. In the mid 19th century, the classical economists didn't really grasp that everything had changed. It was Macaulay, the last of the Whig historians, who really understood.
If any person... after the crash in 1720 [had told that] in 1830 the wealth of England would surpass all their wildest dreams,... that London would be twice as large... and mortality would have diminished to one-half,... that men would be in the habit of sailing without wind and would be beginning to ride without horses, our ancestors would have given as much credit... as they gave to Gulliver's Travels.
Of course our lefty friends still don't want to credit what has happened. That is because they can't get beyond the first stage of every capitalist improvement. The first person to benefit from a new idea is the capitalist innovator and his profit. But then the competitors rush in and everyone benefits from the innovation.
[T]he profits from innovation go in the first act mostly to the bourgeois rich. But in the second act... the poor get better off in real terms.
Of course, some people do suffer from innovation, and we have often not done enough to help them. Our liberal friends, the folks that McCloskey calls the clerisy, in the years after the failed revolutions of 1848--and indeed ever since--insisted upon seeing the capitalist economy as cruel and unjust.
But surely you cannot say that the principal cause of a rise in income from $3 per day to $120 per day was the cruelty of the capitalists in grinding the faces of the poor working class. Or indeed that it was the legislation of the welfare state. The increase in wealth was caused by innovation, middle-class entrepreneurs released from the bonds of age-old prejudice against risk-taking innovation, and allowed, finally, to do their stuff without being put in the stocks.
And when the opponents of the bourgeoisie got their way, in Russia, in Germany, in China, in Cuba, misery and poverty ensued.
You can't say all that enough, and Deirdre McCloskey, in her Bourgeois Cycle, says it. Again and again.