Thursday, December 23, 2010

McCloskey Week: It's Not What You Think

What was it that propelled the economic Hockey Stick of the last 200 years, the step change in economic prosperity from $3 per day back than and since forever, versus the $120 per day in economic prosperity we enjoy today?

Never mind that. What about the things it was not, the plausible reasons for modern prosperity that writers from Marx to Weber floated before the world, and that turned out to be wrong, wrong, wrong?

Most of the second volume in Deirdre McCloskey's Bourgeois Cycle, Bourgeois Dignity: Why Economics Can't Explain the World, is given over to exploding the "reasons" that the educated class have come up with for modern prosperity. It was not:

  • Thrift, Greed, Protestant Ethic. Sorry chum. There is no indication that thriftiness was uniquely in fashion in the 18th century. In fact it is likely that the crucible of the industrial revolution, Britland, has always been moderately un-thrifty. Same with greed. You think that people were less greedy in ancient times? How about the plains of Ilium? And recent scholarship says that Catholics have just as much of a Protestant Ethic as Protestants.
  • Capital Accumulation. A lot of people have assumed that the industrial takeoff could not have occurred without a lot of saving, a storing up of capital to finance the takeoff. But it didn't happen. The textile revolution was financed out of personal savings and modest capital improvements.
  • Oppression, Stealing.It wasn't financed by starving the workers, or the profits from the slave trade, or the ill-gotten gains of the enclosure movement. For one thing, a lot of the industrial revolution took place away from the center in out of the way places, organized by nobodies, where economic regulation could not find it.
  • Transportation. It wasn't transportation improvements, although they didn't hurt.
  • Coal. Nor coal. Although it helped.

No, it wasn't all the economic materialist reasons that all the experts want to believe. It wasn't education either, because innovation is typically transfered directly from one person to another.

No, according to Deirdre McCloskey, it all comes down to dignity--just like in Singin' in the Rain. It was dignity and liberty for ordinary people. She quotes Dr. Johnson:

That the attempts of such men [projectors] will often miscarry, we may reasonably expect; yet from such men, and such only, are we to hope for the cultivation of those parts of nature which lie yet waste, and the invention of those arts which are yet wanting to the felicity of life. If they are, therefore, universally discouraged, art and discovery can make no advances.

Any new project, Johnson goes on, exposes "its author to censure and contempt" and if people were discouraged by contempt or stopped by censure nothing would ever get done.

And that is exactly McCloskey's point. If anything is to change in this world, people have to believe in change, and the rest of us have to resist our instinct to prevent it. We have to take the attitude of Samuel Johnson and look with tolerance, even approval, upon the mad projects of the projectors.

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