Economic history looks, in graphic representation, like a hockey stick. For tens of thousands of years we traced nasty, brutish, and short lives along the shaft. Children anticipated a world no different from their grandparents’. Shakespeare’s audiences had only marginally better lives than Sophocles’. But at the beginning of the 18th century, mankind — beginning with the British and Dutch — hit the blade of that hockey stick, enjoying an unpreceAdentedly sharp and irreversible upturn in prosperity, life expectancy, and health. Ever since, the world has changed more quickly in every generation than it had previously in millennia. By all criteria, human life has improved in ways unthinkable 300 years ago.
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Solving the mysteries of the birth of the Industrial Revolution (and, subsequently, the modern world) has been the primary task and test of economic history. And, according to Deirdre McCloskey, all explanations so far have failed. Those failures, in turn, indicate the failings of modern economics. Her magnum opus, an explanation of the birth and flourishing of the bourgeoisie and its subsequent transformation of the modern world, will occupy at least six volumes. This month, Chicago University Press releases the second installment:
Bourgeois Dignity: Why Economics Can’t Explain the Modern World.
Traditional economic models — the ones we find in Econ 101 — center on labor, capital, technology, population, etc. McCloskey’s economics incorporates two more factors: dignity and rhetoric. Economics, she argues, has failed be a humane science that accounts for the ways in which things like human speech — rhetoric — influence the way a society lives and works. After a detailed examination of traditional explanations of economic growth, McCloskey concludes that each is inadequate, and that the only explanation for the peculiar birth of the modern world is speech: At the beginning of the 18th century, people in the Netherlands and Britain began talking about commerce as a good thing — a novelty at that time. They gave dignity to the bourgeoisie. And that drove capitalism, giving birth to the modern world.
McCloskey is a renaissance intellectual, with appointments in both the social sciences and the humanities at the University of Illinois at Chicago, and writings on everyone from Euler and Gödel to Plato and Derrida. This ferocious intellect talked with NRO’s Matthew Shaffer about her latest book and the state of modern economics.
matthew Shaffer: You approach the Industrial Revolution as something peculiar. We who don’t spend our lives thinking about it assume it was inevitable — only a matter of time. But you think it’s weird that this idea — that being economically productive was a good thing — caught on. Are we very lucky? What would the world be like today if bourgeois dignity hadn’t caught on?
deirdre McCloskey: You got it. We would be at $3 a day, as a good deal of the world still is. It was a weird idea, historically speaking. Especially we Americans, in this most bourgeois-admiring of cultures, don’t notice the ideological water in which we are swimming. Humans in northwestern Europe, and now much of the world, were lucky. It was luck, not some ancient virtue of the English constitution, and least of all some biological superiority of Europeans or Us British or the like. It was not inevitable in 1600. By 1800 it was, and by 1900 everyone not blinded by some millennial fantasy, Left or Right, could feel it.
shaffer: “Bourgeois” and “rhetoric” are, for many, terms of derision. But they are superlatives for you. Explain. In what sense, and in the vein of which intellectual traditions, do you use the words? Hegel and Aristotle?
McCloskey: Aristotle for sure. Plato was disdainful of rhetoric, which he rightly saw as an instrument of democracy. And Plato hated democracy. He wanted the rule of the best, hoi aristoi. That doesn’t leave room for democratic assemblies and law courts, or Fox News or MSNBC.
Bruno Behrend
12/06/10 17:13
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"Markets make us more moral."
He has it backwards. Morals create the possibility of markets. Absent morals, we move away from contract, toward status.
Lack of self-regulation will first lead to deregulation, then to regulatory capture, then to rent-seeking, culminating in scandal, collapse, and more regulation.
One could go on. If I could innovate the creation of Soylent Green, cheap, nutritious, etc., why not put it on the market?
$tem cell$, anyone? Let's create a market for human flesh! Live forever!
The 10 amendments limit the power of government while the 10 commandment is really a "social contract" that we live responsibly toward our fellow man. The absence of either pillar will collapse our society.
Innovation is fine, as far as it goes, which is far. It just doesn't get us all the way.
Positing an utterly Christian (do unto others...) society, one could theorize that both socialism or capitalism could work. Remove the imprimatur that we be decent human beings, and the most wealthy, innovative nation will still collapse.
Hence conservativism's advantage over libertarianism.
11/24/10 12:07
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As a card carrying member of the Bourgeois, I look forward to reading his books.
Could any of the really successful business people (e.g., Steve Jobs) have existed in a society with contempt for the Bourgeois and for commerce?
No, the most successful are heros and some even make pilgrimages to places like Omaha to pay homage to Bourgeois heros.
ellenspa
11/23/10 10:58
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As an economist myself it is discouraging to me to see so many of my colleagues advocating policies for political, not economic reasons, out of what must be self-interest. When the great fiscal train wreck finally comes, historians will ask: where were the economists? Playing politics or playing with DSGE models in their campus offices. Our other big problem is that we are training a generation of economists who have had very little or practically no experience of the business world and the work they turn out shows it. If Deirdre cares to take on these issues it would be a contribution.
Owen Jones
11/23/10 09:26
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It's all fine and good as far as it goes but the problem of God and of how to live a virtuous life does not go away. These questions have to be part of the equation. And the author is only looking at one half of the empirical/quantitative ledger. The other part is the inevitable cultural problems that always develop in prosperous societies that have been documented since classical times. The New Testament and the Church Fathers are not oblivious to man as an economic being. But he's more than that. So absent a philosophical anthropology, i.e. a serious inquiry as to what man is, any cultural and economic analysis is going to be deeply flawed. Finally, the author falls into the old Aristotle vs. Plato trap that is intellectually unsound.
jonpdaly
11/22/10 20:09
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"old money" vs "new money", the elitists have always had disdain
11/22/10 13:42
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Maybe speech has something to do with it, but the theory is obtuse and unecessary.
The immense wealth created in the last 3 centuries is a byproduct of freedom. Freedom unleashes the creativity of millions of people, not of a handful of aristocrats. When you have thousands more people innovating, you have thousands times the innovation. Not complex at all.
I would be curious to see the hockey stick from 1700 forward. I'll bet it is a gradual rise until shortly before 1776, and then a dramatic increase at that point in time.
And the reason Economists are failures is that they long for the day's of old, when serfs were serfs, and kings (like them) were kings. With that perspective, few will be able to even conceive of the truth
William James
11/22/10 11:32
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I have stumbled upon the very same findings -- the disdainful attitudes of political elites from Chinese Emperors to Greek philosophers towards those who soiled their hands with money making. If you read Diocletian's comments in his price freeze proclamation to the Roman people, it reeks of the notion that merchants are nothing but greedy low lives who need to be managed for the public good.