Source: Deirdre N. McCloskey, “Radical Idea That Inspired the Industrial
Revolution: That Is: It's Good
To Be Rich,” The New York Post, February
12, 2011
Text:
The usual history claims that the
Industrial Revolution was born of investment or exploitation, higher saving
rates or imperialism. But what if the revolution was sparked instead by changes
in the way people thought, and especially by how they thought about each other?
Suppose steam engines and computers came not from investment, but respect?
The theory goes like this. Until the Dutch around 1600 or
the English around 1700, you got honor in only two ways: by being a soldier or
a priest, in the castle or in the church. People who bought and sold things for
a living were scorned as sinful cheaters. A jailer in the 13th century rejected
a rich man’s pleas for mercy: “Come, Master Arnaud Teisseire, you have wallowed
in such opulence! How could you be without sin?”
Then something changed. The reformations of Europe gave
voice to ordinary people outside the hierarchies of aristocrats and bishops. If
a congregation choose the minister, as happened in parts of the Reformation,
then the ordinary man was empowered.
We came to admire men like Benjamin Franklin and Andrew
Carnegie and Bill Gates. The middle class, the bourgeoisie, began to be viewed
as good, and was allowed to do well. People signed on to a Bourgeois Deal that
has characterized now-wealthy places such as Britain or Sweden or Hong Kong:
“Let me innovate and make money in the short run out of the innovation, and in
the long run I’ll make you rich.”
And that’s just what happened. Starting in the 1700s with
Franklin’s lightning rod and Watt’s steam engine, and going nuts in the 1800s,
and nuttier in the 1900s, the West, which for thousands of years had played
technological second fiddle to China, became astoundingly innovative. Give the
middle class dignity and liberty for the first time in human history and here’s
what you get: the steam engine, the automatic textile loom, the assembly line,
the symphony orchestra, the railway, the corporation, abolitionism, the steam
printing press, cheap paper, literacy, cheap steel, cheap plate glass, the
modern university, the modern newspaper, clean water, reinforced concrete, the
women’s movement, the electric light, the elevator, the automobile, petroleum,
vacations in Yellowstone, plastics, half a million new English-language books a
year, hybrid corn, penicillin, the airplane, clean urban air, civil rights,
open-heart surgery and the computer.
The result was that for the first time in human history the
ordinary people, and especially the very poor, were made much better off. Much,
much better off. According to the economic historian Angus Maddison, the
average human before 1800 spent in today’s prices about $3 a day. That’s it. No
loans from your brother in Queens, because he, too, lives on $3 a day. So does
your cousin Louise. In fact, everyone you know except the local Big Man lives
that way. No banks will lend you money. There are no rewards for good ideas.
Today you spend $100 a day. That’s the payoff from the
Bourgeois Deal, a rise in the material welfare of ordinary people by more than
a factor of 33.
Did we get rich, as the political left says, by exploiting
slaves or workers, or from imperialism? No. The numbers are too big to be
explained by zero-sum theft. If all the profits of the rich in the US economy
today were handed over to the workers, the workers would only be about 30%
better off. But in the last two centuries we’re 3000% better off. So it can’t
be redistribution that made us rich.
Did we get rich, then, as the political right says, because
of material investment, piling brick on brick, or high-school degree on
high-school degree? No. The numbers again are too big to be explained by
routine savings and investment, earning routine returns. The innovation was
anything but routine. Wynton Marsalis and Geoffrey Ward call improvisation in
jazz an “explosion of consensual creativity.” That’s what happened 1800 to
today, the “invention of invention,” a “creative destruction” that replaced
wood with steel, superstition with science, autocracy with democracy.
Depending exclusively on materialism to explain the modern
world, in other words, whether left-wing historical materialism or right-wing
economics, is mistaken. Ideas of human dignity and liberty did the trick. As
the economic historian Joel Mokyr puts it, “Economic change in all periods
depends, more than most economists think, on what people believe.” It was ideas
that led to our enrichment.
In our own times the big economic story has not been the
Great Recession of 2007–2009, unpleasant though it was. The story has been that
the Chinese in 1978 and then the Indians in 1991 adopted true liberal ideas in
the economy, and came to attribute a dignity and a liberty to the bourgeoisie
formerly denied. China and India then exploded in economic growth. Perhaps
Egypt and Brazil and South Africa will be next.
The biggest threat, meanwhile, to our prosperity is not
temporary recessions, but permanent reversions to old attitudes towards profit
and progress. When making money is demonized, when innovation is stifled,
that’s when we lose what Adam Smith called “the obvious and simple system of
natural liberty.” Respecting capitalism has worked pretty well for the people
for two centuries. I reckon we should keep it.
Deirdre N. McCloskey is a professor
of economics at the University of Illinois at Chicago. Her latest book
“Bourgeois Dignity: Why Economics Can’t Explain the Modern World” (University
of Chicago Press) is out now.
