Bourgeois Dignity: Why economics can’t explain the modern world

McCloskeyT

Deirdre McCloskey is a phenomenal writer, economist, and thinker. Visit her website for an explosion of academic productivity and a highly intelligent viewpoint. We share one thing in common. Both of us have had the gravest doubts that economics as it is usually practiced is capable of explaining much. My friend Oban calls it the anorexic profession: not merely starved, but self starving. Its insights are few, but powerful, but it has become wedded to asking very narrow questions and getting very narrow, if important, insights.

McCloskey breaks the mould. Here is how she begins Bourgeois Dignity: Why Economics Can’t Explain the Modern World (2010) “Sixteen. The magic number is sixteen. The world is on average sixteen times wealthier than it was in 1800.” She finds that the economic discussion fails to comprehend or explain why ‘the largest revolution in human affairs since the invention of agriculture’, as she puts it, has occurred in the past two hundred years. She looks at all the explanations proferred by the economics profession , and finds them inadequate to explain the scale of the transformation from $3 a day world average in 1800 to $48 a day world average (or $147 a day in formerly impoverished Norway).

After demolishing the usual explanations (rule of law, expansion of trade, rise of the middle class – without reference to ideas, war, slavery, imperialism, or population growth) she settles on changed ideas and social attitudes towards innovation.

Changing social ideas, in short, explain the Industrial Revolution. Material and economic factors – such as trade or investment or exploitation or population growth or the inevitable rising of classes or the protections to private property – do not. They were unchanging backgrounds, or they had already happened long before, or they didn’t actually happen at the time they are supposed to have happened, or they were weak, or they were beside the point, or they were consequences of the rhetorical change, or they required the dignity and liberty of ordinary people to have the right effect. And it seems that such material events were not in turn the main causes of the ethical and rhetorical change itself.

Most of the book consists of a careful elimination of the causes usually offered for the Industrial Revolution, and involves naturally a series of disputes with the standard materialistic explanations offered by the economics profession. Many if not most of the economists with whom she disputes  have been at various times her teachers, mentors or students, and on the whole the arguments are kept at the friendly tone with which old friends argue.

I grant that I am inclined to non-materialist explanations. Materialism is the doctrine that there is only matter and its motions, and that mind is an epiphenomenon, as a shadow is to the body for example, and not a primary cause in its own right. Yet anything we know to be important in our own lives has occurred by decisions we have made, that led to actions on our part.

McCloskey argues in this book that the standard sets of explanations for the huge rise in human wealth since 1800 are insufficient, when they are not merely wrong. Bourgeois Dignity is the second of a series of six books she has planned. The next in the series, Bourgeois Equality (2015) is already out. I have already ordered it.

McCloskey is one of those writers who are so enlightening and well argued that you need not fully agree in order to profit from them greatly.

She may think it relevant, but I do not, that she underwent a sex change from man to woman in 1995. More pertinent, in my view, was that she was an atheist and is now an Episcopalian, and was an acolyte of Milton Friedman and now entertains a broader conception of her profession.

 

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Frances

Could it, perchance, the harnessing of energy – first coal and then oil/natural gas – that has caused this wealth increase?

Bill Elder

16X prosperity is a pale shadow of what it could have been. The current “prosperity” McCloskey dotes upon, is underpinned by massive national, international and personal debt. Like a house of cards.

This “astounding” prosperity level was accomplished in spite of Keynesian economics not because of it – had our political class abandoned Keynes after the New Deal failed America and the EU, and returned to Austrian school economic models I’m certain prosperity would be wider, mor affluet and debt free – REAL wealth has no interest bearing encumbrance.

The imperturbable smugness - Barrel Strength

[…] The left wing thing, whatever it is – and I do not really understand it – seems to think that we can invert the moral hierarchy of Victorian England: male, white, Christian, protestant, and somehow reach the egalitarian Utopia they claim to love. On the contrary, the newly inverted moral order that proclaims the female, the coloured, the pagan or the Islamic as the highest expression of humanity has merely inverted the moral order without changing it. Equality for everyone except white males, who have a special penance to perform for having invented the modern world. […]

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