The Great Enrichment Was Built on Ideas, Not Capital - Foundation for Economic Education - Working for a free and prosperous world - Deirdre N. McCloskey:
November 22, 2017 - "The ... modern world was made not by material causes, such as coal or thrift or capital or exports or exploitation or imperialism or good property rights or even good science, all of which have been widespread in other cultures and other times. It was made by ideas from and about the bourgeoisie — by an explosion after 1800 in technical ideas and a few institutional concepts, backed by a massive ideological shift toward market-tested betterment, on a large scale at first peculiar to northwestern Europe.
"What made us rich are the ideas backing the system — usually but misleadingly called modern 'capitalism' — in place since the year of European political revolutions, 1848. We should call the system 'trade-tested progress.' Or maybe 'innovationism'?...
"The upshot of the new ideas has been a gigantic improvement since 1848 for the poor.... The greatly enriched world cannot be explained in any deep way by the accumulation of capital, despite what economists from the blessed Adam Smith through Karl Marx to Thomas Piketty have believed, and as the very word 'capitalism' seems to imply. The word embodies a scientific mistake.
"Our riches did not come from piling brick on brick, or bachelor’s degree on bachelor’s degree, or bank balance on bank balance, but from piling idea on idea. The bricks, B.A.s, and bank balances — the 'capital' accumulations — were of course necessary. But ... [s]uch materialist ways and means are too common in world history and, as explanation, too feeble....
"The bettering ideas arose in northwestern Europe from a novel liberty and dignity that was slowly extended to all commoners (though admittedly we are still working on the project), among them the bourgeoisie. The new liberty and dignity resulted in a startling revaluation by the society as a whole of the trading and betterment in which the bourgeoisie specialized.
"The revaluation was derived not from some ancient superiority of the Europeans but from egalitarian accidents in their politics between Luther’s Reformation in 1517 and the American Constitution and the French Revolution in 1789. The Leveller Richard Rumbold, facing his execution in 1685, declared, 'I am sure there was no man born marked of God above another; for none comes into the world with a saddle on his back, neither any booted and spurred to ride him.' Few in the crowd gathered to mock him would have agreed. A century later, many would have. By now, almost everyone.
"Along with the new equality came another leveling idea, countering the rule of aristocrat or central planner: a 'Bourgeois Deal.' In the first act, let a bourgeoise try out in the marketplace her proposed betterment, such as window screens or alternating-current electricity or the little black dress.... [C]ompetitors will imitate her success, driving down the price of screens, electricity, and dresses. But if the society lets her in the first act have a go, enriching her for a while, then, by the third act, the payoff from the deal is that she will make you all rich....
"In other words, what mattered were two levels of ideas: the ideas for the betterments themselves (the electric motor, the airplane, the stock market), dreamed up in the heads of the new entrepreneurs drawn from the ranks of ordinary people; and the ideas in the society at large about such people and their betterments — in a word, liberalism, in all but the modern American sense."
Read more: https://fee.org/articles/the-great-enrichment-was-built-on-ideas-not-capital/
'via Blog this'
November 22, 2017 - "The ... modern world was made not by material causes, such as coal or thrift or capital or exports or exploitation or imperialism or good property rights or even good science, all of which have been widespread in other cultures and other times. It was made by ideas from and about the bourgeoisie — by an explosion after 1800 in technical ideas and a few institutional concepts, backed by a massive ideological shift toward market-tested betterment, on a large scale at first peculiar to northwestern Europe.
"What made us rich are the ideas backing the system — usually but misleadingly called modern 'capitalism' — in place since the year of European political revolutions, 1848. We should call the system 'trade-tested progress.' Or maybe 'innovationism'?...
"The upshot of the new ideas has been a gigantic improvement since 1848 for the poor.... The greatly enriched world cannot be explained in any deep way by the accumulation of capital, despite what economists from the blessed Adam Smith through Karl Marx to Thomas Piketty have believed, and as the very word 'capitalism' seems to imply. The word embodies a scientific mistake.
"Our riches did not come from piling brick on brick, or bachelor’s degree on bachelor’s degree, or bank balance on bank balance, but from piling idea on idea. The bricks, B.A.s, and bank balances — the 'capital' accumulations — were of course necessary. But ... [s]uch materialist ways and means are too common in world history and, as explanation, too feeble....
"The bettering ideas arose in northwestern Europe from a novel liberty and dignity that was slowly extended to all commoners (though admittedly we are still working on the project), among them the bourgeoisie. The new liberty and dignity resulted in a startling revaluation by the society as a whole of the trading and betterment in which the bourgeoisie specialized.
"The revaluation was derived not from some ancient superiority of the Europeans but from egalitarian accidents in their politics between Luther’s Reformation in 1517 and the American Constitution and the French Revolution in 1789. The Leveller Richard Rumbold, facing his execution in 1685, declared, 'I am sure there was no man born marked of God above another; for none comes into the world with a saddle on his back, neither any booted and spurred to ride him.' Few in the crowd gathered to mock him would have agreed. A century later, many would have. By now, almost everyone.
"Along with the new equality came another leveling idea, countering the rule of aristocrat or central planner: a 'Bourgeois Deal.' In the first act, let a bourgeoise try out in the marketplace her proposed betterment, such as window screens or alternating-current electricity or the little black dress.... [C]ompetitors will imitate her success, driving down the price of screens, electricity, and dresses. But if the society lets her in the first act have a go, enriching her for a while, then, by the third act, the payoff from the deal is that she will make you all rich....
"In other words, what mattered were two levels of ideas: the ideas for the betterments themselves (the electric motor, the airplane, the stock market), dreamed up in the heads of the new entrepreneurs drawn from the ranks of ordinary people; and the ideas in the society at large about such people and their betterments — in a word, liberalism, in all but the modern American sense."
Read more: https://fee.org/articles/the-great-enrichment-was-built-on-ideas-not-capital/
'via Blog this'
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