Virtue and growth

Deirdre McCloskey:

I tell the story of modern economic growth, summarizing what we have thought we knew from 1776 to the present about the nature and causes of the wealth of nations — how we got refrigerators and college degrees and secret ballots. The book tests the traditional stories against the actually-happened, setting aside the stories that in light of the recent findings of scientific history don’t seem to work very well. A surprisingly large number of the stories don’t. Not Karl Marx and his classes. Not Max Weber and his Protestants. Not Fernand Braudel and his Mafia-style capitalists. Not Douglass North and his institutions. Not the mathematical theories of endogenous growth and its capital accumulation. Not the left-wing’s theory of working-class struggle, or the right-wing’s theory of spiritual decline.

. . .

The Big Story of the past two hundred years is the innovation after 1700 or 1800 around the North Sea, and recently in once poor places like Taiwan or Ireland, and most noticeably now in the world’s biggest tyranny and the world’s biggest democracy. It has given many formerly poor and ignorant people the scope to flourish. And contrary to the usual declarations of the economists since Adam Smith or Karl Marx, the Biggest Economic Story was not caused by trade or investment or exploitation. It was caused by ideas. The idea of bourgeois dignity and liberty led to a rise of real income per head in 2010 prices from about $3 a day in 1800 worldwide to over $100 in places that have accepted the Bourgeois Deal and its creative destruction.

. . .

When bourgeois virtues do not thrive, and especially when they are not admired by other classes and by their governments and by the bourgeoisie itself, the results are sad.

I should state upfront, that there’s a lot in her piece that I don’t agree with, but I certainly agree that virtues and ethics deserve some credit for economic growth and the rise of the industrial revolution.


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