_{Another selection from the trilogy here. Today, we move forward within the second volume, arriving at Chapter Five of Bourgeois Dignity: Why Economics Can’t Explain the Modern World.}

The book is the second of a half dozen planned, three written including this second one, the first published in 2006, intended as a full-scale defense of our modern form of innovation—universally if misleadingly called “capitalism.” The books are meant for skeptical people like you who think markets and innovations need such a defense. The implied readers of the books are at present rarities—a scientist who takes the humanities seriously, admitting that novels and philosophies are data, too; a humanist who enjoys calculation, admiring even economistic arguments; or a common reader who delights in listening patiently to evidence and reasoning that overturn most of his own left- or right-wing folklore about what happened in the economy 1600 to the present.^[1]

Together the books make one big argument. The argument is: Markets and innovation, which are ancient but recently have grown dignified and free, are consistent with an ethical life. An ethical and rhetorical change in favor of such formerly dishonorable activities of the bourgeoisie—innovating a fulling mill for woolens or innovating a bank for paying florins in England easily—happened after 1300 in isolated parts of the European south (Florence, Venice, Barcelona), as in many other scattered locales in the world, and in many other eras, and after 1400 or so in other towns of the south (such as Lisbon) and the Hansa towns of the north, and after 1600 in larger chunks of the north (Holland), and after 1700 in England, Scotland, and British North America, and after 1800 in southern Belgium, the Rhineland, northern France, and then the world. Such words or conversations or rhetoric mattered to the economy, and still do. The words enabled after 1800 a big fall in poverty and a big rise in spirit.

Yet in the nineteenth century the artists and the intellectuals—the “clerisy,” as Samuel Taylor Coleridge and I call it—turned against liberal innovation. The treason of the clerisy led in the twentieth century to the pathologies of nationalism and socialism and national socialism, and in the twenty-first century to the pieties of radical environmentalism, and to the dismal pessimism of the union left and the traditional right. The clerisy provided the “scientific” justifications for such attitudes, as in scientific materialism or scientific imperialism or scientific racism or scientific Malthusianism or, lately, scientific neoeugenics. The scientific schemes reasserted an elite control over newly liberated poor people. Consider Mao’s Little Red Book, say, or Hitler’s Mein Kampf, which extracted from the scientific dreams of left or right a plan for an ant-colony society governed by the Party. Or consider the more polite versions of elite control, such as the great statistician Karl A. Pearson in 1900 approving of scientific racism in support of imperialism: “It is a false view of human solidarity, which regrets that a capable and stalwart tribe of white men should advocate replacing a dark-skinned tribe which can. . . [not] contribute its quota to the common stock of human knowledge.”^[2] In 1925 he wrote against Eastern European Jewish migration to Britain, on the grounds that “this alien Jewish population is somewhat inferior physically and mentally to the native population,” for example in “cleanliness of clothing.”^[3] Or consider the great American jurist Oliver Wendell Holmes, Jr., sneering in 1895 in social Darwinist style that “from societies for the prevention of cruelty to animals up to socialism, we express. . . how hard it is to be wounded in the battle of life, how terrible, how unjust it is that any one should fail.”^[4] In 1927 he approved of compulsory sterilization on grounds of scientific utilitarianism and eugenics: “It is better for all the world, if instead of waiting to execute degenerate offspring for crime, or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind. The principle that sustains compulsory vaccination is broad enough to cover cutting the Fallopian tubes. Three generations of imbeciles are enough.”^[5] Sadly, such stuff wasn’t “junk science” or “pseudoscience,” easily demarcated by methodological rule from the real stuff. It was regular, front-line, widely accepted science, such as now the environmentalism without economic content published regularly in Science. Science is a wonder, but it is not always the same as wisdom. And a little learning is a dangerous thing.

The clerisy’s anti-innovation and antimarket and antiliberty rhetoric in the years since 1848, though repeated down to yesterday, misapprehends the scientific history. The clerisy says that every spillover in the environment justifies world-governmental control. Scientific economics suggest that it does not. Some spillovers are best treated at the local level, or by making not less private property, but more. The clerisy says that lack of elite control of human breeding will cause the race to degenerate. Scientific genetics suggests that it does not. Human abilities flourish from diversity, as they will in a while in Africa. The clerisy says that innovation impoverishes people. Scientific economics suggests that it does not, as it has not in Hong Kong. It enriches most of them. The clerisy says that state planning or nationalist mobilization is better than voluntary commercial peace. Scientific history suggests not, as it was not in the USSR. Socialism and nationalism have regularly disrupted the prosperity provided by bourgeois commerce. The clerisy says that the modern urban world is alienated. Scientific sociology replies on the contrary that bourgeois life in France strengthened numerous if weak ties, and freed people from village tyrannies, as it did in modern Spain or Greece. The clerisy says that the market and its economic liberties are politically dangerous. Political science suggests that on the contrary they give ordinary people dignity and make them mild and tolerant, as they have in the Netherlands and Sweden, at any rate by the standards of alternative arrangements.

The present book is the second, I say, in a trilogy called the Bourgeois Era. The Bourgeois Era offers an “apology” for the modern world—in the Greek sense of a defense at a trial, and in the theological sense, too, of a preachment to you-all, my best-beloved infidels or ultraorthodox or middle-of-the-road. My beloved friends on the political left have joined with my also beloved, but also misled, friends on the political right in asserting that capitalism, as Marx put it in 1867, is “solely the restless stirring for gain. This absolute desire for enrichment, this passionate hunt for value.”^[6] Many on the left have been outraged by what they take to be the bad material results of the history—though misapprehended, because the desire for enrichment is after all universal, and the material results of its modern bourgeois fulfillment have in fact been startlingly good for the world’s poor, not bad. Many on the right have on the contrary been pleased by the same misapprehended history. They join their opponents on the left in believing that Marx was right to define the modern world as the restless stirring for gain. Yet such greed, they affirm with a smirk, is “good” for three-car garages and time-shares in Barbados. Get used to it.

And on both political wings many of a less ruthless character are dismayed by the spiritual vulgarity they detect in a novel greed. They look into the future darkly. Such pessimism typifies some on the left (though accompanied by a longer-term apocalyptic optimism), who see in every business downturn the final crisis of global capitalism. Another sort of pessimism typifies some on the right (accompanied by no such longer-term optimism), who see in every new cultural fashion a corruption arising from the rule of the vulgar.

Admittedly, myopic pessimism, from the right or left, sells. The late Allan Bloom’s right-wing pessimism, The Closing of the American Mind (1987), sold half a million copies merely in hardback. Shortly afterwards, at a little conference we both attended, Allan was the assigned commentator on an essay of mine entitled “If You’re So Smart, Why Aren’t You Rich?” He started with a little joke: “I should note that I now am rich.” Paul Ehrlich’s The Population Bomb (1968) sold three million copies total, and little or none of what it confidently predicted came to pass. I bought a copy of Ravi Bahtra’s The Great Depression of 1990 (another event which didn’t happen, though in 1987 that book, too, sold well) at a prepulping sale in 1992 for $1.57. I show it to my students as an exhibit against economic pessimism.

So I admit that my optimistic view of the modern world and especially of its long-term prospects is less profound than the Chicken Little predictions of my good friends on the right and on the left. Still, when set beside the conviction that the End is Near, the optimistic, anti–Chicken Little view I retail here has at least the merit of being scientifically correct.

The first volume, The Bourgeois Virtues: Ethics for an Age of Commerce (2006), asked whether a bourgeois life can be ethical. It replied that it is, and was, and could be, and should be. The present volume, as I’ve said, makes the case for an ethico-rhetorical Industrial Revolution by criticizing on economic and historical grounds the materialist explanations. I’m not happy to be so critical of a materialist economics that I have loved and learned and taught since 1961. An economist like me loves the routine of trade or of accumulation or property, which are things she understands pretty well, and can even calculate. Allow me to show you on the blackboard the proofs that protectionism is bad and that investment is good. And look here: I can show with a little math that a lack of private property leads to a tragedy of the commons. Beautiful stuff.^[7]

By contrast, ideas and rhetoric stand at present outside her economic science. Even the best economists fail to notice that humans are talking animals and that the human animals put more of meaning into their talk than “I bid $2.71828.”^[8] In explaining the most important economic event since the invention of agriculture, or perhaps since the invention of language, the facts seem to demand a rejection of the materialist and antirhetorical ideology which I so long advocated. A materialist economic science appears, in other words, to need a good deal of amending. We need humanomics.

The opposite of “materialist” is not exactly “idealist,” if by that is understood a Hegelian notion of an Absolute Sprit or the like. The scientific alternative to a dogmatically materialist, positivist, behaviorist ideology would still admit that the mode of production matters, sometimes. But it would note that talk matters, too. Consider the parallel terms in a nonphilosopher’s philosophizing, “objective” and “subjective.” As any philosopher after the critics of Descartes can tell you, neither objective nor subjective can be had (recent philosophers have put the point in a more sophisticated way, but it still approximately holds). If the “objective” is “what is really there in God’s eyes,” what Kant called the “noumena,” we humans here below will never quite see it, short of the Second Coming. Is the universe made from strings? Does the communion wafer change in essence to Christ’s body? Is it possible for the Cubs to win the World Series? And if the “subjective” is what is in my mind, you can never really know it (notice the rhetorical force of the word “really” in such statements). Do you really experience the color red the same way I do? Neither of us will ever know. Do all the brain scans you want: you can’t feel exactly like me.

What we can know is neither objective nor subjective, but (to coin a word) “conjective,” what we know together in our talk.^[9] Spell it out: con-jective, together thrown. The chief discovery of the humanities in the twentieth century was that a human science must be about the conjective, the palpable phenomena to examine. No science can be about the hopelessly unattainable objective or subjective. As Niels Bohr put it, even physics is about what we humans can say. The conjunctivist admits of course that a clam sits in the sea, perhaps even in God’s eyes, but she points out that what constitutes a “fruit of the sea” for eating purposes is always a matter of agreement among humans. That doesn’t make “clam” a figment, but it does make it conjective. As Sahlins put it in 1976, rejecting the “procrustean opposition of ‘idealism’ and ‘materialism’ by which the discussion customarily proceeds,” a human “must live in a material world, [a] circumstance he shares with all organisms, but. . . he does so according to a meaningful scheme of [human] devising, . . . according to a definite symbolic scheme which is never the only one possible.”^[10] He says elsewhere that “nature as it exists in itself is only the raw material provided by the hand of God, waiting to be given meaningful [note the word] shape and content by the mind of man. It is as the block of marble to the finished statue.”^[11]

It all strikes me now as obviously so. But when Sahlins first said it (he following many others from Protagoras to Dewey and James, to Wittgenstein, with his contemporaries Geertz and Rorty) I rejected it out of hand. I am not, believe me, an idealist by predilection. I’m a disappointed materialist. I was in the early 1970s a stubbornly ignorant positivist, as most economists are, but came gradually to realize that the conjective is what we can know. You should become a conjectivist, too.

A third volume, soon to appear, The Bourgeois Revaluation: How Innovation Became Virtuous, 1600–1848, shows in detail how attitudes toward bourgeois life changed. A fourth, tentatively called Bourgeois Rhetoric: Interest and Conversation during the Industrial Revolution, develops an amended economic science acknowledging that humans do speak their meanings, and shows how their speaking changed to make possible the bourgeois dignities and liberties and revaluations and rising boats.^[12] It cashes in the claim by the economist and philosopher Frank Knight in 1935 that “economics is a branch of aesthetics and ethics to a larger degree than of mechanics.”^[13] A fifth volume, Bourgeois Enemies: The Treason of the Clerisy, 1848 to the Present, will explore how after the failed revolutions of 1848 we European artists and intellectuals became in our rhetoric so very scornful of the bourgeoisie, and how the gradual encroachment of such ideas motivated the disasters of the twentieth century—and how they can motivate fresh disasters if we neglect to contradict the left- or right-wing theories. And the last, Bourgeois Times: Defending the Defensible, will look into present-day anti-innovation and antimarket rhetoric, such as the alleged sins of globalization, the despoilment of the environment, the evil of commercial free speech known as advertising, the alleged dependence of innovation on an alleged reserve army of the unemployed.

The books lean on each other. If your worries about the ethical foundations of innovation and markets are not sufficiently met here, they perhaps are more fully met in The Bourgeois Virtues. If you feel that not enough attention is paid here to unemployment or global warming, more will be paid in Bourgeois Times. If you wonder how the present book can claim that words matter so much, consider The Bourgeois Revaluation and Bourgeois Rhetoric. If you feel that the story here does not explain why such a successful bourgeois life came to be despised in deeply progressive and deeply conservative circles, some of your questions will be answered in Bourgeois Enemies.

The apology does seem to take six volumes. I apologize. A philosopher recently wrote, to explain why he crammed his opus on “warranted [Christian] belief” into three stout books rather than allowing himself four, that “a trilogy is perhaps unduly self-indulgent, but a tetralogy is unforgivable.”^[14] Here you have in prospect, God help you, a sestet, and this is merely volume 2.^[15] But bourgeois life and innovation since 1848 have had a voluminously bad press, worse even than warranted Christian belief. The prosecution in the past two centuries has written out the indictment of the developing free and bourgeois and business-respecting civilization in many thousands of eloquent volumes, from the hands of Robert Southey and Schiller and Carlyle and Dickens (the critics of innovation, I repeat, were not all of the left), of Alexander Herzen, Baudelaire, Marx, Engels, Mikhail Bukharin, Ruskin, William Morris, Nietzsche, Prince Kropotkin (my hero at age fourteen, when I fell in love with socialist anarchism down at the local Carnegie-financed library), Tolstoy, Shaw, Ida Tarbell, Upton Sinclair, Rosa Luxemburg, Emma Goldman (another admired figure, when I later as a young economist reaffirmed anti-statist convictions), D. H. Lawrence, Bertrand Russell, Lenin, Trotsky (companion of a brief adolescent flirtation with communism), John Reed (ditto), Veblen, Ortega y Gasset, Sinclair Lewis, T. S. Eliot, Virginia Woolf, Mussolini, Giovanni Gentile, Hitler, Heidegger, Wittgenstein, F. R. Leavis, Karl Polanyi, Walter Benjamin, Sartre, Simone de Beauvoir, Simone Weil, Dorothy Day, Woody Guthrie (whose songs and singing made me for a while in college a Joan Baez socialist—the leftish critics of bourgeois dignity and liberty have all the best tunes), Pete and Peggy Seeger (ditto), Ewan MacColl (so too), Lewis Mumford, Hannah Arendt, Herbert Marcuse, Maurice Merleau-Ponty, J. K. Galbraith, Louis Althusser, Allan Bloom, Fredric Jameson, Saul Bellow, Howard Zinn, Noam Chomsky, Eric Hobsbawm, E. H. Carr, E. P. Thompson, Ernest Mandel, Immanuel Wallerstein, Paul Ehrlich, Stuart Hall, C. L. R. James, George Steiner, Jacques Lacan, Stanley Hauerwas, Terry Eagleton, Alain Badiou, Slavoj Žižek, Charles Sellers, Barbara Ehrenreich, Naomi Klein, Nancy Folbre (a personal friend), Jamie Galbraith (ditto), and Jack Amariglio (double ditto). Few people have defended commerce from this magnificent flood of eloquence from the pens of left progressives and right conservatives—jeremiads against markets and innovation which stretch from the Hebrew prophets through Plato and the Analects of Confucius down to the present—except on the economist’s Prudence Only grounds that after all a great deal of money is made there. In offering merely six volumes in defense, after such grand prolixity in the prosecution, I admire my restraint. As Henry Fielding wrote toward the end of Tom Jones, a “prodigious” book, “When thou hast perused the many great events which this book will produce, thou wilt think the number of pages contained in it scarce sufficient to tell the story.”^[16]

The Bourgeois Era, in other words, tries to initiate a defense of our bourgeois lives that goes beyond economic balance sheets, without ignoring them. It offers the outlines of an ethical rhetoric for our globalized souls, an idealism of ordinary life such as Henrik Ibsen and Willa Cather were formulating. It recoups the virtues for the lives, neither heroic nor saintly, that most of us in fact live. If you were raised on the left or the left-middle and were taught to believe that innovation and the bourgeois life were born in sin, and that they impoverish and corrupt the world, as in globalization and financial meltdowns, perhaps one or two of the books can plant a seed of doubt. And likewise, perhaps, the books can plant the self-critical seed if you were raised on the right or the right-middle and were taught to believe that (admittedly) capitalism is “solely the restless stirring for gain, this absolute desire for enrichment,” if a materially efficacious desire for enrichment—but that the economists and calculators have corrupted our holiness and demeaned our nobility, as in rock music and feminism and deconstruction since the 1960s, and the glory of Europe is extinguished forever.^[17]

What the philosopher Charles Taylor said about “authenticity” my books say about “innovation”: “The picture I am offering is rather that of an ideal that has degraded but that is very worthwhile in itself, and indeed, I would like to say, unrepudiable by moderns. . . . What we need is a work of retrieval, through which this ideal can help us restore our practice.”^[18] Innovation backed by probourgeois rhetoric made people well-to-do, and made possible the modern pursuit of authenticity. The sestet of the Bourgeois Era can perhaps persuade you, whether progressive or conservative or standing in between, that your belief that innovation is especially greedy, and the bourgeoisie sadly ignoble and unspiritual, might—just might—be mistaken. And as a work of retrieval perhaps it will persuade you that to continue attacking a virtuous life in commerce, or for that matter to continue defending a greedy life in commerce, corrupts our souls, and poisons our politics.

[1]. In modern literary criticism in the English-speaking world the term “humanist” is a fighting word, but the fight is sidestepped here. Here all it means is “a scholar in an academic department such as English, French, music, art, philosophy, theology, parts of history, that is, a person interested in die Geisteswissenschaften or les sciences humaines.” It does not mean partisans of the approach to literary criticism following Matthew Arnold, T. S. Eliot, the Blooms (Harold or Allan), or my own teacher, Howard Mumford Jones.

[2]. Pearson 1900, pp. 26–28. Even on strictly genetic grounds, by the way, Pearson’s remark is mistaken. Africa’s genetic diversity ensures that it will eventually make contributions to the quota of human knowledge that will put the white and yellow and brown “races” in the shade.

[3]. Pearson and Moul 1925. Peart and Levy 2005 give a full and penetrating treatment of the Pearson and Moul paper (chap. 5, pp. 87–103) in the context of the new eugenic social sciences of the late nineteenth and early twentieth centuries.

[4]. Holmes 1895, p. 264.

[5]. Holmes, Buck v. Bell, 274 U.S. 200 (1927). See Alschuler’s (2000) devastating critique of Holmes.

[6]. Das Kapital 1867, p. 168 (pt. 2, chap. 4, “The General Formula for Capital”). The usual English translation (though approved by Engels) errs in many important details. Thus the Moore and Aveling translation (in, say, the Modern Library edition): “this boundless greed after riches” (p. 171). But the word “greed” is not in the German (Gier, or Geltgier), and is in fact a word eschewed by Marx throughout the book, as moralistic and unscientific.

[7]. You may admire its beauty in McCloskey 1985b, available on line at deirdremccloskey.org.

[8]. McCloskey 2008d.

[9]. McCloskey 1994c, pp. 201, 311, 347, 353, 378.

[10]. Sahlins 1976, pp. ix, viii. Sahlins views culture as a tertium quid, such as the conjective (p. x).

[11]. Sahlins 1976, p. 210.

[12]. Drafts of both volumes are available at deirdremccloskey.org.

[13]. Knight 1935, p. 97.

[14]. Plantinga 2000, p. xiv.

[15]. I won’t call it a “hexology,” the proper Greek corresponding to a tetralogy (“hex” in West Germanic languages means “witch”); and I certainly won’t, despite the temptations of higher book sales, call it by the vulgar Latin-Greek mix “sexology.”

[16]. Fielding 1749, vol. 2, p. 409 (book 18, chap. 1).

[17]. The point that left and right complain in much the same ways about the bourgeoisie is made also by Immanuel Wallerstein in 1983 (1995), p. 115.

[18]. Taylor 1992, p. 23.

Their faith is admirable. Yet in denying (before the scientific conversation begins) the relevance of words and rhetoric and identity and creativity, in favor of numbers and interest and matter and Prudence Only, they are standing against a good deal of the historical evidence, not to speak of science studies in the half century since Thomas Kuhn. The opponents of ideas as causal are what the modern Marxists call with a sneer “vulgar” Marxists—wanting passionately to be seen as tough-minded behaviorists, positivists, materialists, quantitative, “evidence based,” every single time, regardless of the common sense or the historical evidence. Their methodology, they are quite sure, yields the only scientific truth. It is their identity, which is why they become upset and abusive when some unScientific fool claims that something was caused by ideas. They even feel (I seem to recall) that it is masculine to deny ideas.

The trouble is that such a methodological preconception is often historically wrong. The American constitution, for example, as the historian Bernard Bailyn argues, was a creative event in the realm of ideas—and its economic origins are easily exaggerated.^[2] “The Atlantic democratic revolutions of the later eighteenth century,” writes Jonathan Israel, “stemmed chiefly from a general shift in perceptions, ideas, and attitudes,” a “revolution of the mind.”^[3] The abolition of slavery, a policy once advocated merely by a handful of radical churchmen (and the Baron de Montesquieu), played in the 1820s and 1830s a role in British politics, and later of course a much bigger role in American politics. It had less to do with the North’s material interests than with cheap printing interacting with evangelical Christianity. As Lincoln famously said on being introduced to the author of Uncle Tom’s Cabin (1852), “So this is the little lady who wrote the book that made the big war.” Books can indeed make wars—Erskine Childers’s spy novel, The Riddle of the Sands: A Record of Secret Service (1903), was no minor influence on the Anglo-German naval rivalry. Socialist ideas and at length socialist reality spread after the disappointed revolutions of 1848 in congresses and party meetings and manifestos. Various nationalisms had spread across Europe in reaction to Napoleon’s conquests, but then were matured in poetry and songs of risings and in the screeds of exiles resident in London. Talk, talk, talk. Ideas matter.

To explain the new dignity of the middle class in northwestern Europe, and to explain the success it brought to the modern world, the social scientists need to moderate their fervent ideology of materialism—though of course without denying material forces. They need to collect the facts on ideas and rhetoric and social distance—though still collecting facts on the price of iron and the size of bribes to congressmen, too. It is not a rule of scientific method that an economic subject, such as revolutionary economic growth, must entail a narrowly economic explanation. Marshall Sahlins put it this way:

It is not that the material forces and constraints are left out of account, or that they have no real effects on [the] cultural order. It is that the nature of the effects cannot be read from the nature of the forces, for the material effects depend on their cultural encompassment. . . . The practical interest of men in production is symbolically constituted. . . . Nothing in the way of their capacity to satisfy a material (biological) requirement can explain why. . . dogs [in the West] are inedible but the hindquarters of the steer are supremely satisfying of the need to eat.^[4]

In his recent history of the American business school and its role in legitimizing and then corrupting professional managers, the sociologist Rakesh Khurana declared that “I take it that ideational interests can be important factors in a professionalization project, and that statements of them must sometimes be taken at face value,. . . along with social roles and private (material or power) interests.”^[5] Likewise the sociologist of religion Rodney Stark, without by any means neglecting material forces, urges us to take sometimes at face value, or at any rate some value, the actual content of religious doctrine.^[6] Sometimes people mean what they say, or at least they say by accident their meaning. Words are facts for a social science, too.

The present book supports such a balancing step indirectly, by looking at a representative sample of apparently promising materialist and anti-rhetorical explanations of the Industrial Revolution and the modern world—explanations such as investment or exploitation or geography or foreign trade or imperialism or genetics or property rights. It finds them to be surprisingly weak. It concludes therefore (I admit the inferential gap) that the remaining explanations, such as ideas and rhetoric, must be strong. (The two books to follow will offer more positive evidence for the change in rhetoric.)

The critical method of “remainders” or “residues” was recommended in his System of Logic (1843) as one of four methods of induction by J. S. Mill, that admirably learned and open-minded scholar. “Subducting from a given phenomenon,” wrote Mill in his high-flown but lucid style, “all the parts which, by virtue of preceding inductions, can be assigned to known causes, the remainder will be the effect of the antecedents which have been overlooked, or of which the effect was as yet an unknown quantity.”^[7] In simple language, take out what you can measure, and what’s left is the impact of what you can’t. If the economic and material causes usually proposed as explanations for the Industrial Revolution turn out to be weak, then the large remainder might well be the effect of a remaining antecedent—a rhetorical change, perhaps. If the new/old investment and trade can’t do it, maybe the new ways of talking and thinking can. The crucial remaining antecedent, I claim, was a rhetorical change around 1700 concerning markets and innovations and the bourgeoisie, a rhetoric spreading after 1800. It was merely a change in talking and thinking about dignity and liberty. But it was historically unique and economically powerful. It raised the tide (though on the time scale of all human history, by the way, the tide was more like a tsunami; the implied suddenness of the Japanese word better fits the case).

The materialist accounts are many, from the “original accumulation” favored by early Marxist historians to the “new institutionalism” favored by late Samuelsonian economists.^[8] The criticism made here does not hurl into the eighth circle of Hell every possible version of the theories suggested up to now; nor does it damn their advocates, many of whom are my personal friends and admired colleagues, whether Marxist or Samuelsonian. Their arguments may well be true that posit a surplus value staying with capitalists for a long time, or that explain with reallocations some increases of efficiency here or there of 2 or 3 percent of national income. The scientific evidence, however, seems to be strong that the economistic, Prudence Only theories, whether taken individually or together, can’t explain the startling rise of real incomes from 1700 to the present, thousands of percents. Rhetoric perhaps can.

The negative case made here, summarizing fifty years of research by economic and historical scientists, is:

Foreign trade was too small and too anciently common to explain the rising tide after 1700 in northwestern Europe. Capital accumulation was not crucial, since it is pretty easily supplied. Literacy, for example, is a form of investment in human capital, but responds to demand. Coal can be and was moved. Despite what you may think, European empires did not enrich the imperial countries, and anyway the chronology is wrong, and anyway imperialism was commonplace in earlier times. Likewise, the institutions of property rights were established many centuries before industrialization, in China more even than in Europe. The European marriage pattern was not only European. Greed didn’t increase in the West. In bourgeois countries during the Industrial Revolution the Catholics did just as well as the Protestants, at least when in similar circumstances, as they were in Amsterdam. The Muslims and the Hindus and the Buddhists, or for that matter the Confucians and most of the animists, could think as rationally about profit and loss as did the Christians. Populations had grown, even explosively, in earlier times and other places. The Black Death hit all of Eurasia. Genetic variation and evolution work too slowly and irrelevantly to explain European success. Until the eighteenth century many parts of the Far and Near and Southern East were as rich, and appeared to be as ready for innovation, as parts of the West—except at length in the crucial matters of the dignity and liberty of the bourgeoisie. Until the seventeenth century the Chinese and the Arabs practiced a science more sophisticated than the European one. The science of the Scientific Revolution was in any case mostly about prisms and planets, and before the twentieth century even its other branches did not much help in worldly pursuits. True, European science was in its non-normal, revolutionary episodes an important parallel in the realm of ideas to the acceptance of creative destruction. But the new dignity and liberty for innovators was a rhetorical event outside of science, and it influenced science itself by elevating bourgeois stick-to-itiveness (such as Charles Darwin’s) over aristocratic gestures (such as Lord Bacon’s).

In 1500 only one of the ten largest cities in the world, Paris, was in Europe. In 1800 still only Paris, London, and Naples ranked so.^[9] After a century of shocking divergence, however, only one city outside Europe or the United States was in the top ten (namely, Tokyo, and this after Japanese industrialization had taken hold).^[10] Yet in our own times, it is estimated that by 2015 only two cities with only partial European origin, Mexico City and São Paulo, will be in the top ten. Jack Goody calls it “alternation,” and economists call it “convergence.” “No one wishes to deny Europe (or America) its recent advantage,” writes Goody, “only to dispute the reasons given which all too often relate to imaginary long-term superiority. . . . The advantages. . . are of much more recent and specific origin.”^[11] The wheel turns. In short, the Europeans were not economically special until about 1700. They showed most plainly their special ingenuity only briefly in the two centuries after 1800 (as they had by then been showing for some centuries their special brutality). By the early twenty-first century they had reverted to not being special at all, even in brutality. The episode of their innovative specialness, and the rising tide, came from a change in their economic rhetoric. It made the difference.

“Teach the conflicts,” says my colleague in English at the University of Illinois at Chicago, a past president of the Modern Language Association, Gerald Graff. With Cathy Birkenstein he has brought the idea to fruition in a rhetoric for students called They Say/I Say: The Moves That Matter in Academic Writing (2005).^[12] Their brilliant little handbook notes that a student—or a scientist—can’t see what’s distinctive even in her own position if she can’t summarize reasonably fairly what others think. I test here reasonably fairly the numerous (sadly mistaken) alternatives to the (correct) theory that a change in rhetoric caused the Industrial Revolution and the modern world. To use the piece of argumentative rhetoric in Graff and Birkenstein’s title, “My honored if misled friends in economics, history, and economic history say that the modern world came from trade or exploitation or legal change. They say that. I say, no, it didn’t. It came from a change in the rhetoric about the common economic life, which led to the Franklin stove and the Bessemer process and peaceful transitions of political power and all our joy.”

Such a methodical rejection-of-alternatives, I admit, is a little irritating—one tires of being told what did not happen. And there is always the embarrassing danger that Montaigne noted: “Our reasons and arguments in controversial matters can ordinarily be turned against ourselves; and we run ourselves through with our own weapons.”^[13] Yet such hazardous naysaying is after all the conventional ideal in the philosophy of science—if commonly overlooked in practice (the practice is more usually what sociologists of science call the Empiricist Monologue, that is, My Wonderful Theory And Only My Wonderful Theory). A recent rejection-of-alternatives article in Science, for example, describes the “solar model problem,” namely, the problem that elements heavier than hydrogen and helium in the sun are more common than is implied by models of convection. The author politely rejects four “straightforward” hypotheses “receiving some initial support.” “Perhaps the only proposal left still standing,” he concludes, “is internal gravity waves.”^[14] Similarly, in 1965 Arno Penzias and Robert Wilson discovered the background radiation of 3 degrees kelvin from the Big Bang by ruling out alternative explanations for the static noise in their new microwave detector pointed at the night sky, including for example the activities of certain local pigeons. Ideally we “encompass” other people’s theories in our own and show triumphantly that our theory explains the facts while theirs do not. The pigeons didn’t do it. Surely, therefore, the Big Bang must have.

In the ancient world, Plato’s dialogues used the same method of rejecting alternatives and teaching the conflicts, as in Republic, book 1 (for example, Steph. 335), with Socrates as the encompasser. Talmudic Judaism used another. St. Thomas Aquinas used still another, influenced to some degree it appears by Maimonides, as well as by a budding university tradition of disputation after Peter Abelard, intensifying the centuries-old spirit of Christian theological dispute after Irenaeus and Origen. In early modern science the classic case was Galileo’s Dialogo of 1632, where the sun-as-center “Simplicio” had rings—or orbits—run around him by the Copernican master. (Galileo may not have endeared himself to the Inquisition by naming the anti-Copernican “Simplicio,” supposedly in honor of a sixth-century Neoplatonist named Simplicius [classical Latin “of one nature,” from sim-plex; in modern Italian, simplice, “straightforward”; but in medieval Latin “naïve.”])

In medicine the classic case was the demonstration in 1855 by John Snow (1813–1858), following on his earlier inquiry in 1849, that cholera was caused, as he put it, by people being “supplied with water containing the sewage of London.”^[15] He examined various named alternatives to the water-borne theory, such as miasma or person-to-person contagion. He gradually accumulated evidence that the alternative theories were untenable—devising for example clever maps of London based on house-to-house surveys during the 1854 epidemic. In particular he concluded that “if the cholera had no other means of communication than those [claimed in the older theories] which we have been considering, it would be constrained to confine itself chiefly to the crowded dwellings of the poor, and would be continually liable to die out accidentally in a place, for want of the opportunity to reach fresh victims; but there is often a way open for it to extend itself more widely, and to reach the well-to-do classes of the community; I allude to the mixture of the cholera evacuations with the water used for drinking and culinary purposes.” Likewise here: The idea of dignified merchants and free manufacturers can spread more widely and quickly than trade or empire or investment or an asserted British racial superiority, and can explain more easily how others came finally to master the trick. The United States, Belgium, France, Germany, Italy, Korea, Taiwan, Hong Kong, Spain, Thailand, Botswana, China, Ireland, India, and their imitators grew because they did.

In modern economics the classic use of remainders was the productivity calculations made in the 1950s by John Kendrick, Moses Abramovitz, and Robert Solow (anticipated in 1933 by the economic historian G. T. Jones).^[16] Using “marginal productivity theory,” the economists took out the impact on output per head of sheer capital accumulation, piling brick on brick. Take out what you can measure directly, and what’s left is what you can’t—namely, the not-directly-measurable impact of innovation. The present book takes out what one can measure directly in the materialist and economistic explanations of the sharp rise of incomes after 1800, and finds their measure to be small. What’s still left standing is—let us pray—the not-directly-measurable innovation released by the rhetorical change.

I assemble here a catholic sample of the scientific and philosophic work bearing on the hypothesis. I myself have done since the 1960s some research on economic history, especially British, and since the 1980s I’ve done some philosophical and literary-critical writing as well. But most of the evidence and reasoning I use here was discovered or invented by others. The book is an essay, not a monograph. Specialists will spot the old pieces of news.

We economic historians, for example, have known since the 1960s that capital accumulation can’t explain the Industrial Revolution or its follow-on, the blade of the hockey stick. The news hasn’t gotten around much to our academic colleagues. It is resisted even by a few sadly misled economic historians. Our economist colleagues in growth theory and economic development resist it fiercely. They want very much to go on believing that the quantity of output depends not on ideas independent of material causes but mainly on the labor applied and most especially on the masses of physical and human capital present, Q = F(L, K)—so lovely is the equation, so tough and masculine and endlessly mathematizable. And a left-leaning Department of French would simply be stunned to hear that innovation does not depend on accumulated capital ripped from the proletariat. The scientific finding, though, is elderly, and secure.

Likewise the literary critics know that the bourgeoisie read, and wrote, the European realist novel, from Robinson Crusoe to Rabbit Is Rich, celebrating and attacking the bourgeois virtues, though the critics differ on exactly how.^[17] The related notion that novels and plays therefore teach a good deal about the history of bourgeois ideology and innovation, which will strike the average economist as scandalously unscientific, will provoke yawns in the Department of English. Yet that scientific finding, too, is elderly and secure.

(I use throughout the word “science,” by the way, in the wide sense of “serious and systematic inquiry,” which is what it means in every language except the English of the past 150 years: thus in Dutch wetenschap, as in kunstwetenschap [“art science,” an English impossibility], in German Wissenschaft as in die Geisteswissenschaften [the humanities¸ literally a very spooky sounding “spirit sciences”], or in French science as in les sciences humaines [serious and systematic inquiries concerning the human condition, such as studies of literature or philosophy or anthropology, literally “the human sciences,” another impossible contradiction in modern English], or plain “science” in English before 1850 or so. Thus Alexander Pope in 1711: “While from the bounded level of our mind / Short views we take, nor see the lengths behind: / But more advanced, behold with strange surprise / New distant scenes of endless science rise!”^[18] He did not mean physics and chemistry. John Stuart Mill used the science word in its older sense in all his works.^[19] Confining the word to “physical and biological science,” sense 5b in the Oxford English Dictionary—which was an accident of English academic politics in the mid-nineteenth century—has tempted recent speakers of English to labor at the pointless task of demarcating one kind of serious and systematic inquiry from another.)

Likewise, no one in a department of philosophy, whether or not they agree with it, will be startled by “virtue ethics,” explained in The Bourgeois Virtues (2006) and used here from time to time to talk about the ethical change in the Bourgeois Revaluation. (For example, I used it a while ago to speak of the virtues of hope and faith redirected by the Revaluation.) She might be more comfortable with Kantian and utilitarian arguments—in philosophical lingo, “deontological” and “consequentialist” ethics—which arose in the eighteenth century and which have since then dominated academic philosophy. The academic hegemony of utilitarianism 1789 to the present, for example, reappears in vulgar form in the business school’s supposition that adding up “stakeholders” is the only ethical argument, or in the economics department’s supposition that U = U(X,Y) is the only way to think about human choice. But the philosopher will at least have heard of the more ancient theory, and of its recent and feminist revival. No surprise.

What is surprising in the book, and therefore less scientifically secure, is the claim that in the eighteenth century the ideal and the material connected, and powered the modern world. Even that hypothesis, however, has ancestors.

The text above is an excerpt from Bourgeois Dignity: Why Economics Can’t Explain the Modern World, the second volume of Deirdre McCloskey’s trilogy on the ethical and historical origins of modern prosperity.

[1]. In the field of history the fullest telling of the story of objectivism is Peter Novick’s brilliant book, That Noble Dream (1988). My own The Rhetoric of Economics (1985a; 1998) tells a similar tale about economics.

[2]. Bailyn 2003, especially chapter 1, “Politics and the Creative Imagination.”

[3]. Israel 2010, pp. 37, 39; see also pp. 87, 91.

[4]. Sahlins 1976, pp. 206–207.

[5]. Khurana 2007, p. 11.

[6]. Stark 2003, p. 2: “Ideas about God have. . . consequences”; p. 11: “Monotheism has immense capacities to mobilize human action.”

[7]. Mill 1843, p. 464.

[8]. “Samuelsonian” is an adjective for modern, American-style economics, which was originated by the late, great, and amiable Paul A. Samuelson (1915-2009) and by his brother-in-law (also great and amiable) Kenneth Arrow (b. 1921), and announced in Samuelson’s modestly entitled PhD dissertation of 1947, The Foundations of Economic Analysis. It insists that every economic issue must be treated as a problem of constrained maximization by utility-seeking individuals. To this, Arrow added the use of proof in the style of the department of mathematics (as against departments of physics or engineering, which care not a fig about such existence-theorem proofs). Samuelsonian economics, especially in its recent form melded with Milton Friedman’s conclusions, is commonly called “neoclassical.” But the term perpetuates an anachronism, since neoclassical economics names the much earlier new economics during and after the 1870s (Menger, Walras, Jevons, Marshall, Clark, Wicksell), which was wider than Samuelsonian in method, or wider than Friedmanite in conclusion

[9]. Hohenberg 2003, p. 179.

[10]. The word “divergence” and the idea that it happened after 1800 is from Pomeranz (2000) and others of the “California School.”

[11]. Goody 2010, p.122.

[12]. Graff and Birkenstein (2005) and Graff (1992). Another of my friends, Jack Goldstone, has practiced the same method of teaching the conflicts and using the remainders in his elegant textbook Why Europe? The Rise of the West in World History, 1500–1850 (2009), from which I have learned so much. I have not seen his forthcoming A Peculiar Path, but expect to learn from it even more.

[13]. Montaigne 1588, book 3.8, ”Of the Art of Discussion,” p. 709.

[14]. Asplund 2008, p. 51.

[15]. Snow 1855, p. 75.

[16]. Abramovitz 1956, Kendrick 1956 and 1961, and Solow 1957. Jones’s Increasing Returns (1933) should be better known among economists. A student of Alfred Marshall, he anticipated the mathematics of the what came later to be called the “price dual of the residual.” He died young, and his work was forgotten except by economic historians. The notion that an input price (such as of coal, labor, lumber) divided by an output price (such as of iron, wheat, furniture) is a measure of productivity was a commonplace in the nineteenth century, rather obscured in the twentieth by fascination with the “quantity primal.”

[17]. For example, dialectic or not, Michael McKeon 1987 (2002).

[18]. Pope 1711, Essay on Criticism, lines 221–224, italics supplied.

[19]. You may persuade yourself of this by getting hold of a searchable text of any item by Mill and searching for “science,” finding for example that he speaks of “a science of morals.”

Bastiat’s funniest example of what is wrong with ancient urban monopolies or modern protectionism is the “negative railroad.” A railroad was proposed in the early 1840s from Paris to Madrid. The city of Bordeaux, at a third of the distance, demanded that the railroad break there, on the argument that the break would “create jobs” for porters and hotels and cabs. (The cities of Paris, London, and Chicago have long had such arrangements, extracted by politics and monopoly. Passenger trains do not skirt principal cities. They go into them and end. During the railway age in the United States we said, “Change in Chicago.”) Bastiat noted that according to such “job-creating” logic every town along the route should see its opportunity and take it. “Change in Ablon-sur-Seine, Evry, Ballancourt-sur-Essonne, La Ferté-Alais.” Every few kilometers, at every country village, the railroad on the way to Madrid would end at a Gare du Nord to be resumed at a Gare du Sud, after job-creating expenditure for freight and travelers en route. All the national income of France and Spain would come to be “generated” by the Paris-to-Madrid railroad, at the cost of all other forms of production and consumption. Jobs would be “created.” The protected production, forced by politics, would replace better uses of labor and capital. It would be a negative railroad, a triumph of protectionism and industrial planning achieved through what economists would later call “rent seeking” by the politicians of Bordeaux or Ablon-sur-Seine.^[4]

By contrast, the society is in fact made better off if the opportunity is an actual improvement in how things are provided—rather than a rent-seeking opportunity for legalized theft such as blocking the sun’s light entering houses, or building a negative railroad. Innovation is positive sum. Move the marketplace to a truly more convenient location. Produce Greek olive oil at a low cost to sell high. Invent the container ship. Discover E = mc². Devise the personal computer.

Yet such alert activities, especially in towns, had always been scorned by the elite. After all, the elite of Brahmins and warriors lived by the dignified collection of rents or taxes imposed on the lower classes—the proletarian Shudra and the bourgeois Vaishya. The Shudra lived by physical work, by which they were polluted. And a middleman from the Vaishya, who improved life for all by purchasing a bolt of cloth or an idea for an invention at a low price and selling it at a higher price to people who valued it still more, seemed to the world’s elite before the Revaluation to be a mere lying trickster. In 44 BCE Cicero declared that “commerce, if on a small scale, is to be regarded as vulgar; but if large and rich. . . it is not so very discreditable. . . if the merchant, . . . contented with his profits, . . . betakes himself from the port itself to an estate in the country.”^[5] A merchant, said Cicero, lived by making the worse product seem the better, which was shameful (though an orator like himself, who earned the price of his tenement houses in central Rome and his country estate by making the worse legal case seem the better, was of course one of nature’s noblemen). In 1516 the blast by Thomas More—or, rather, by his character Raphael Hythloday (“peddler of nonsense”: in most seasons Sir Thomas was canny in making his own position a little bit ambiguous)—can stand for the abuse directed for millennia at the vulgar traders and innovators of the towns: “They think up. . . all ways and means. . . of keeping what they have heaped up through underhanded deals, and then of taking advantage of the poor by buying their labor and toil as cheaply as possible. . . . These depraved creatures, in their insatiable greed,. . . are still very far from the happiness of the Utopian commonwealth. [Where] once the use of money was abolished, and together with it all greed for it, what a mass of troubles was cut away!”^[6] The Earl of Leicester, sent by Elizabeth in the 1580s to meddle in the politics of the already bourgeois Dutch, did not trouble to conceal his contempt for the “Sovereign Lords Miller and Cheeseman” with whom he had to deal.^[7] And even the commercial Dutch had a proverb, Een laugen is koopmans welvaart, “A lie is a merchant’s prosperity.”

After about 1700 in Britain, however, as earlier in Holland, the vulgarities of the economy and of money and of dealing, with their unsettling creativity, came gradually to be talked about as noncorrupting. They began to be seen in theory as worthy of a certain respect, as not being hopelessly vulgar or sinful or underhanded or lower-caste. In a word, they became dignified, in part because they were recognized as good for the nation, not a useless scam. The very idea of virtue and dignity in (of all places) the economy—even in small-scale commerce, in buying grain low to sell high, or making cheese—had been proposed tentatively by a few professors in Italy and Spain and France. In the middle of the thirteenth century Thomas Aquinas had written in the style of his ancient and antibourgeois authorities, especially of Origen and St. Augustine and the desert fathers, and of Aristotle the teacher of aristocrats, that “trading, considered in itself, has a certain debasement attaching thereto, in so far as, by its very nature, it does not imply a virtuous or necessary end.”^[8] Yet Thomas and the other urban monks of his time wrestled against the inherited style, contradicting the world-denying ideology of stoic and stylite by emphasizing that working is like God’s creativity. (Laborare est orare, to work is to pray, the Benedictines had long said: the liberal Freemasons of the Bourgeois Revaluation adopted it as their motto). Even trading, Aquinas suggested, is worthy: “Nevertheless the gain which is the end of trading, though not implying, by its nature, anything virtuous or necessary, does not, in itself, connote anything sinful or contrary to virtue: wherefore nothing prevents gain from being directed to some necessary or even virtuous end, and thus trading becomes lawful. Thus, for instance, a man may intend the moderate gain which he seeks to acquire by trading for the upkeep of his household”—the “upkeep,” for example, of an establishment of fifteen rooms and twenty servants in a tower castle in Prato.

No one in charge in Prato or Florence or Barcelona after 1200 actually thought that buying low and selling high was immoral—they left such primitive notions to the folk of the interior North (the coastal northerners already had their own vigorous traditions of commerce). Yet eventually in the North Sea lands, during the seventeenth and especially during the eighteenth century, many of the clerisy of artists and intellectuals, and even a few churchmen and aristocrats, whether coastal or interior, came to tolerate and even to admire the bourgeoisie, in the way their coastal ancestors had admired, or feared, or joined, the merchant-vikings. Thus the Bourgeois Revaluation.

Toward 1800 many northwestern Europeans, and toward 1900 other Europeans, and then toward 2000 many ordinary people elsewhere, came to accept the outcome of the market with more or less good grace. As Christine MacLeod puts it, by the standard of the “aristocratic cultural hegemony” of earlier times “the inventor was an improbable hero,” buying ideas low and selling them high. Yet certainly in Britain by the middle of the nineteenth century the inventor had become just that, an acknowledged benefactor of the world.^[9] The Dutch and the Americans, then the British, and then many other people for the first time on a big scale, such as the Swedes late in the nineteenth century, looked with favor on the market economy, and even on the creative destruction coming from its profitably alert innovations. Later the American westerns from The Virginian (novel 1902; films 1929, 1946) to Shane (novel 1949; film 1953) praised honest and nonviolent business.^[10] In 1913 Willa Cather, without the antibourgeois sarcasm which her fellow members of the American clerisy were beginning to develop, has her heroine, Swedish-American Alexandra Bergson, exclaim, “There’s Fuller [the real estate man] again! I wish that man would take me for a [business] partner. He’s feathering his nest! If only poor people [such as Alexandra’s unenterprising brothers] could learn a little from rich people!”^[11] Japanese salarymen became heroes of novels. Against resistance from many in the clerisy of avant-garde intellectuals and artists, the world began to revalue the bourgeois towns. In 2005 the English philosopher and writer from Switzerland, Alain de Botton, spoke of his boring and bourgeois hometown, Zurich, whose “distinctive lesson to the world lies in its ability to remind us of how truly imaginative and humane it can be to ask of a city that it be nothing other than boring and bourgeois.” He quoted Montaigne, writing in the last decades of the sixteenth century:

Storming a breech, conducting an embassy, ruling a nation are glittering deeds. [But] rebuking, laughing, buying, selling, loving, hating, and living together gently and justly with your household—and with yourself..—is something more difficult. Whatever people may say, such secluded lives sustain in that way duties which are at least as hard and tense as those of other lives.^[12]

The Bourgeois Revaluation was not simply a “rise of the middle class,” if by that is meant a coming of an enlarged bourgeoisie to political power. Outside the scattered republics of Northern Italy, the Hansa, the Netherlands, Switzerland, and Geneva, and the British colonies in North America, such a step was long delayed. The middle class, as the historian Jack Hexter pointed out long ago, is always “rising”—and yet only lately even in bourgeois England has it found room at the top.^[13] It hadn’t found it, really, even in the nineteenth century, and certainly hadn’t in the aristocratic sixteenth and seventeenth centuries. Aristocrats ran Britain until very late—Winston Churchill, for instance, was born in Blenheim Palace, and showed it.^[14] Until recently a plummy BBC or Oxbridge accent was compulsory among the English to advance to political power, and was helpful even to many politicians of the Celtic Fringe. And a wealthy merchant’s son from Bristol attending Eton and Christ Church acquired anyway his aristocratic airs, and a commission in a fashionable regiment.

The key economic event of early modern times is instead a Revaluation of bourgeois behavior, an increased if sometimes embarrassed acceptance by others and by themselves of the bourgeois’ virtues—the rebuking, laughing, buying, selling so far from glittering deeds. As the historian Joyce Appleby put it in 1978, speaking of the late seventeenth century and after, the middle class in England “coalesced with, rather than displaced, the existing ruling class. . . . Social change. . . requires not a new class but a modern class, however formed.”^[15] Or rather, I would say, it requires a change in attitude toward an existing class. In Holland first, and then in the England-speaking lands and then elsewhere, attitudes changed.

The market and the bourgeoisie in the Revaluing countries repaid the compliment with a stunning enrichment of nearly all, and the piling up (the ruling class noted with approval) of materials of war. The bourgeoisie enacted for the first time at a large scale a social drama in which it enjoyed dignity and liberty, yet was forced out into the cold of innovation by withdrawal of mercantilist protection. (The bourgeoisie did not, by the way, need self-consciousness to play such a role—the belief that a social class must be self-conscious to constitute a social class has long been a red herring drawn across the historian’s trail.) The bourgeoisie, through its innovation and its competition for customers, made itself rich, and also—promoting an end which was no part of its intention—increased the welfare of the poor in Britain and then elsewhere, at first by 100 percent and at length by 900 percent, then 1,500 percent, then beyond, up to that $100 or so a day. It’s happening now even in Ghana and in Egypt.

In the event, by the new pro-bourgeois, egalitarian, talk (or “self-dependence,” as John Stuart Mill called it), a positive-sum game was freed to some extent from zero-sum politics. The idea of progress through bourgeois dignity and liberty took hold of the social imaginary of the West. Napoleon’s armies saw it as their first duty after a conquest to abolish the monopolizing guilds. In 1857 the Danish Sound tolls for getting into and out of the Baltic, which for centuries had been collected from Hamlet’s Helsingør (“Elsinore,” said Shakespeare), were eliminated by international treaty (with substantial monetary compensation to Denmark from the countries thus liberated). By the middle of the nineteenth century both Britain and France were free-trading nations.^[16] And all were on their way to bourgeois enrichment.

I am claiming, in other words, that the historically unique economic growth on the order of a factor of ten or thirty or one hundred, and its political and spiritual correlates, depended on ideas more than on economics. The idea of a dignified and free bourgeoisie led to the ideas of the steam engine and mass marketing and democracy. “During its rule of scarce one hundred years,” wrote Marx and Engels in The Communist Manifesto of 1848, “the bourgeoisie has created more massive and colossal productive forces than have all preceding generations.”^[17] True, and in the next hundred years it created many more, with a consequent betterment of the formerly impoverished, quite contrary to what Marx and Engels expected in 1848, and contrary to what the well-meaning people of the left down to the present, such as the American filmmaker Michael Moore, keep saying. And it raised the human spirit, contrary to what Thomas Carlyle expected in 1829, and contrary to what the well-meaning people of the right down to the present, such as the American journalist Pat Buchanan, keep saying. A young American critic of Carlyle’s moral pessimism, Timothy Walker, a host to Tocqueville in Cincinnati during his American tour, noted in 1831 that we are not speaking of Athenian aristocrats supported by the labor of women and slaves, but Democratic Humanity in the mass. “Our doctrine is that men must be released from the bondage of perpetual bodily toil before they can make great spiritual attainments.”^[18] And so the Americans did, compliments of their bourgeois people such as Walker.

But ideas, not mere trade or investment or exploitation, did the creating and the releasing. The leading ideas were two: that the liberty to hope was a good idea and that a faithful economic life should give dignity and even honor to ordinary people, to My Sovereign Lord Cheeseman as much as to Your Grace the Duke of Leicester. The very concept of justice shifted, away from the justice of giving His Grace his due and toward the justice of honoring contracts. The vocabulary (dating from the Latin inspired by Aristotle) was an old “distributive” justice as against a new “commutative” justice, the old justice of status as against the new justice of contract. (The modern left has returned to distributive justice, another of many instances of the modern left resembling in doctrine the old, pre-liberal right.) Aquinas had said, as if in preparation for the “democratic” shift (though seventeenth-century Holland, not to speak of eighteenth-century England, was hardly democratic): “In distributive justice a person receives all the more of the common goods, according as he holds a more prominent position in the community. This prominence in an aristocratic community is gauged according to virtue, in an oligarchy according to wealth, in a democracy according to liberty, and in various ways according to various forms of community.”^[19] John Locke replaced such justice by a commutative justice that honored everyone, and not merely the privileged by inheritance, under which the duke was expected to pay his tailoring bills, and property was justified by labor. Adam Smith likewise introduced a democratic redefinition of the old notion of distributive justice, which had favored an elite, by one according honored status to everyone, including the poor.^[20] The disruptive outcome of such a bizarre egalitarianism, many Europeans came to believe, should be encouraged.

To use the word Marx taught us, the modern world arose out of an entirely new “ideology.” Or, equivalently, it arose out of an entirely new social “rhetoric”—an older term meaning about the same thing. For example, the word “honest” in Shakespeare’s time, as you can see in dictionaries of Shakespearean English or by searching the texts of the plays, was understood mainly as “noble” (that is, honorable in an aristocratic way, achieved in battle or at court: “Honest, honest Iago”). Its rhetoric changed radically in the eighteenth century, coming to mean mainly “dignified as an ordinary person” and “truth-telling” (that is, reliable in a bourgeois way, for making deals). In the eight works of Jane Austen written from 1793 to 1816 (including The Watsons, 1804, unfinished, and her early and unpublished Lady Susan, but not including her last, unfinished Sanditon), “honest” occurs thirty-one times.^[21] In six of these thirty-one occasions it means “upright,” dominantly in the old phrase an “honest man.” Never is it used in Shakespeare’s old sense “of high social rank, heroic in battle, aristocratic.” Another third of the time it means “genuine,” as in “a real, honest, old-fashioned boarding-school” (Emma), very far indeed from “honest” as “aristocratic.” In its dominant modern sense it occurs again a third of the time in the meaning “sincere,” and in four out of the thirty-one total occurrences in the restricted sense of “truth-telling.” The 1934 Webster’s New International Dictionary labels as archaic “honest” in sense 1, “held in honor,” with the example of “honest” (chaste), as in the old phrase an “honest woman” (applied repeatedly to Desdemona in Othello). It labels as obsolete “honesty” in sense 1a, “honor.” “Honest” in the now-dominant sense 2 means, the dictionary declares, fair, upright, truthful “as, an honest judge or merchant, [or an honest] statement” (italics supplied). No talk of aristocrats and honorable war. What is astonishing, and revealing of the Bourgeois Revaluation, is that an identical shift of meaning from an aristocratic to a bourgeois meaning of “honesty” took place at the same time during the Revaluation in other Germanic and Romance languages of commerce, such as in Dutch eerlich and Italian onesto.^[22]

“The great chain of being”(scala naturae: the staircase of nature, though a staircase no one was meant to ascend: “chain” is better), dominated the Elizabethan world picture as it had dominated all our worlds since Plato and before. It was the endlessly refreshed hierarchy of dignities, which had ruled since the first large-scale agricultural societies in Iraq and Egypt and north China or for that matter Hawaii.^[23] Yet in the seventeenth century in northwestern Europe it began to break down, and by the nineteenth century the great chain was viewed by many as

reactionary—though for all that still having practical force. Probably because of the successful revolts from above and below 1568 to 1689, Holland and England and Scotland experienced a shrinkage in what sociologists call “social distance” (to use the terminology of the sociologist Georg Simmel, its originator, and of the Americans Robert Park and Emory Bogardus, its first systematic users, early in the twentieth century).^[24] The eighteenth-century French progressives had theorized the shrinkage, in Voltaire and Rousseau and the other bogeymen of the reactionary powers—powers decidedly opposed to the shrinkage of social distance. To apply a modern analogy, northwestern European society by 1800 was lurching away from, say, old South Asian or Korean levels of deference, and starting toward new American or Israeli levels. They did not, to put it mildly, get all the way. Yet around the North Sea the barons and bishops reluctantly moved over a little for townspeople, and at length even for plowmen. Ordinary northwestern Europeans acquired a dignity and liberty, first in Holland and then elsewhere, that the proud man’s contumely had long been devoted to suppressing.

In a striking remark in 1908 Simmel brought into focus the old image of the bourgeois man: “In the whole history of economic activity the stranger makes his appearance everywhere as a trader, and the trader makes his as a stranger.”^[25] An instance from the fourteenth century is Boccaccio’s tale of Saladin disguised as a merchant (in forma di mercatante). Around 1600, though, a new rhetoric of nonstrangeness arose in Holland, and later in England, and still later in other places down to the present. In the revolutionary year of 1795 the poet and plowman Robert Burns declared that “The pith o’ sense, an’ pride o’ worth,/ Are higher rank than a’ that. . . . / A man’s a man for a’ that.” In fictional 1820 in a fictional and reactionary Kingdom of Parma, Stendhal’s character the Conte Mosca della Rovere notes with characteristic insight that “it is doubtful whether the mania of reverence [for us aristocrats] will last out our time.”^[26] In Europe, the times they were a-changin’.

For their part the northwest European townspeople lost their grip on cozy medieval monopolies. They got in exchange a new dignity as innovators, and a smaller social distance from the revered elite. (Nonetheless in fictional Parma in 1820 the bourgeois were still disdained by the aristocracy and gentry, and in 1839 when he wrote the novel still by Stendhal himself.)^[27] The bourgeois became at last the new heroes of the first thoroughly bourgeois-respecting societies on a big scale, first Holland, then Britain, and then yet more so, with anticipations, the United States. Walt Whitman wrote in 1855 that what was astonishing about American citizens (the word “citizen,” of course, would have left out at the time women, blacks, Indians, immigrants, and many of the poor native white men) was “the air they have of persons who never knew how it felt to stand in the presence of superiors.”^[28]

The new dignity for trading and innovating in ordinary life had, it goes without saying, causes itself. Some of the causes were economic and material, surely. Yet some, equally surely, were rhetorical and ideal. For example: the immense payoff from positive-sum politics in Holland could inspire direct imitation in England, as it has in present-day India. Matter then could be said to have moved other matter, interests to have spawned new interests. The elite interest in funding for ships and armies certainly did move policy and attitudes: look at Peter the Great’s attempts to modernize Russia for purposes of national glory (and not to make his people better off). But you could just as well call it an ideal cause—after India had stagnated during the License Raj of the four decades after Independence it was the irritating idea of the enemy China growing fast after 1978 that at last stimulated a rhetorical Revaluation, especially after 1991. Likewise, during the seventeenth century the success of commercial Holland stuck in the craw of English people, the way the recent success of innovative Hong Kong and Taiwan stuck in the craw of mainland Chinese people, and inspired them to imitate.^[29] The chain-like causation of successive Bourgeois Revaluations is similar to the causation of nationalism in reaction to conquering nationalisms, English to French, or English to Indian. That, too, you could call either material or ideal.

But Marx erred in claiming (as he and Engels ordinarily did claim) that ideological or rhetorical change always reflects the material economy of interests. It was no material, merely prudential, interest that drove Hitler’s or Stalin’s or Mao’s regime to murder tens of millions merely of its own people, or Pol Pot’s to murder a third of the Cambodian population.^[30] It was ideology, during the century of warring ideologies. Doubtless the ideas themselves had some partial dependence on interests. But not always. People do not become conservatives or liberals, fascists or Communists, always because of self-interest. Their willingness to die for such causes shows their commitment, as the economist and philosopher Amartya Sen would say, or it shows their ethical complexity for good or evil, as I would say.^[31]

In the crucial early case from 1600 to 1800 in northwestern Europe the

words and ideas led the way. Wrote Joel Mokyr in 1990: “Economists have traditionally been leery of mentalités as a factor in long-term economic development. In the [then] budding literature on the economic rise of the West, such factors have been ignored or curtly dismissed,” as in works down to 1986 by John R. Hicks, Douglass North, Robert Paul Thomas, Eric Jones, Nathan Rosenberg, and L. E. Birdzell.^[32] Economists, and even some of these, have grown wiser since then. European revolutions, reformations, renaissances, and especially revaluations made townspeople bold and raised them in the estimation of their fellows. As the economist Deepak Lal put it recently, “Capitalism as an economic system [I would call it ‘innovation’] came about when the merchant and the entrepreneur finally were given social acceptance [‘dignity’] and protection from the predation of the state [‘liberty’].”^[33] As Lal’s colleague in History at UCLA, Joyce Appleby, put it recently, “the riddle of capitalism’s ascendancy isn’t just economic but political and moral as well: How did entrepreneur’s get out of the straitjacket of custom [‘liberty’] and acquire the force [‘liberty’] and respect [‘dignity’] that enabled them to transform, rather than conform to [more ‘liberty’ and a new standard for ‘dignity’], the dictates of their society?”^[34] The North Sea lands arrived at the “bourgeois dignity” of my title, with the liberty to venture. The material economy followed.

The text above is an excerpt from Bourgeois Dignity: Why Economics Can’t Explain the Modern World, the second volume of Deirdre McCloskey’s trilogy on the ethical and historical origins of modern prosperity.

[1]. For example, Kirzner 1976, p. 83, as elsewhere in his writings, and especially Kirzner 1973. I have criticized his very fruitful approach as not going quite far enough: as not recognizing

the importance of the social aspect of entrepreneurship, and especially the role of persuasion (McCloskey 2008d; compare Storr 2008).

[2]. W. L. Riordon, Plunkitt of Tammany Hall (1905), pp. 3–10, reproduced in Leland D. Baldwin, The Flavor of The Past: Readings in American Social and Political Portrait Life, vol. 2 (New York: Van Nostrand, 1968), pp. 57–60, and then at http://www.uhb. fr/faulkner/ ny/plunkitt.htm. Plunkett’s use of “honest,” by the way, is a late use in the sense of “honorable.”

[3]. Bastiat 1845, I.7.

[4]. In case you imagine that cases like Bastiat’s are mere fictions, consider the officials nowadays of Hanchuan, China, anxious to create jobs for making the local liquor, baijiu. And so they required that state workers buy in total $300,000 worth of it in a year. Because such a figure worked out to three bottles per state worker per day of the “sinus-clearing” liquor, the requirement was canceled. Even in China people sometimes recognize a mercantilist absurdity when they see it (Sharon LaFraniere, “Chinese Mock Bewildering Rules,” International Herald Tribune, Oct. 20, 2009, p. 2).

[5]. Cicero 44 BCE, I:42. Compare Finley 1973, pp. 60, 23.

[6]. More 1516, p. 132.

[7]. Israel 1995, p. 222. Yet by 1702 the Duke of Marlborough is addressing the states-general of cheesemen in the Hague as “your High and Mighty Lordships,” with no irony.

[8]. Aquinas 1267–1273, Second Part of the Second Part, Q. 77, art. 4, “I answer that.”

And not all the Desert Fathers: “A brother said to Pistamon, ‘I am anxious [for my soul] when I sell what I make.’ Pistamon replied, ‘There is no harm in this. . . . Set straight away the price [that is, don’t bargain for advantage]. . . . However much you have, do not stop making things, do as much as you can, provided that your soul is at peace’” (The Desert Fathers: Sayings of the Early Christian Monks, translated by Benedicta Ward [London: Penguin, 2003, p. 56).

[9]. MacLeod 2007, pp. 1, 13. MacLeod detects a decline in the prestige of inventors by the early twentieth century, but I would argue that by then the heroism had been routinized. In A. G. Macdonnell’s comic novel England, Their England (1933) the engineer character, William Rhodes, a northerner, is still to be admired, though a trifle suspect from a southern English and upper-class point of view (Macdonnell was a Scot). MacLeod’s argument, admittedly, is about inventors in the strict sense, not the users of inventions. Yet as Edgerton (1991, 1996, 2005) argues, Britain remains, for all the post-Victorian lament, one of the most inventive economies on earth.

[10]. For a discussion of the bourgeois tendency of the cowboy novel and film, and its tensions, see McCloskey 2006a, pp. 212–230. Hollywood soon became strangely hostile to commerce, as in Giant or Wall Street.

[11]. Cather 1913, p. 58.

[12]. Montaigne, Essays, book 3.2, , “Of Repentance,” quoted in Botton 2005, p. 46; alternatively translated in Montaigne, trans. D. Frame, Essays, p. 614.

[13]. Hexter 1961.

[14]. Cannadine 1994 (2005).

[15]. Appleby 1978, pp. 11–12.

[16]. Nye 2007.

[17]. Marx and Engels 1848 (1988), sec. 1, p. 59.

[18]. Quoted in Leo Marx 1964, p. 190.

[19]. Aquinas 1267–1273, Second Part of the Second Part, Q. 61, art. 2, “I answer that.”

[20]. I owe these ideas to my friends Paul Turpin, as in Turpin (2005), and Samuel Fleischacker, as in Fleischacker (2004).

[21]. http://www.pemberley.com/janeinfo/novlsrch.html.

[22]. A fuller discussion of the illuminating vagaries of the word “honest” is given in McCloskey, forthcoming, The Bourgeois Revaluation.

[23]. On the great chain of being, see Tillyard 1943. Members of the school of literary critics known as the New Historicists, for whom somewhat unreasonably Tillyard is a whipping boy, point out that the great chain acquired its meaning from the challenges to it, Caliban challenging Ariel so to speak. Orthodoxy implies a heterodoxy to be worried about, and suppressed.

[24]. See Ethington 1997; an economist’s use of such ideas is Akerlof 1997.

[25]. Quoted in Ethington 1997.

[26]. Stendhal 1839, p. 147, italics his.

[27]. Stendhal 1839, among many places expressing his contempt for the bourgeoisie (none of them is in style indirect, which would make them possibly contrary to Stendhal’s own views): pp. 90 (“with his mind on nothing but money”), 103 (“Fabrizio. . . thought the middle class ridiculous”), 119 (in the France of Louis-Philippe “the sole passion that has outlived all the rest is lust for money”), 254 (“in the eyes of the middle class exaggeration passes for beauty”), 427 (“in a republic such as America, one is forced to bore oneself the whole day by paying serious court to the shopkeepers in the street, and become as dull and stupid as they are”). But I have not checked the French, and may be wrong.

[28]. Whitman 1855, p. 6.

[29]. The evidence for how much it stuck in the craw of English people in the seventeenth century is reviewed in Appleby 1978, chapter 4, “The Dutch as a Source of Evidence.”

[30]. Otteson 2006, p. 178.

[31]. Sen 1985.

[32]. Mokyr 1990, p. 171.

[33]. Lal 2006, p. 2. Lal here perhaps falls in with Douglass North’s ideas that literal “predation” was common as late as 1688 in England. Lal’s own ideas about the High Medieval origins of property rights are better.

[34]. Appleby 2010, p. 7.

Among the seven principal virtues, faith is the virtue of backward looking, of having an identity.^[1] Keep the faith. Dignity encourages faith. You are dignified in standing, in being who you most truly are, and have been. A Chicagoan. A scholar. A woman. Hope by contrast is the virtue of forward looking, of having a project. Liberty encourages hope. You are free within the terrible limits of scarcity to venture. To change who you are. To start a business making adjustable wrenches. To become a professor of Assyriology. I claim here that the modern world was made by a new, faithful dignity accorded to the bourgeois—in assuming his proper place—and by a new, hopeful liberty—in venturing forth. To assume one’s place and to venture, the dignity and the liberty, were new in their rhetorics.

And both were necessary. My libertarian friends want liberty alone to suffice, but it seems to me that it has not. Changing laws is not enough (though it is a good start—and rotten laws can surely stop growth cold). True, from 1600 on the new dignity and the new liberty normally reinforced each other, and such a reinforcement is one possible source of the economist’s “nonlinearities.” Dignity and liberty are admittedly hard to disentangle.^[2] But dignity is a sociological factor, liberty an economic one. Dignity concerns the opinion that others have of the shopkeeper. Liberty concerns the laws that constrain him. The society and the economy interact. Yet contrary to a materialist reduction, they are not the same. Laws can change without a change in opinion. Consider prohibition of alcohol and then of drugs over the past ninety years. And opinion can change without a change in laws. Consider the decades-long drift toward independence among the English North American colonists.

It matters that dignity and liberty work together. Liberty without dignity, such as the lack of dignity that the wandering merchant faced outside his home city in medieval Europe or China or South Asia or Africa, makes for activity without faithful self-esteem, the eager but lowly and self-despising niggling of the marketplace. Willa Cather wrote in 1931 of “nervous little hopper men, trying to get on,” by contrast with her admired bourgeois successes of the early Midwest, R. E. Dillon and J. H. Trueman, true indeed.^[3] If thus lacking in dignity, the little hopper bourgeoisie is under assault from politics and society and literature, which makes for bad economic politics, as in Habsburg and then Bourbon and then fascist Spain, and $3 a day. A leading example in European history is that of the Jews, liberated legally during the eighteenth and nineteenth centuries but not accorded dignity—with the dismal result of Russian pogroms and Viennese anti-Semitic politics and the Final Solution.

Likewise, dignity without liberty makes for status without hope, merely another version of the hierarchy of olden times, as in the overregulated guild towns of Venice or Lübeck in their maturity. It happened repeatedly early and late that a vigorous, innovating bourgeoisie settled at last for local political power, and ceased innovating, as did (until they awoke during the nineteenth century) the Swiss “patriciate,” or the Dutch “regents.” The merchant aristocracy of Venice was closed in 1297, and yet the Venetians by unusual patriotism and focus were able to hold the golden East in fee for centuries after. The more usual case is that an oligarchy arises, then closes, and then promptly goes to sleep. Sleeping while collecting rents is so much more pleasant than striving. If the bourgeoisie were thus admitted into the elite, but at the price of disabling itself from alert and outward-looking innovation, the modern world would look a good deal like the ancien régime of Northern Italy or the Hansa, at $1 to $5 a day.

All this changed on a large scale, first in Holland, in the Bourgeois Revaluation from the seventeenth through the nineteenth century. People needed to be persuaded to accept the outcome of innovation. It was a complicated cultural task, the creation of what the great economist Joseph Schumpeter, looking back with nostalgia from 1942 on Europe just before the First World War, called a “business-respecting civilization.” But it did happen, and for the first time and uniquely in northwestern Europe, by a series of happy preconditions and accidents. Revaluations of the honorable transcendent, no longer confined to heroism or saintliness or courtly grace, changed society and politics. It became honorable—“Honorable!” the aristocrat snorts—to invent a machine for making screws or to venture in trade to Cathay. By contrast, what Tocqueville called “habits of the heart” did not change much. The initiating change was not psychological (as for example Max Weber claimed in 1905, and Robert Lucas in 2002), nor economic (as Karl Marx and Friedrich Engels claimed in 1848, and Douglass North in 1990), but sociological and historical and political. That is, around 1600 on a big scale in pioneering Holland, and then around 1700 on a bigger scale, and permanently, in innovating Britain, some of the elite began to revalue the town and its vulgar and corrosive creativity.

John Lilburne, one of the gentry-origin, merchant-radicals of London (he was born in the royal place at Greenwich), a Leveller of the English Revolution after 1642, saw it in 1653 as a law of God and England that “no man. . . may be put to answer for anything but wherein he materially violates the person, goods, or good name of another.”^[4] Leave us alone, milord, unless we steal. By the 1669 the Dutch cloth merchant Pieter de la Court was declaring that “a power of using their natural rights and properties for their own safety [‘the pursuit of happiness’ soon became the usual phrase]. . . will be to the commonalty. . . an earthly paradise: for the liberty of a man’s own mind, especially about matters wherein all his welfare consists, is to such a one as acceptable as an empire or kingdom.”^[5] No aristocratic empires or kingdoms, please; we’re bourgeois, and merely want the liberty to get on with the workaday task of pursuing happiness. In 1690 an English merchant to the Ottomans, Dudley North (himself from an aristocratic family), wrote in an even more modern and economistic and bourgeois way that “there can be no trade unprofitable to the public, for if any prove so, men leave it off; and wherever the traders thrive, the public, of which they are a part, thrives also.”^[6] Therefore, laissez faire (make what you want, free of regulation), as the early eighteenth-century French theorists of bourgeois life such as Pierre de Boisguilbert began to say, and later laissez passer (trade what you want).^[7]

Such promarket opinions have never become universal. Though his audience included a big proportion of the merchants and apprentices of businesslike London, Shakespeare’s only plays touching on the bourgeoisie are The Merchant of Venice and The Merry Wives of Windsor. In The Merchant the bourgeois Antonio is silly in his love for aristocratic Bassanio, and the other major bourgeois figure is Shylock. All the other works of the Bard sing of honorable aristocrats or comical peasants or sweet shepherds (priests are notably absent). His honored characters, speaking in blank verse rather than comical prose (The Merry Wives is almost all in bourgeois/commoner prose), reflected the sociology of dignity in his times, and the hierarchical conventions of the Elizabethan theater. The elite took a century or more after the age of Shakespeare to begin speaking of commercial creativity as OK, acceptable, not-to-be-sneered-at, as in all the many works of Daniel Defoe, and then the essays and plays of Addison and Steele, and then the “bourgeois tragedies” on the stages of England and France and Germany, and then above all in the modern European novel. Two centuries after Shakespeare the heroes even in Jane Austen’s novels, though noncommercial gentry, think in terms of sense and sensibility, prudence and love. And dear Jane herself speaks enthusiastically in her letters about her bourgeois business of authorship, and relishes her royalties. Yet anticommercial snobbery even in Britain did not entirely end, ever. You see it in Emma Woodhouse’s ill-begotten advice to Harriet Smith in Emma (1815) not to marry the merely bourgeois farmer Robert Martin. One of Jane’s brothers became for a while an haut bourgeois banker—though two others ended up as aristocratic admirals in the Royal Navy. Aristocratic or Christian virtues never entirely left the imagination of the West, or of the East. They sometimes were mischievous, as in Japanese militarism or American fundamentalism; yet sometimes they were a glorious completion of bourgeois ethics.

The liberty half of the Revaluation was equally, and more famously, slow in coming. The domination of British politics by an illiberal and antibourgeois and indeed antidemocratic Establishment did not entirely end, ever—consult for instance the British TV comedy of the 1980s, Yes, Minister. As the historian Margaret Jacob argued long ago, and as the historian Jonathan Israel has confirmed lately in the history of ideas, the free-market and free-voting “radical Enlightenment” of people like the Levellers, de la Court, Spinoza, Mandeville, Rousseau, Benjamin Rush, Mary Wollstonecraft, and some of the well-named Freemasons was undercut by the more conservative Enlightenment of Locke, Newton, Voltaire, Adam Smith, John Adams, and others of the Freemasons, in the utter liberty of trade that the radicals sometimes favored, among other matters—though note that both sides of the Enlightenment contained admirers of the bourgeoisie.^[8] (And of course the reactionary powers for centuries fought both Enlightenments with galley and with rope. In France during the term of the laws 1686–1759 prohibiting the importation or making of printed calicoes—this to protect wool and linen manufacturers, and so a bourgeois party of the old and mercantilist sort—the Swedish economist and historian Eli Heckscher reported that the measures “cost the lives of some 16,000 people, partly through executions and partly through armed affrays, without reckoning the unknown but certainly much larger number. . . sent to the galleys. . . . On one occasion in Valence, seventy-seven were sentenced to be hanged, fifty-eight were to be broken on the wheel, 631 were sent to the galleys.”)^[9]

In many places in Northwestern Europe, however, the new and liberal bourgeois values, and the Revaluation, triumphed, with startling economic results. The historian of technology Christine MacLeod dates the final apotheosis of the inventor in Britain to the early nineteenth century. Certainly the shift in rhetoric beginning in seventeenth-century Holland needed to be tended, as ideologies do. MacLeod tells for example of the campaign before 1834 to erect in Westminster Abbey—there among the kings and priests and poets—a big statue of the inventor of the separate-condenser steam engine, James Watt (1736–1819; the statue was later shifted to St. Paul’s): “Not to perpetuate,” the inscription reads, “a name which must endure while the peaceful arts flourish, but to show that mankind have learned to honor those who best deserve their gratitude. . . [such as James Watt,] who enlarged the resources of his country, increased the power of man, and rose to an eminent place among the most illustrious followers of science and the real benefactors of the world.” A contemporary asked in vexation “what this vast figure represents, what class of interests before unknown [well, hardly ‘unknown’], what revolution in the whole framework of modern society.”^[10] He was behind the curve. MacLeod notes that the Times as early as April 22, 1826, had declared that inventors were “the elect of the human race.”^[11] She detects during the 1830s “a marked alteration in the attitudes of judges and juries towards patentees. . . . The balance of success in litigation shifted towards prosecutors of infringements, as patentees began to be regarded less as grasping monopolists [of Elizabethan date, for example], and more as national benefactors,” sixty years after Adam Smith had fully articulated the case.^[12] The real benefactors of the world came to be seen as commercial innovators and followers of “science” (which by the way was still being used then in the old sense: Watt was an instrument maker, not a physical “scientist” in the definition later prevalent in English, as was for example his friend the chemist and physicist Joseph Black, who initiated the science of thermodynamics).

Such dignity for innovation and liberty for enterprise are sometimes still opposed, which along with a bad climate and a bad start is why some countries remain poor. True, if supporters of subsidies to American cotton growers were capable of shame, eastern Burkina Faso and the rest of the Sahel would do better. Ethical failures in the global North, such as the rhetoric of zero-sum “protection” and “competitiveness,” contribute to keeping such places poor. Yet even with a bad climate and a bad start and an unethical policy in the North of protecting its own rich farmers and trade unions, and helping them to compete by suppressing competition, such places do not have to remain poor. That’s the difference on past form between Bottom-Billion Bangladesh now and Norway or Japan in 1800, whose poverty then seemed hopeless, an old rugged cross to be taken up without complaint (you’ll get pie in the sky when you die). When a stable though tyrannical country like China or a turbulent though law-governed country like India started to revalue markets and innovation, and to give a partial liberty to commerce, the food and housing and education for the average person commenced exploding. In a few generations China and India, I repeat, if

they don’t revert to anti-innovation, will have a standard of living beginning to approach Eva’s. Already they have entered Collier’s Top Four to Six Billion. Imagine the artistic and intellectual flowering when 37 percent of the world’s population is well-off enough to pick up a brush or pen or flute or computer. An internal ethical change is doing it, and it began in northwestern Europe a little before and after 1700.

It wasn’t “capitalism” that was new in 1700. Markets and nonagricultural property and a town-living middle class in charge of them are very old. The market economy, contrary to what you might have heard, has existed since the caves. The anthropologist Jack Goody declares that “trade was essential to the growth of human life from the earliest times, including the institution of the market and the rise of some specialized individuals (later merchants).”^[13] The invention of full language, by some accounts occurring somewhere between 70,000 and 50,000 BCE in Mother Africa, shows up archaeologically for example in a big and sudden increase in the distance traveled by stone for tools, such as flint or obsidian, scores of miles in trade instead of the former few. So it went, for millennia. The invention of agriculture required a walled town to guard the crop harvested, in Jericho in Israel and Catalhöyük in Turkey, after 8000 BCE. For millennia the towns proliferated, with their markets and their bourgeoisies and their enterprises. In the third millennium BCE the urban merchants from the Indus Valley in what is now Pakistan exported grain and cotton cloth to the towns of Sumer in southern Iraq. Credit and its premise of monetary accumulation is ancient.^[14] Stamped or cast metal coinage was invented around the eighth or seventh century BCE simultaneously in China, India, and what is now Turkey. But long before, and in many places long after, people had used monetary equivalents such as bars of copper or iron, coils of silver, or cattle, or cowry shells, or cacao beans, or the pieces of cloth used as money at Prague in 965 CE.^[15] The big market of Tlatelolco, next door to Tenochtitlan in what is now Mexico City, serviced daily in 1519 CE tens of thousands of customers, paying with cacao beans. “Back at least as far as the third millennium BCE,” writes the economic historian George Grantham, “farmers on some islands in the Aegean Sea were producing olive oil and wine in amounts greatly exceeding domestic consumption requirements.”^[16] Their balance of trade would have been squared with money substitutes like wheat from the mainland, or later with copper bars or tin.

The conventional history of “commercialization” and especially “monetization,” and their opposites “self-sufficiency” and “communal property rights,” with an allegedly sharp distinction between rural Gemeinschaft (inherited, emotional community) and urban Gesellschaft (created, cold society), and a recent “rise of rationality” and a lamentable dominance of Gesellschaft, are for the most part myths, created by German scholars in the nineteenth century under the influence of a Eurocentric Romanticism of race, and in reaction to the universalist claims of the French and Scottish Enlightenments. But on the contrary (and in agreement with the French and the Scots), from the earliest times peasants and townsfolk, farm and factory, were motivated by the same set of human virtues and vices. Ferdinand Tönnies, who developed the vocabulary of Gemein- and Gesellschaft, declared in 1887 that “one could. . . hardly speak of commercial Gemeinschaft.” Yes one can, and for business to function well it must be an emotional community. “The Gemeinschaft of property between husband and wife cannot be called Gesellschaft of property.”^[17] Oh yes, it can, and had better be if wives are to have independent identity.

There is no change in human nature from olden to modern times, and the attribution of a novel “rationality” to a society capable of world wars and modern sports seems at least strange. In particular the townsfolk worldwide appear to have had pretty much the same psychological makeup as the modern bourgeoisie, as we can infer for example from the curses directed at them early in the first millennium BCE by the Hebrew prophets (Amos 8:4–7, Hosea 12:7–8, among many cases). There was no rise in the “rationality” of the bourgeois in, say, the sixteenth century. The businesspeople wanted profit then as now, as do all humans—and as do all forms of life. Grass is rational. The townsfolk wanting profit believed that the very best way to attain it was by arranging for monopolies enforced by corrupt judges and kings and mayors, who then as now were very willing to participate: the wool and linen manufacturers of France, for example, persuaded the state to send importers of cotton cloth to the galleys or the breaking wheels. But the bourgeois were willing to innovate if compelled by competition and enabled by cooperation, and honored to boot. They only awaited the sociological and political Revaluation in northwestern Europe, and the closing of protectionist avenues for local enrichment and the elevation of inventors to fame, to begin innovating on an immense scale, creating a unique and enriching Bourgeois Era.

Nor of course was innovation entirely novel in 1700. Women and men

had always been creative in weaving cloth or knapping arrowheads. An Upper Paleolithic burst of creativity in making tools and ornaments and musical instruments gives another sign of the coming of fully modern language, as does the use of oceangoing boats to get proto-New-Guineans and proto-Australians across the Wallace Line shortly before 40,000 BCE.^[18] Around 4000 BCE the Indo-Europeans of Ukraine, whose remote ancestors had turned left on leaving Africa, appear to have domesticated the horse; and they went on to conquer or repopulate or inspire Europe, Iran, and much of South Asia. Around 3500 BCE the Taiwanese natives, originally from China, and ultimately like all of us out of Africa, appear to have invented the outrigger canoe; and they went on to populate the Pacific.

Until 1800 of our era, however, such innovations had allowed expansion of humans merely in numbers and ecological range, or the replacement of one culture by another, without improvement of the human lot. Until two centuries ago, for Malthusian reasons, the better clothing and better boats had done nothing to change the $3-a-day life—nothing at all, from Zulu farmer to Eskimo hunter. If things got better for a certain group of people, the people had more children, and so things got worse, by what economists call “diminishing returns to labor, given land.” Even the “European marriage pattern,” in which many people did not marry at all, or married late, having lower completed family sizes, made things only a little better, and could not break through $3 a day. True, as the anthropologist Marshall Sahlins argued long ago, and persuasively, the “stone-age economics” of hunter-gatherers allowed working many fewer hours than agriculturists did.^[19] (But the late economic historian Stanley Lebergott sharply contradicted Sahlins’s implied anti-industrial story: “Americans could choose equal simplicity [as the Bushman’s life], and live on 300 nuts a day, half a pound of raw meat, and some vegetables. But they would need to work only 2 hours a week to do so [a fraction even of Sahlins’s low estimate of the time budget], given superior U.S. production methods.”^[20]) Shifting to the laborious cultivation of fields of grain, requiring storehouse and guards, turned out to support cities and temples and then literacy. It was a tradeoff, a sparsely populated hunting/grazing ground of illiterates traded off for a densely populated city with a rich elite and a few readers and many fewer writers (and the seeds, long dormant, of the modern industrial world).^[21] Yet the point here is that neither choice, neither the Amazonian nor the Sumerian, improved the scope of the average person until the industrial world. For most people up to 1800, whether average nomads or average Romans, a typical life was poor, narrow, illiterate, sick, and brief.

What was different after 1800, and with unstoppable force after 1900, was a novel and immense and sustained, almost lunatic, regime of innovation, finally breaking the Malthusian curse. As people enriched, they eventually started having fewer rather than more children, quite against Malthusian expectations—though even with large families, such as in bourgeois England, the enrichment would have taken place, so unprecedentedly powerful was it. The innovation of steam engine or corporate form or airplane or Wal-Mart for the first time made ordinary people richer, then vastly richer, than had the ancient routine of hunter-gatherer or nomadic herder or settled farmer or imperial subject, and encouraged the moderns to have smaller and more educated families. The riches interacted with the society and the polity in a blessed liberalism. Mario Vargas Llosa, the novelist and liberal, argued that one should read the Spanish public intellectual of the 1920s, José Ortega y Gasset, “to rediscover that—contrary to what those people bent on reducing liberalism to an economic recipe for free markets, low tariffs, controlled government spending and the privatization of business, suppose—liberalism is, above all, an attitude toward life and society based on tolerance and coexistence, on respect for the rich history and unique experiences of different cultures, and on a firm defense of liberty. . . . Economic freedom is a key element of the liberal doctrine, but certainly not the only one.”^[22] Think again on the poverty and illiberality of your ancestors, and rejoice.

The text above is an excerpt from Bourgeois Dignity: Why Economics Can’t Explain the Modern World, the second volume of Deirdre McCloskey’s trilogy on the ethical and historical origins of modern prosperity.

[1]. A full defense of this and the other categories of virtues is given in McCloskey 2006a, especially pp. 151–194.

[2]. As the economist Daniel Klein has argued to me.

[3]. Cather 1931 (1992), p. 675.

[4]. Lilburne, “The Just Defense of John Lilburne against Such as Charge Him with Turbulency of Spirit,” 1653, at http://www.strecorsoc.org/docs/defence1.html. After quoting the formulation, H. N. Brailsford commends it as “one of the earliest and one of the boldest state-

ments of the liberal creed,” and notes its strict libertarian implications—but then in the collectivist spirit of the British left in 1961, he rejects them (Brailsford 1961, p. 75).

[5]. De la Court 1669, Part III, chap. viii, “Conclusion.” The wording here is from the 1743 English edition.

[6]. North 1691, preface, p. viii. I have modernized spelling and punctuation here and elsewhere, to avoid pointless distancing of the authors. The distinguished literary critic Stephen Greenblatt praises the Oxford edition’s (1986) modernizing of Shakespeare’s spelling for avoiding thereby “a certain cozy, Olde-English quaintness” (Greenblatt 1997, p. 73). The distance of the olde ffolke should be experienced by their strange thoughts, not by their premodern conventions of spelling and punctuation. For the same reason I have changed British spellings to American, “honour” to “honor” and the like, except in titles. Sometimes I cannot resist retaining “-eth” in sixteenth-century quotations. It’s so cozy and quaint.

[7]. Tribe 1995; Rothschild 2001, p. 20.

[8]. Jacob 1981 (2006); Israel 2001.

[9]. Heckscher 1931, vol. 1, p. 173.

[10]. Dean Stanley, 1834, quoted in MacLeod 1998, p. 96.

[11]. MacLeod 1998, p. 108.

[12]. MacLeod 1998, p. 108.

[13]. Goody 2010, p. 60.

[14]. Cohen 1992. An eloquent summary of the evidence for “capitalist” institutions in ancient Mesopotamia is Baechler 1971 (1975), pp. 37–38.

[15]. Grierson 1978, pp. 3, 5; Demetz 1997, p. 16.

[16]. Grantham 2003, p. 73.

[17] Tönnies 1887 (1957), p. 34.

[18]. Kuhn, and others 2001: they speak of the emergence over a wide area rather suddenly of “redundant, standardized ornament forms” suggesting communicative purposes. The earlier art was rare, and unique, item by item, in design: it appears not to be a result of a talking culture. The evidence from genetic family trees and the (controversial) evidence from historical linguistics of the Joseph Greenberg-Merritt Ruhlen school points also to about the same time. The issue of when humans acquired language, though, is fraught, and recent findings suggest that some signs of it (voice box and brain ability; art; burial) occurred much earlier in Southern Africa.

[19]. Sahlins 1974 (2004), esp. chap. 2, “The Domestic Mode of Production: The Structure of Underproduction.”

[20]. Lebergott 1993, pp. 63–64.

[21]. The economics of hunters vs. farmers was lucidly outlined by Lebergott 1984, pp. 13–16.

[22]. Vargas Llosa 2008, p. 68.

By contrast, if you live nowadays in a thoroughly bourgeois country such as Japan or France you probably spend about $100 a day. One hundred dollars as against three: such is the magnitude of modern economic growth. The only people much better off than $3 or so up to 1800 were lords or bishops or some few of the merchants. It had been this way for all of history, and for that matter all of prehistory. With her $3 a day the average denizen of the earth got a few pound of potatoes, a little milk, an occasional scrap of meat. A wool shawl. A year or two of elementary education, if lucky and if she lived in a society with literacy. She had a 50-50 chance at birth of dying before she was thirty years old. Perhaps she was a cheerful sort, and was “happy” with illiteracy, disease, superstition, periodic starvation, and lack of prospects. After all, she had her family and faith and community, which interfered with every choice she made. But she was desperately poor, and narrowly limited in human scope.

Two centuries later the world supports more than six-and-half times

more souls. Yet contrary to a pessimistic “Malthusian” belief that population growth would be the big problem, the average person nowadays earns and consumes almost ten times more goods and services than in 1800. Despite the disturbing pauses during the three dozen or so recessions that have roiled the world’s economy since 1800, nearly every trough of a business cycle has been followed in a few years by a new all-time peak in the welfare of the poor of the earth, and the cases of very long recoveries were those from the two world wars, now distant.^[2] Starvation worldwide is therefore at an all-time low, and falling. Literacy and life expectancy are at all-time highs, and rising. Liberty is spreading. Slavery is retreating, as is a patriarchy enslaving of women.

In the now much richer countries, such as Norway, the average person earns fully forty-five times more than in 1800, a startling $137 a day, or $120 a day for the average person in the United States, or $90 in Japan.^[3] The environment—the concern of a well-to-do and educated bourgeoisie—is in such rich places improving. Even the merely improving places, like China, which is still very poor at $13 a day but much better off than in 1978, have started to care about the future of the earth.^[4] Economic history has looked like an ice-hockey stick lying on the ground. It had a long, long horizontal handle at $3 a day extending through the two-hundred-thousand-year history of Homo sapiens to 1800, with little bumps upward on the handle in ancient Rome and the early medieval Arab world and high medieval Europe, with regressions to $3 afterward—then a wholly unexpected blade, leaping up in the last two out of the two thousand centuries, to $30 a day and in many places well beyond.^[5]

True, some whole countries, and many people even in rapidly growing places like China or especially India, remain terribly poor. Out of the 6.7 billion people on the planet the terribly poor constitute a “bottom billion,” thankfully shrinking, but for the present suffering the appalling $3 a day that had been the human lot since the African savannah. Some hundreds of millions live on a bare dollar, sleeping on mats on the streets of Mumbai.^[6] Some 27 million are literal slaves, such as the Dinkas in Sudan. And many girls and women worldwide, as in much of Afghanistan, are held in slavish ignorance. Yet the share of the terribly poor and the terribly unfree in world population is now falling faster than at any time in history. World population has in fact been decelerating since the 1970s, and in a few generations will actually start falling.^[7] Look around you at modern family sizes.

In fifty years, if things go as they have since 1800, the terribly poor will have become adequately nourished. Slaves and women will be largely free. The environment will be improving. And the ordinary person worldwide will have become bourgeois. In 1800 there were good reasons to be pessimistic—though many people in that dawn were in fact optimists. Nowadays, although an age of widely circulating tales of impending catastrophe, there are many more reasons to be optimistic about our future.

In a good deal of the world the optimistic outcome has already happened. Marxists have long been vexed by the complacently bourgeois character of the American working class. The economic historian Werner Sombart asked in 1906, “Why is there no socialism in the United States?” and answered that “all socialist utopias come to grief on roast beef and apple pie.”^[8] It turned out that the prosperous Americans were merely showing the way for the British and the French and the Japanese. We seem to be on track to merge not into a universal class of the proletariat but into a nearly universal class of the innovative bourgeoisie. (I use the French word bourgeoisie in its wide sense, as the hiring or owning or professional or educated class [bourgeois, without the -ie on the end, “boor-zhwa,” is the adjective, and is also the male person of the class, singular and plural], usually in towns, the “middle class.” I do not use it in its frequent Marxist sense as la haute bourgeoisie, the class of captains of industry alone.) Your physical therapist, now earning $35 an hour, or $280 each work day, at AthletiCo, who went to university and then to graduate work and now to continuing education, does not regard himself as a wage slave.^[9] He works four days a week, and his wife, also a physical therapist, three. He and she can at any moment become a little company in private practice. The relations of production no longer tell much about the mentality or the prospects of hired labor. You work for a wage. Do you feel immiserized? Reflect, oh dear bourgeois-by-education reader, on the real and demeaning poverty of your own ancestors in 1800, and offer thanks to the Bourgeois Era and to the Age of Innovation.

In 2007 the economist Paul Collier observed that for decades “the development challenge has [been thought of as] a rich world of one billion people facing a poor world of five billion people. . . . By 2015, however, it will be apparent that this way of conceptualizing development has become outdated. Most of the [formerly poor] five billion, about 80 percent [or four billion], live in counties that are indeed developing, often at amazing speed.”^[10] Collier is right, and the sums in 2015 will be more like six billion rich or richify-ing people facing a bottom billion of persistently poor.^[11] Witness richifying China and India nowadays—places still poor by the standard of Hong Kong or Belgium, but growing in real income per head at amazing, unprecedented speeds, twice or three times faster than other countries—7 to 10 percent per year. Their growth rates are faster than the rates at which the United States or Japan ever grew, and imply a quadrupling of human scope every twenty or fourteen years, in a short generation. In two such generations their real incomes per head will have risen by a factor of sixteen, to the $48 a day the United States enjoyed in the 1940s. The fact provides some scientific ideas about what to do for the bottom billion or so.

Yet Collier also says that “since 1980 world poverty has been falling for the first time in history.” That last is mistaken (though perhaps he means the absolute numbers of poor people instead of their share, in which case maybe he is right). As a share of all the world’s population the world’s poverty has been falling not for two decades but for two centuries. A higher and higher share have become since 1800 those $30- or $48- or $137- or $280-a-day folk, in the top four to six billion. Witness again Norway and Japan, once abysmally poor. The history provides some scientific ideas about how we got here and where we are going.

The last two centuries worldwide favored the ordinary person, especially a person who lived in a bourgeois country. Consider a third cousin once removed of mine, thirty-five-year old Eva Stuland, in Dimelsvik on the Hardanger Fjord of western Norway. In 1800 our mutual ancestors had been $3-poor. Compare Bangladesh. Yet by now, ten generations further on, the honest, educated, and oil-blessed Norwegians have the second-highest average income in the world. Expressed in American prices of 2006 it is fully $50,000 a year for every man, woman, and child, that $137 a day. (Tiny Luxembourg ranks first out of 209 countries at $60,000 a head; closed-citizenship Kuwait ranks third at $48,000; and the big U.S.A. lumbers along at merely fourth, $44,000—nonetheless a stunning increase over the U.S.A. in 1900 or 1950, and most stunningly for the American poor.)^[12] Fru Stuland consumes with her $137 a day a good deal of Belgian chocolate and a summer home in the mountains and a nice little Audi (her husband Olaf has the BMW). Her daily earnings are of course much higher than $137—compare the AthletiCo therapist—because she works only Monday through Friday, with ample vacation time, and the average consumption per Norwegian includes allotments for Eva’s young children and for her parents and her grandmother on pensions. She and the rest of the Norwegians work fewer hours per year than the citizens of other rich countries, and many fewer hours than the workaholics in Japan or the U.S.A. At birth Eva could have expected to live to age eighty-five. Her own two children will probably live even longer, and certainly will be even better off financially than she is, unless they decide on careers in fine arts or charitable works—in which case the satisfactions from such sacred careers amount to income.^[13] Norway contributes more per capita to international governmental charities than any other country. Eva supports nonviolent and democratic institutions. She graduated from the University of Bergen, studying mathematics. She works as an actuary in an insurance company, getting six weeks of paid vacation a year in Sicily or Florida. Her husband (who is by no means her lord and master) worked as a diver on the oil rigs for a few years, but now is deskbound at Statoil’s regional office. As a girl at school Eva read many of the works of Ibsen in Norwegian, and a couple even of Shakespeare in simplified English. She’s been pleased to attend performances of both at the National Theatre in Oslo over the mountains. Her home resonates with recordings of the music of Edvard Grieg, who in fact was a not-so-distant relative on her mother’s side.^[14]

Why did it happen? How did average income in the world move from $3 to $30 a day? How did the Norwegians move from being poor and sick and marginally free and largely ignorant to being rich and healthy and entirely free and largely educated?

The main point of this book is that the hockey-blade leaps, such as Norway’s from $3 to $137 per head, with its cultural and political accompaniments, did not happen mainly because of the usual economics. That is, they did not happen because of European trade or Dutch investments or British imperialism or the exploitation of sailors on Norwegian ships. Economics did matter in shaping the pattern. It usually does. Exactly who benefited and exactly what was produced, and exactly when and where, was indeed a matter of economics—a matter of incomes and property and incentives and relative prices. If a historian doesn’t grasp the economics he will not understand the pattern of modern history. The pattern was shaped by the trade in cotton and the investments in seaports, by the supply of steam engines and the demand for elementary education, by the cost of wrought iron and the benefit of railways, by the plantation exploitation of slaves and the market participation of women. Economics of a material sort can surely explain why Americans burned wood and charcoal many decades longer than did the forest-poor and coal-rich people of inner northwestern Europe. It can explain why education was a bad investment for a British parlor maid in 1840, or why the United States rather than Egypt supplied most of the raw cotton to Manchester, England, or to Manchester, New Hampshire, or why indeed the cotton growers of the present-day African Sahel are damaged by protection for American cotton. Economics can explain why a comparative advantage in making cloth out of cotton shifted from India to England and then back to India.

Economics, though, can’t explain the rise in the whole world’s (absolute) advantage from $3 to $30 a day, not to speak of $137 a day. That is the main scientific point of the book. Economics can’t explain the blade of the hockey stick. It can’t explain the onset or the continuation, in the magnitude as against the details of the pattern, of the uniquely modern—the widespread coming of automobiles, elections, computers, tolerance, antibiotics, frozen pizza, central heating, and higher education for the masses, such as for you and me and Eva. If an economist doesn’t grasp the history she will not understand this most important of modern historical events. An economics of a bourgeois or Marxist sort does not account for the unprecedented size and egalitarian spread of the benefits from growth, only the details of its pattern. Material, economic forces, I claim, were not the original and sustaining causes of the modern rise, 1800 to the present. Economics does most usefully explain how the rising tide expressed itself in macrogeographical detail, channeled into this or that inlet, mixing with the river just so far upstream, lapping the dock to such-and-such a height. But the tide itself had other causes.

What then? I argue here, and in complementary ways in the third and last volume to follow, that innovation (not investment or exploitation) caused the Industrial Revolution. Many historians and economists would agree, so there’s not much that is surprising in that part of the argument. But I also argue—as fewer historians and very few economists would—that talk and ethics and ideas caused the innovation. Ethical (and unethical) talk runs the world. One-quarter of national income is earned from sweet talk in markets and management.^[15] Perhaps economics and its many good friends should acknowledge the fact. When they don’t they get into trouble, as when they inspire banks to ignore professional talk and fiduciary ethics, and to rely exclusively on silent and monetary incentives such as executive compensation. The economists and their eager students choose Prudence Only, to the exclusion of the other virtues that characterize humans—justice and temperance and love and courage and hope and faith—and the corresponding sins of omission or commission. The theorists of prudence forbid ethical language, even in the word-drenched scene of banking. Such a reduction to Prudence Only works reasonably well in some parts of the economy. You’ll do well to choose Prudence Only, and silent incentives, when trying to understand covered interest arbitrage in the foreign exchange markets. But it doesn’t explain the most surprising development of all.

In particular, three centuries ago in places like Holland and England the talk and thought about the middle class began to alter. Ordinary conversation about innovation and markets became more approving. The high theorists were emboldened to rethink their prejudice against the bourgeoisie, a prejudice by then millennia old. (Sadly, the talk and prejudice and theory along such lines didn’t alter right away in China or India or Africa or the Ottoman lands. By now it has, despite resistance from European progressives and non-European traditionalists.) The North Sea talk at length radically altered the local economy and politics and rhetoric. In northwestern Europe around 1700 the general opinion shifted in favor of the bourgeoisie, and especially in favor of its marketing and innovating. The shift was sudden as such things go. In the eighteenth and nineteenth centuries a great shift occurred in what Alexis de Tocqueville called “habits of the mind”—or more exactly, habits of the lip. People stopped sneering at market innovativeness and other bourgeois virtues exercised far from the traditional places of honor in the Basilica of St. Peter or the Palace of Versailles or the gory ground of the First Battle of Breitenfeld.

To speak for a moment to my economist colleagues, some of us have saved our models in the face of a dawning realization of how radical the development was in the eighteenth and especially in the nineteenth and twentieth centuries by speaking of “nonlinearities” or “economies of scale” or “multiple equilibria.” Though such tricks are fun to think about, they don’t work scientifically. Some other economists, now led by an astonishing group of economic historians with a serious focus on growth theory and growth theorists with a serious focus on history, argue instead that Europe, and especially Britain, was preparing for the blade of the hockey stick for centuries. The new history has a theme similar to an old history attributing Europe’s excellence to its ancient civilization, Christian and humanist, from Israel and Greece, and the Germanic tribes in the forests. The trouble is, as the best among the economists admit with puzzlement, that India and the Arab lands and Iran and China and especially Japan were equally excellent and ready. Many such rich areas long before had the low interest rates and good property laws praised by the economists—China in the seventeenth century, Northern Italy in the fifteenth century, the Arab world in the tenth century, Rome in the first century. But for millennia no blade of the hockey stick ensued.^[16] When ideology changed, it did. I am claiming that the economy around the North Sea grew far, far beyond expectations in the eighteenth and especially in the nineteenth and most especially in the twentieth century not because of mechanically economic factors such as the scale of foreign trade or the level of saving or the amassing of human capital. Such developments were nice, but derivative. The North Sea economy, and then the Atlantic economy, and then the world economy grew because of changing forms of speech about markets and enterprise and invention. Technically speaking (I continue saying to my economist colleagues), the new conversation caused the dimensions of the Edgeworth box to explode. Pareto-optimal reallocation by exchange within a fixed box, or reallocation by aggression along the contract curve, or the modest expansion of the box achievable by investment, was not what happened—though it is these three which economists want most to talk about, because they understand them so well. On the contrary, the production possibility curve, the dimensions of the Edgeworth box, leapt out, radically, and from the point of view of conventional economics, inexplicably.^[17]

The argument in truth should not shock a thoughtful economist. All economists have realized since the 1870s that economics is something that happens between people’s ears. The economists learned so from the various forms of neoclassical economics Mengerian or Marshallian, or from institutionalism or from modern Marxism. Valuations, opinions, talk on the street, imagination, expectations, hope are what drive an economy. In other words, you don’t have to be a materialist, denying the force of ideas, just because you are an economist. Rather to the contrary. One of the leading contributors to the new growth theory, Robert Lucas, declared that “for income growth to occur in a society, a large fraction of people must experience changes in the possible lives they imagine for themselves and their children. . . . In other words. . . economic development requires ‘a million mutinies.’”^[18] Lucas’s formulation is more psychological than the sociological and rhetorical one proposed here. But in any case, to believe that habits of the lip changed in the seventeenth and especially the eighteenth century, for various good and interesting reasons—some in turn material, some autonomously rhetorical—does not deny conventional economics a place. It merely takes speech seriously within the economy and the society. It initiates a humanistic science of the economy, “humanomics” as the economist Bart Wilson calls it. Speech, not material changes in foreign trade or domestic investment, caused proximally the nonlinearities, or (expressed in more conventional theorizing) the leaping out of the production possibility curve, the imaginings of possible lives. We know this empirically in part because trade and investment were ancient routines, but the new dignity and liberty for ordinary people were unique to the age. What was unique was a new climate of persuasion, out there in the shops and streets and coffeehouses populated by the bourgeoisie. As I shall try to persuade you, oh materialist economist.

The text above is an excerpt from Bourgeois Dignity: Why Economics Can’t Explain the Modern World, the second volume of Deirdre McCloskey’s trilogy on the ethical and historical origins of modern prosperity.

[1]. Strictly speaking, “1990 international Geary-Khamis dollars”—so I’ve inflated a bit (using the consumer price index in the USA since 1991) to bring the figures in a rough and ready way up to 2008 prices in the United States. That is,f the $3 is to be understood as what you would live on in Chicago, say, in 2008 if you had the misfortune of the world’s average real income in 1800. The figures were estimated by the late lamented Angus Maddison in his amazing palace of numbers, The World Economy (2006), these particular numbers on p. 642. (It will become apparent how much I have relied on Angus’s work, which would already have earned a Nobel prize if economics were not so disdainful of “mere data collecting”; imagine how astronomy or biology would have done with such an attitude! Anyway, his work, for me and for many others, is sine quo nullum. For “two centuries ago” I used the average of his world figures for 1700 and 1820. Economic historians agree on a factor of ten or so worldwide since the eighteenth century: for example, Easterlin 1995, p. 84.

[2]. In Maddison’s calculation of the real per capita GDP of 12 West European countries, 1869 to 2001 (Maddison 2006, pp. 439–441; a reasonable aggregate since they were certainly tied by the business cycle, and were all developing), eight out of the twelve new highs were exceeded within only two or three years after the big crashes (1884, 1890, 1900, 1907, 1974, 1980, and 1992); after the two severe depressions (1875 and 1929) the peaks took as long as six or seven years to be exceeded; and the two world wars began in peak years not to be exceeded for sixteen (1913) and twelve years (1939).

[3]. World Bank 2008, pp. 161, 216, 112.

[4]. World Bank 2008, p. 58.

[5]. The “bumps on the handle” follow Walter Scheidel and Gregory Clark, reported in Zanden 2009, p. 274, fig. 35.

[6]. The “bottom billion” is Paul Collier’s phrase (Collier 2007). The Norwegian ratio to average entire-world gross national income per capita in 2006 (at purchasing-power parity: adjusting for the cost of living) was 5.4 (according to World Bank 2008, pp. 8, 161). And relative to the average of low-income countries by World-Bank definitions the ratio was 27, that is, $137 a day compared with the low-income average of $5 a day (World Bank 2008, p. 10).

[7]. Maddison 2006, p. 615; U.S. Census Bureau, Population Division 2009, projecting that by 2050 the rate will be down to 0.5 percent per year, as against its historic peak of over 2.0 percent in the 1960s.

[8]. Sombart 1906.

[9]. Bureau of Labor Statistics, U.S. Department of Commerce, at http://www.bls.gov/oes/current/oes291123.htm.

[10]. Collier 2007, p. 3 (and for the next quotation, p. x).

[11]. World population in 2009 was about 6.77 billion.

[12]. Again the figures are at (U.S.A. purchasing-power parity, from World Bank 2008.

[13]. Abbing 2002.

[14]. Eva is a fiction—though in truth I have plenty of such cousins at Dimelsvik.

[15]. McCloskey and Klamer 1995.

[16]. A recent and comprehensive survey is Zanden 2009. On p. 289 and in many other places he admits that China and Japan were ready.

[17]. I am indebted to a conversation in August 2009 with Karl Wärneryd of the Stockholm School of Economics for this way of putting the point.

[18]. Lucas 2002, p. 17. Zanden (2009) uses Lucas’s remark as the motto for his book, but the age of a million mutinies was after the date he ends his own researches, 1800.