As Your Own Life Shows

The enrichment came mainly from bourgeois liberty and creativity unbridled, not from piling up constraints on voluntary deals or from redistributing what income we get from the deals.

You doubt it’s as rosy as I say. I sympathize with your skepticism. You are bombarded daily with confidently asserted pessimisms, back-projected to the beginnings of the modern world, in the newspapers and on TV and in the latest Chicken-Little book from a respected (noneconomic) scientist. As the science writer Matt Ridley, like me a (rational) optimist, puts it:

I find the world is full of people who think that their dependence on others is decreasing, or that they would be better off if they were more self-sufficient, or that technological progress has brought no improvement in the standard of living, or that the world is steadily deteriorating, or that the exchange of things and ideas is a superfluous irrelevance.^[1]

Such pessimism is favored perhaps by our genetic inheritance of sharp attention to dangers.^[2] It certainly sells books and TV shows and newspapers. News is by definition mostly bad, and modern media tell of disasters from all the wide world. Romanticizing the good old days, compared with which our latter days look so shabby, has been standard since the Romantic movement, and anyway was a conventional trope among the Greeks and Hebrews and Hindus celebrating an age of gold. Science fiction and horror fiction, offshoots of Romanticism, have tended since their invention in the nineteenth century to predict dystopias, reflecting the pessimism about the disturbing betterment current at the time. Consider Mary Shelley’s Frankenstein; or, The Modern Prometheus (1816), H. G. Wells’s The Time Machine (1895), John Wyndham’s The Day of the Triffids (1951), or Matt Damon and Jodie Foster in Elysium (2013). It is a rare science-fiction writer, a Robert Heinlein or an Ursula K. Le Guin, who does not see the future as a version of scientific mischance or class struggle or imperial fascism or, most recently, environmental catastrophe.

But look around at the material betterments since 1800 in such places as your own room, located in a high-rise unbuildable before the 1880s with a condominium agreement first invented in Puerto Rico in 1958:

the twenty ballpoint pens stuffed into a mass-produced coffee cup, pens and cups greatly cheapened after World War II,

the electric lights much brighter and more convenient than candles or kerosene lamps,

the running water and sewer system, making possible the indoor toilet that your great-aunt’s farm in Illinois in 1930 did not have,

the central heating rare even in rich Britain before 1970,

the thin TV screen hanging on the wall with access to many hundreds of idiotic programs,

the magnesium ladder standing over in the corner, safer and in terms of work-hours-to-buy cheaper than anything comparable available before 1960,

the family photos, better than the cutout profiles available in 1800,

the scissors for making cutouts, hanging on a nail on a hardwood bookcase imported from the other side of the world in container ships invented in 1957—things all cheaper in hours of work per item than they were in 1800 or 1960,

the cheap but serviceable paper on which to scribble grocery lists for the Trader Joe’s store, driven to in a car that is cheaper in labor-hours than a horse and wagon in 1850 or a bicycle early in its improvement in 1880,

the safety pins and staplers, invented in the nineteenth century,

the machine-made quilt on your advanced mattress, better aesthetically and functionally than most handmade quilts and down mattresses available in 1900,

the faux-hardwood flooring, produced by better band saws and better veneers made with better scalpers of logs and better glue,

the dropped ceiling, which so pleasantly covers the pipes for fire sprinklers and the wiring for smoke detectors,

the lovely mass-produced carpeting,

the lucid plate-glass window,

the organized distribution to and from Whole Foods of that bowl of apples over there,

the scattered books written by a multitude of highly educated people,

the copies of scholarly articles on modern economic growth, copies made by xeroxing, invented in 1959 and costing now a small fraction in labor-time-to-buy of what it cost then,

the fine quality of the inexpensive book you now hold,

the ease of access to the Kindle edition if you were too cheap to buy the book,

the contact lenses that allow you to read it,

the computer on which you take admiring notes about it,

the college sheepskin on the wall, the acquiring of which allows you to grasp the book’s profundity,

and even the better aluminum studs behind the wall, preventing the better wall board painted with better paint and affixed with better cordless screwdrivers from caving in when you punch it out of sadly misled vexation at some of the more irritating factual claims in the book.

All this. And note how all of it arose over the past two centuries only, in a trade-testing economy.

It did not arise from the government or from unions, as fine as such institutions are in other ways. I do earnestly believe that government “has a role,” as my friends on the left relentlessly put it to me. For example, I admire the Civil Rights Act of 1964, especially its overturning of legal segregation, and the Voting Rights Act of 1965, overturning voter suppression. And as for unions, I belonged when I was seventeen to the National Maritime Union, and now in old age I belong enthusiastically—reacting to the union-busting folly of our local version of bureaucracy run mad in the “administrative university”—to a union for professors at the University of Illinois at Chicago, affiliated with the American Federation of Teachers, AFL-CIO. You gotta go down and join the union. I’m a union maid.

But I do not imagine that expanding the government or joining the union will radically improve the material condition of my people, rich or poor. That would be mistaken economics and mistaken history. The enrichment came mainly from bourgeois liberty and creativity unbridled, not from piling up constraints on voluntary deals or from redistributing what income we get from the deals. Wages and working conditions, after such shocking enrichment, are in fact determined largely by supply and demand, not by regulations passed by Congress or by struggles on the picket line. All boats do rise. Professors and artists and child-care workers, whose productivity has not increased for millennia, benefit from being substitutes in the long run for farmers and truck drivers and medical doctors, whose productivity during the Great Enrichment has risen enormously. A professor with an antique technology of chalk-and-talk could have instead entered farming or medicine, which means that she must earn, roughly at least, what such utterly transformed jobs earn. The professor cannot earn in equilibrium one-tenth, say, of what farmers earn, not because it would be unfair but because she could move, as the poet Robert Frost did in the early twentieth century, between farming and teaching. A ten-to-one differential is not sustainable if a sufficient number of people can move. Such reasoning was Adam Smith’s chief analytic contribution to the emerging political economy of the eighteenth century.

If such an economic analysis were not roughly true in the world, one could not explain why Walmart employees, not unionized, make conservatively measured twenty times what the average South Asian employee makes. The explanation is obviously not solidarity forever or bargaining skill, or the more stringent regulatory constraints that Walmart faces in the United States. Walmart would not be in business if the legally required minimum wage were thirty times what it earned from hiring a laborer, no more than it would if the minimum wage were raised to $300 an hour. The gap between the United States and South Asia arises not from acts of Congress but from the economist’s “marginal productivity theory,” the commercial demand for labor determined by how much money for the employers the average employee produces in an extra hour of work. Marginal, or for that matter total, productivity depends on how fully an economy has been able to take advantage of bourgeois betterment. Trade-testing of new ideas, not government-regulating or union-joining, did it.

§

The English colonists in North America at first lived on $2 a day. The historical reconstruction of the Plimouth Plantation in southeastern Massachusetts shows how the settlers lived in the 1620s—drafty, unplastered walls, without glass windows, enclosing the sole room on the ground floor, and up a ladder to a sleeping loft. Six people lived there (in northern Europe typically there were also cows in the back for additional heat, and smell). The mother had one skirt for Sunday and one or two for the rest of the week. The newcomers faced disease, often fatal, in the first, “seasoning” generation, and smallpox and dysentery were ongoing threats, especially to children. The television series Colonial House in 2004 showed people trying to live in the way of pioneers in Maine in 1628, to similar effect. It was no bag of bluebirds. (True, in America, as was not the case among most Europeans at the time, there was from the beginning usually sufficient food, though still reliant on the harvest. Smith was right to note in 1776 of the English colonies that “a dearth has never been known there.”^[3])

Yet by 2011 the average resident of the United States consumed, correcting for inflation, $132 a day, sixty-six times more housing, food, education, furniture than in 1620—a betterment of 6,500 percent. Such a figure is conservatively measured, not allowing for the better quality of today’s goods and services. The rise is a great deal larger per person if you adjust for the better quality of modern medicine (antibiotics, painless dentistry) and travel (cars, airplanes) and lighting (incandescent bulbs and now LEDs) and knowledge (philosophy and literature, physical science and, yes, economics). Such bettering would yield, according again to the always useful economist William Nordhaus, a factor as high as the rough yet justifiable figure at the upper end of the possibilities I keep mentioning, a factor of 100.^[4] Thomas Babington Macaulay (1800–1859), with a longer perspective than his depressed contemporaries the classical economists, remarked in his History of England from the Accession of James the Second (1848):

It is now the [Romantic] fashion to place the Golden Age of England in times when noblemen were destitute of comforts the want of which would be intolerable to a modern footman, . . . when to have a clean shirt once a week was a privilege reserved for the higher class of gentry, . . . when men died faster in the lanes of our towns than they now die on the coast of Guiana [thus seasoning illness]. We too shall, in our turn, be outstripped. . . . It may well be, in the twentieth century . . . that laboring men may be as little used to dine without meat as they now are to eat rye bread; that sanitary police and medical discoveries may have added several more years [try thirty more, Tom] to the average length of human life; that numerous comforts and luxuries which are now unknown, or confined to a few, may be within the reach of every diligent and thrifty working man.^[5]

In the reign of Marx and materialism, 1890–1980, it was the fashion to deprecate Macaulay as hopelessly optimistic about progress. In the same extraordinary year of 1848 in which Macaulay published the first volume of his History, John Stuart Mill published the first edition of his Political Economy, in which he predicted merely modest betterment, modest in view of diminishing returns and the principle of population. Even in its last edition, 1871, when the betterment was becoming obvious, Mill did not modify his restrained and un-Macaulayite enthusiasm for the twentieth century to come. But Macaulay, not Mill, was more correct in his predictions, and his post-dictions. The anti-Whig-history pessimists, from Mill to Herbert Butterfield, were mistaken (as Butterfield himself eventually conceded, becoming himself a Whig historian). Fernand Braudel, the soft-left French historian of “capitalism,” observed that even the rich in olden times suffered a world in which “heating was still poor, ventilation derisory.”^[6] In a rich modern economy even quite poor people have access to vaccination, air conditioning, automobiles, reliable birth control, the Internet, and flush toilets. The aristocrats attending on the very Sun King himself at Versailles in 1715 had access instead to smallpox, hand-held fans and open windows, bumpy carriages, leaky condoms, a small list of censored books, and relieving themselves in the staircases of Le Palais.

You are doubtful still. Open, then, your own closet. Compare it with the volume and quality of clothing possessed by even the richest woman in Plimouth in 1620, or for that matter the above-average woman in Amsterdam in 1800, or all but the extremely well-off in London in 1900 (if you doubt that last, watch the 1999 BBC’s series 1900 House; or while in London visit for a view of eighteenth-century life the Dennis Severs House for its family of Huguenot-descended silk weavers).

Further, a good deal of our present flow of income in the rising number of rich countries goes into consumer durables (as the economists call them), things that yield services over time rather than being, like pizza or movie tickets or copies of the Printer’s Row Journal, used up in a day or a week or a year. The very fact of our massive expenditure on consumer durables betokens an enriched population, which can invest in long-lived items such as cars and granite kitchen counters instead of hustling to get today’s food and drink. Look around at your bedroom. The $2,000 Tempur-Pedic mattress and the $500 Bose clock radio beside it contain together as much productive power as the entire average yearly income of a person in Ghana or Pakistan or Kyrgyzstan.

The point is stronger still, since the average age of U.S. consumer durables of your house, except for the house itself, is merely a little over four years. Every four and a half years the automobile or the coat or the Bose is, on average, bought again, even though many of the “old” items have no secondhand market to offset the cost of novelty. Such churning of consumer durables is not peculiar to the United States. In Japan the tiny living spaces are refurnished frequently, and the unfashionable furnishings, such as working color TVs and entire bedrooms sets, are left at the curb to be picked up by junk men specialized in the trade.^[7] Your mattress and the Bose together could pay for every fourth year of a Pakistani income. Select a few other items—a fridge, say, or that bedroom set, and you’re set for many, many years of Pakistani life. At a higher income, at say the world’s and Brazil’s average of $33 dollars a day, if you sold your $220,000 average American house (supposing you owned it clear of a mortgage) and took a small apartment or a shack in a favela in Rio you could live on that sale alone for fully eighteen years of leisure at the US average income in 1941, playing soccer barefoot on the beach at Copacabana.

§

In other words, modern economic growth emerged only in the last couple of centuries out of 1,500 centuries, or out of 500, or 100, or 10, or 5. A Malthusian could only predict—from the sevenfold increase of world population 1800 to the present—a homeostatic reversion to $3-a-day misery, or worse. Some still do, while trumpeting their status as Scientists devoted to facts. Our beloved friends the environmentalists and our less-beloved friends the population-control mavens cling to the Malthus of 1798 as their guide.

They have been gravely mistaken. Just about the time that Malthus so persuasively explained it, the old Malthusian constraint, luckily for us, began to dissolve.^[8] Nowadays, and contrary to a Malthusian belief still widely credited, having more humans on the planet is good for the rest of us.^[9] The whole of humankind, and no European imperium or class exploitation about it, broke decisively with the homeostatic equilibrium of being poor and sick. Trade-tested betterment exploded.

The text above is an excerpt from Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, the third volume of Deirdre McCloskey’s trilogy on the ethical and historical origins of modern prosperity.

[1] Ridley 2010, p. 8.

[2] Adrian Bowyer of the RepRap Project suggested the survival point to me.

[3] Smith 1776, 1.2.

[4] The factor of 100 is argued in a little more detail in Bourgeois Dignity, pp. 54–59, using Nordhaus on lighting and his suggested extrapolations (Nordhaus 1996). Fouquet and Pearson (2011) confirm Nordhaus on lighting.

[5] Macaulay 1848, end of chap. 3. Tom G. Palmer drew my attention to the passage.

[6] Braudel 1967 (1973), p. 235. And yet rich Romans had floor heating, denied to rich Europeans until recently.

[7] Bailey 1999.

[8] See, for example, Kenny 2011, Kenny n.d.

[9] Simon 1981 (1996).

Since 1776, there has been a 3,000% explosion in the average real income per person in the world.

Nothing earlier came remotely close.

It was caused not by the usual suspects of investment or exploitation, but by liberty inspiring a flowering of human creativity—in the arts and sciences, and in the economy.

Though Brazilians and many other Latin Americans are uneasily aware that their economies lag some, and sometimes a lot, the Great Enrichment is nonetheless evident everywhere from the Border to Tierra del Fuego, from Santiago in Chile to Recife in Brazil.

The Latin Lag can be overcome. Brazil, like much of Latin America, needs essential liberalism to do it.

Check out my new book, Liberdade: 100 Conversation Starters on Liberalism, Latin America, and Brazil