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Thursday, October 12, 2017

Reviewing Deirdre McCloskey’s Bourgeois Trilogy

McCloskey's Bourgeois trilogy explores the underlying causes of the Industrial Revolution and the huge improvements it brought about.

Nothing molds our politics as much as our understanding of history. Perhaps the most influential book in the entire socialist tradition is Friedrich Engels’s The Condition of the Working Class in England (Engels 1845). In that work, published just when the Marx-Engels partnership was beginning, Engels laid the ground for a good chunk of future historiography. Engels, a German bourgeois, was shocked by the living conditions of the poor in London and immortalized them.

In the third book of her trilogy on bourgeois values, economic historian Deirdre McCloskey acknowledges that works like Engels’ were a form of “salutary wrenching”: “anyone who reads such books is wrenched out of a comfortable ignorance about the other half.”

And yet,

waking up does not imply despairing, or proposing the overthrow of the System, if the System is in fact over the long run enriching the poor, or at any rate enriching the poor better than those other systems that have been tried from time to time (McCloskey 2016, 42).

Deirdre McCloskey’s trilogy (Bourgeois Virtues; Bourgeois Dignity; Bourgeois Equality) incessantly reminds us of the exceptionality of economic growth. The three books comprise one intellectual venture which aims to answer the great riddle of contemporary economic historians: why did modern economic growth take off precisely when and where it did? Why England? Why the 18th century?

McCloskey’s answer is by now well known. Her work is monumental, as it comprises some 2000 pages in the three volumes. But in addition she has succinctly presented her case in many an interview, in conferences, and in a number of opinion articles. In a nutshell, her thesis is that it was culture which needed to change so the economy eventually could. Wealth could be created on a grander extent than ever, but only as soon as wealth creation was no longer deemed a filthy purpose.

This hardly means that the world turned from celebrating warriors and saints into the sort of appreciation of businessmen as heroes you could find in Ayn Rand’s Atlas Shrugged. But the bourgeois spirit — a quieter understanding of labor, tinkering, improving one’s lot through selling and buying — at some point took off and became part of the mainstream culture.

The first book in the trilogy, Bourgeois Virtues (McCloskey 2006), set the stage by having the reader understand that the market system has an ethical underpinning. Mind the verb: has, not needs. A thriving free market economy won’t develop without a society which prizes the virtues of the bourgeois, not only those of the cavalier. This means, of course, prudence: the central attribute of the calculating merchant. But not prudence only, as the pursuit of innovation requires courage too.

The second and third book in the trilogy, Bourgeois Dignity and Bourgeois Equality, are even more evidently two parts of the same project. McCloskey here stresses the importance of “dignified” trades in building the great enrichment; it was, indeed, a process of “equalization” of dignity, thus combining two forces that led to prosperity. People eventually had “equality of respect” for their own endeavors, and this is one of the two meanings in which McCloskey employs the term. She emphatically explains that such equality has nothing to do with equality of outcomes, the hallmark of socialism, but rather equality before the law: the sovereign ought not to discriminate, even though the market does. It is “Scottish” equality, as in the Scottish rather than in the French Enlightenment, and “has a harsh, even tragic, side. It entails equal reward for equal merit in a marketplace in which others, by freedom of contract, can also compete” (McCloskey 2016, XXXII).

Deep-rooted prejudice may cause us to miss an unprecedented turn in history: modern economic growth. The Improvement of the World

While McCloskey rejects equality of outcomes, nonetheless she relentlessly points out that “the idea of equality of liberty and dignity for all humans caused, and then protected, a startling material … progress” (McCloskey 2016, 403). In these last two books, McCloskey’s emphasis on ideas and culture does not conflict with a patient and scrupulous enumeration of the extent to which “the great enrichment” went to the benefit of the less well-off. There is, to be sure, a degree of  redundancy in the two tomes. The reader, however, will easily pardon it, as soon as she understands that McCloskey is not only advancing a thesis; she is energetically campaigning for a truer understanding of what the Industrial Revolution meant for us all, in the Western world and later all around the globe.

And that is desperately needed. Engels’s picture of doom and destitution in filthy urban life became a cliché of the Industrial Revolution. His snapshot of capitalism in its infancy informed the understanding of political economy of millions. That machineries were a technological marvel but chained the poor to a life of misery was taken as a truism. Very few people seemed to remember that poverty existed before the steam engine. The consequences of such an attitude for the perceived legitimacy of the market economy can hardly be overestimated, as F. A. Hayek knew well. In Capitalism and the Historians, he brought together a few scholars who were arguably the vanguard of “revisionist” historians, who thought the Industrial Revolution deserved a second look.

It was only in the 1970s that many scholars began to develop a better and fairer understanding of the Industrial Revolution. Yet their findings are still relatively unknown by the general public. Path-dependency is hard to defy when it comes to textbook writing.

Deep-rooted prejudice may cause us to miss an unprecedented turn in history: modern economic growth. This is the subject of McCloskey’s three books — the turn provided by economic growth. Before looking more closely at her latest arguments, we should review the message of her earlier books.

Two centuries ago the world’s economy stood at the present level of Bangladesh… In 1800 the average human consumed and expected her children and grandchildren and great-grandchildren to go on consuming a mere $3 a day, give or take a dollar or two. The figure is expressed in modern-day, American prices, corrected for the cost of living. It is appalling.

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. (McCloskey 2010, 1)

It is from such an understanding of the extent to which the world actually improved that McCloskey derives her attitude towards political economy and, by contrast, socialism. Engels and the all too many doomsayers who gave us the picture of an Industrial Revolution that polluted rivers and corrupted souls, “That people still sometimes die in hospitals does not mean that medicine is to be replaced by witch doctors” (McCloskey 2016, 43). When it comes to poverty, modern economic growth is the medicine, not the illness.

Key among many of McCloskey’s teachings is that economic growth in this scale is a very new thing in human history [1]. McCloskey claims that Reverend Malthus was right that food production increased at only arithmetic rate while population tends to grow at geometric rate up to his own times. Back then “zero-sum ruled.” The race between technology and population size, McCloskey observes, quoting economic historians Voigtlander and Voth, “is the turtle against the hare.” Then

before 1800 the average rate of betterment was never higher than half a percent per year, and according to the economist Oded Galor more like one-tenth of one percent, yielding at best a rise of 64 percent per century. But population could grow at 3 percent per year, which is 1,800 percent per century. The turtle didn’t stand a chance. (McCloskey 2016, 15)

How did things change? How did modern economic growth become possible? To properly define any occurrence, you should look at what makes it different than all others. Misery — which means misery for the masses — has been the natural condition of mankind since Adam bit the apple. Adam Smith did not look for the cause of the poverty of nations, because poverty hardly needed an explanation. This massive increase in wealth is what needs to be explained.

Piling Brick on Brick?

McCloskey’s answer is twofold. On the one hand, she maintains that “innovation (not investment or exploitation) caused the Industrial Revolution” (McCloskey 2010, 6). She argues that capital accumulation, piling brick on brick, was nothing new. You always had prudence, thrift — and avarice, for that matter. But at a certain point, accumulation turned from making capital for buying lavish villas and ever-larger estates to financing machineries and factories. Capital was used to supply an endless flow of novelties, to the benefit of an ever-growing number of consumers.

The unprecedented growth Westerners experienced in the last two centuries requires a different explanation. But was really piling brick on brick the essential feature of this process? The most conspicuous critic of “capitalism,” Karl Marx, mocked “primitive accumulation” as something which “plays in Political Economy about the same part as original sin in theology” (Marx 1871, 784), telling a fable of thrift which served only to cuddle the self-esteem of the upper classes. But instead of rejecting it all together, he developed his own version of it. For Marx, the true primitive accumulation happened “when great masses of men are suddenly and forcibly torn from their means of subsistence, and hurled as free and ‘unattached’ proletarians on the labour-market” (Marx 1871, 787). Paradoxically, the prophet of historical materialism — which demands that politics and culture are mere cloaks of relations of production — looked for the fountainhead of bourgeois accumulation in political violence, from the slave-trade to 15th century enclosures. In his view, whatever evil happened in history, it made the greater evil of modern capitalism possible.

Marx’s “primitive accumulation” may well be the most elaborate version of the not-uncommon idea that the only way to get rich is at the expense of somebody else. This, of course, may happen: the world is never short of thieves. But was the emergence of capitalism predicated on just that? Not for McCloskey. “It is not a good business plan” to count “on the scraps to be gained by stealing from poor people,” she wrote in her second “bourgeois” book. If it were, “industrialization would have happened when Pharaoh stole labor from Hebrew slaves” (McCloskey 2010, 156). Stealing from the poor would never “explain enrichment by a factor of sixteen, not to speak of one hundred.”

The unprecedented growth Westerners experienced in the last two centuries requires a different explanation. It came about when societies started to unleash unprecedented innovation. This in turn magnified productivity.

Since 1800 the ability of humans to feed and clothe and educate themselves, even as the number of humans increased by an astonishing factor of seven, has risen, per human, by an even more astonishing factor of ten. … We humans now produce and consume seventy7 x 10times more goods and services worldwide than in 1800 (McCloskey 2016, 6).

Yes, this means more stuff. Individuals became better off in the materialistic sense: they can rely on machines for washing their dishes and can entertain themselves with plasma TV screens and Spotify. But they also live healthier lives; they are free to starve themselves and limit their diet to vegetables because they want to do so and not because circumstances force them to do so; they have grown in number; they increasingly learn how to read. write, and compute; and they drive cars and run machines.

This process was hardly anticipated, let alone planned. It is by and large the result of bottom-up efforts, performed by people whose primary interest is improving their own lot (“not from the benevolence of the butcher”). McCloskey quotes approvingly Nobel Laureate Robert Lucas, who observed 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.’ (Lucas 2002, 17)

Successful innovation is what comes out of these widespread rebellions against the status quo, as they withstand the hardest litmus test — submission to the judgment of customers — as expressed in the market. Instead of “capitalism,” McCloskey calls modern economic growth “market-tested betterment” or “market-tested progress.” By so doing, she refers at once to the effect and to the cause: to betterment and the process of experimentation (sometimes breeding successful novelties, sometimes less compelling ones) that made it possible.

Culture, Not Institutions

A “million mutinies” is not an elite phenomenon, but rather the transformation of attitudes and, in a sense, “living styles” across the board in society. But, beyond innovation, what McCloskey endeavors to understand is how such a process of experimentation became possible and widespread. Materialistic enrichment had non-materialistic causes. She argues that “talk and ethics and ideas caused the innovation.” In particular, “ordinary conversation about innovation and markets became more approving” (McCloskey 2010, 7). Her answer is thus: that the Industrial Revolution needed a welcoming culture, which implies a welcoming politics, but is not exhausted by it.

One of McCloskey’s favorite targets is neo-institutionalism, which she considers naïve in its understanding of the rules of the game. In response, her critics typically argue that culture is too vague a word to become the cornerstone of a scientific hypothesis of the origins of modern economic growth; McCloskey could well reply that the same applies to the word institution. Institutions exist “mainly because of the good ethics of its participants, intrinsic motivations powerfully reinforced by the ethical opinion people have about each other” (McCloskey 2016, xxiii-xxiv). What separates McCloskey from the neo-institutionalists is her willingness, and perhaps enthusiasm, for considering data that others deliberately ignore: that is, novels and drama (not so much opera or music). Typically considered unworthy of scientific attention outside the boundaries of humanities, they have, McCloskey maintains, an important signalling value. They are good evidence of the common preconceptions and beliefs in particular societies and historical timeframes — information that would be otherwise impossible to detect. The novels that people read, the plays they enjoy, the authors they cherish, allow us to deduce something about their own views and values.

McCloskey doesn’t use occasional references to Austen or Balzac as a mere embroidery on her work; references to literature are part of her own proof.

Discussing McCloskey’s work, Joel Mokyr has properly pointed out that “Culture cannot be understood without institutions, just as institutions cannot be understood without culture” (Mokyr 2014). Culture and norms may be self-reinforcing, but to play chicken and egg with them, you need to think of what may happen when they are in discord. More often than not, habits and customs get the upper hand over formal norms. The many failures at grafting rules and procedures onto foreign soil we have witnessed in the past — think, for example, of the workings of foreign aid — seem to support McCloskey’s reasoning. So does the fact seen, for example, in my own country of Italy that a similar set of formal rules can still produce results that are far different in areas that share geographical proximity but are characterized by a very different “civic capital” (which is part of the larger notion of “culture”).

Sure, “culture” will ever remain a most problematic term. It looks too dense, too all-encompassing to be truly useful to social scientists. Still, McCloskeyan “ideas” are emphatically not only the ideas and attitudes of a cultural or political elite. A “million mutinies” is not an elite phenomenon, but rather the transformation of attitudes and, in a sense, “living styles” across the board in society.

This explains McCloskey’s insistence on the use of a word, bourgeois, which otherwise could be dismissed as an attempt to épater les bourgeois themselves, to outrage their readers. McCloskey quotes literary scholar Franco Moretti, who points out that in Victorian literature it is often the case that two generations are pitted against each other, the older turning out to be the bourgeois and, naturally, soon to be superseded and betrayed by the more refined and humanitarian children (McCloskey 2016, 62). Bourgeois is usually a term of vilification, further vilified by the adjective “petty.”

Bourgeois for a Reason

McCloskey doesn’t use bourgeois to engage in class talk: she does it because she identifies the rise of the bourgeoisie with a new wave of symbols and ideas, which eventually changed social life. Sergio Ricossa, a great Italian economist who is sadly unknown internationally, did note in 1986 that:

In lordly culture the hero was the model of perfection and heroism did imply an absolute dedication to the cause of infinite value, in comparison thereof any calculation becomes petty and base. The bourgeois, instead, was a calculator, he took risks, albeit calculated ones, and he did not sacrifice anything if not in viewor in the hopeof a suitable return. (Ricossa 2006, 58).

Bourgeois is a useful term because it expresses an attitude which is equidistant from two different and yet converging ethics: the ethics of aristocratic valor and the “salvationist heresy.” [2] The first considers economic value to be nothing, because it pursues a heroism of the sword. The second agrees that economic value is nothing, because all means are justified for the end of reaching the salvation of humanity, which is equated with some particular set of political institutions.

In contrast, the bourgeois mentality embraces practical rationality, prudent calculations, and betterment. The bourgeois doesn’t feed himself with his sword, nor with words announcing a much-needed regeneration of the world. The bourgeois wins his wealth by producing improvements, by being a merchant, a retailer, an inventor. Whereas the nobleman and the activist refuse to deal with the petty calculations of economic life, the bourgeois sees no shame in them. She knows that “a commercial test for supplying consumption is signalled by money profit. When something tested in trade is popular, it earns money for someone” (McCloskey 2016, 563). There is no shame in supplying people with stuff they like.

This sets in motion a process by which people increasingly understand themselves as being free to choose, but also free to be chosen. They’re free to choose in the rather obvious sense that they are not coerced in their own consumer will, which often, far from being trivial, makes at least part of their own identity: As we know well, we are often able to deduce things as different as political preferences, musical tastes, and social background by people’s clothing. At the same time, as they exercise more and more their freedom to choose, they create room for themselves to become suppliers of different goods and services. Adam Smith spoke of the “division of labour being limited by the extent of the market.” The more the market is extended, the more complex specialization can be. You don’t find dog sitters in small villages in the mountains, but in big cities nowadays some people make a living by walking other people’s dogs. Modern economic growth is a complex puzzle, but if it has a unifying character, it is the constant broadening of the range of available choices. This is indeed the egalitarianism of the bourgeoisie McCloskey refers to in the title of her book: an idea of equality of dignity, equality of opportunity in trying to realize oneself, to pursue your own happiness (to quote that conspicuous bourgeois document, the Declaration of Independence).

A Change in Thinking

The bourgeois era began, and so the great tide of modern economic growth started, when people began to think there is no shame in supplying others with stuff they like. Before it, as economist Don Boudreaux wrote in summarizing McCloskey’s viewpoint:

Unlike warriors who dirtied their hands honorably (namely, with blood), traders dirtied their hands dishonorably (namely, with profit). Unlike the nobility who got their riches honorably (namely, by idly collecting land rents), merchants got their riches dishonorably (namely, by actively trading). Unlike the clergy who won their rewards honorably (namely, by pondering the eternal), the bourgeoisie won their rewards dishonorably.(Boudreaux 2014)

This was a “dishonor tax,” wrote Boudreaux, which like all taxes “discourages the activities on which it falls while it makes alternative, untaxed activities relatively more attractive” (Boudreaux 2014). At a certain point in history, it gets, if not utterly extinguished, at least substantially reduced. (Survey your fellow university colleagues and you’ll quickly find out that so many people still believe selling and buying are far from honorable activities!) Once they are no longer told the life of a seller is a life of scum, people begin considering it in a different way: intelligent and ambitious people think it may be a profession worth pursuing, without shame.

Consider, instead of trade, medicine. For a long time in history, the physician was part hairdresser, part witch doctor. Medical care was considered complementary to prayers, as the latter were generally more effective. Things changed when instruments improved, medicine became a science, care was “industrialized” in hospitals. But all of this brought with itself a social appreciation of doctors, which is what makes mothers all over the world glowingly happy when little kids announce they want to be physicians. Social appreciation matters, as it provides medical school with a big supply of smart students, who in turn may become brilliant practitioners or scientists themselves.

In my own country of Italy, intellectuals have traditionally tended to prize humanities over hard sciences. Families tended to believe that there was no future for their children if they studied mathematics or science other than becoming high school teachers (not a high-salary career). These factors may have something to do with the fact that Italian universities have only small numbers of people enrolling in science, technology, or math and an even smaller number graduating. We are only now adjusting to the demand of the job market in an economy that runs on software and robots.

If social appreciation of traders, merchants, and inventors was key in enabling modern economic growth, the last book in McCloskey’s trilogy inevitably should — and does — deal with the countervailing forces against this appreciation. McCloskey is well aware that in predicating the rise of modern economic growth on “culture” she is being greatly counterintuitive, as most of “culture,” in our world, seems opposed to so-called “capitalism.” “Something strange has happened in the minds of the clerisy,” she writes (McCloskey 2016, 559-568), referring to “artists, intellectuals, journalists, professionals, and bureaucrats” (McCloskey 2016, xvi).

A Problem of Intellectuals

McCloskey is not the first to point to the problem. The question “Why Do Intellectuals Oppose Capitalism?” to echo the title of an essay by Robert Nozick (Nozick 1998), has been one of the topoi of classical liberalism in the last century. In academic quarters, classical liberal intellectuals have faced widespread opposition to their case. Only a handful of scholars shared an appreciation of the market system. Capitalism was seen as hopelessly 19th century, and a new era, freed of the “anarchy of production,” was on the rise. Classical liberal scholars spent energies in opposing the intellectuals’ marketophobia because they suspected  that intellectuals’ views often “trickle down” in society. They wanted to identify patterns to better explain why so many intellectuals opposed the market economy. Some of them thought self-interest was at play in their colleagues’ antipathy for market relations, and some maintained that intellectuals were mainly motivated by resentment. McCloskey thinks they really don’t have a clue.

The first set of answers to the question “why do intellectuals oppose capitalism?” may be summarized with a reference to Ronald Coase’s “The Market for Goods and the Market for Ideas” (Coase 1974, 384-391). Intellectuals are consistently advocating higher regulation in the market for “things,” but never so in the market for ideas, where they adamantly oppose it.

The market for ideas is the market in which the intellectual conducts his trade. The explanation of the paradox is self-interest and self-esteem. Self-esteem leads the intellectuals to magnify the importance of their own market. That others should be regulated seems natural, particularly as many of the intellectuals see themselves as doing the regulating. But self-interest combines with self-esteem to ensure that, while others are regulated, regulation should not apply to them. (Coase 1974, 384-391)

Milton Friedman argued in a similar vein and pointed out that coercive solutions are always easier to sell to public intellectuals than market-based ones. “The collectivist answer is a simple one. If there’s something wrong pass a law and do something about it” (Cobb, Machan, Raico 1974), and a simpler answer sells books and magazines far better than complicated ones.

The second set of answers was cultivated by thinkers as diverse as Joseph Schumpeter, Ludwig von Mises, and Robert Nozick. For Nozick, intellectuals are essentially people who were successful students in the classroom, where rewards are distributed according to a clear pattern defined by central authority. Once school is over and they enter the labor market, they’re shocked, as it rewards very different skills than the ones they possess and trained for.

The intellectual wants the whole society to be a school writ large, to be like the environment where he did so well and was so well appreciated. (Nozick 1998, 10)

Schumpeter and Mises both reminded us the cornucopia generated by capitalism made mass education possible for the first time in history. In its turn, mass schooling creates a surfeit of intellectuals, who can hardly find a job up to their expectation. Therefore they systematize their resentment by means of anti-capitalism. Their anti-capitalist evolution is smothered by the fact that political parties and bureaucracies are among the very few employers interested in the kind of wordsmiths modern education generously produces.

In old age, Mises devoted to The Anticapitalist Mentality a short, illuminating pamphlet. He acknowledged that intellectuals were shocked by the poverty of taste of the masses, and they crucially missed the fact that:

Capitalism could render the masses so prosperous that they buy books and magazines. But it could not imbue them with the discernment of Maecenas or Can Grande della Scala. It is not the fault of capitalism that the common man does not appreciate uncommon books. (Mises 1956, 52)

Note that the problem is not simply the intellectuals’ blindness to the virtue of free exchange or the marketplace, but their distaste for the historical happening of modern economic growth, which gave us mass production and made us a so-called “consumer society.”

McCloskey takes a charitable view of her opponents. Or at least it looks charitable at first glance. She sees that “anticapitalism came for many reasons,” including psychological ones: “There is scarcely an English or French intellectual in the nineteenth century who was not simultaneously the son of a bourgeois and sternly hostile to everything bourgeois” (McCloskey 2016, 592). Like Schumpeter, she knows that “the clerisy is an appendage of the bourgeoisie” (McCloskey 2016, 597). But “anticapitalism came in part also because trade-testing disturbed the society without at first enriching ordinary people greatly” (McCloskey 2016, 595).

That the world had just escaped from a Malthusian trap wasn’t quite clear at the time Engels wrote The Conditions of the Working Class in England: real incomes were rising but not yet “surging upward, as they did finally in the third quarter of the nineteenth century” (McCloskey 2016, 608). That picture of destitution excited the fantasy of historians and was immortalized by novelists, painters, and photographers.

But ultimately, McCloskey argues, anti-capitalist intellectuals do not understand what they’re talking about. “The economists and especially the economic historians know it, in their quantitative way” (McCloskey 2016, 26). They have a sense of the extent by which illiteracy fell (“from over 90 percent of the world’s adult population in 1850 to 20 percent in 2000”), of how “years of life… have shot up… from an expectation at birth worldwide of less than thirty years in 1800 to fifty-two years in 1960 and to seventy years in 2010, including even very poor places” (McCloskey 2016, 26-27), of how “access to clean water has dramatically improved” (McCloskey 2016, 27).

Sure, intellectuals, right and left, have endlessly lamented “the mass character of modern society” (McCloskey 2016, 25), as if mass production lowered understanding, culture, and morals. McCloskey agrees with George Stigler (not her favorite Chicago colleague) when the latter pointed out that intellectuals’ criticism of the mass society was “misplaced, and at times even hypocritical” (Stigler 1967, 5). Stigler argued that:

Most societies have been judged by their cultural aristocracies—indeed in earlier periods the vast majority of the population was not even considered to be a part of the culture of the society, for this vast majority was illiterate, tradition-bound, with most people living brutishly in peasant huts. Our society’s tastes are judged by those of the vast majority of the population, and this majority today is generous, uncomplacent, and hard-working, with unprecedentedly large numbers engaged in further self-education, or eagerly patronizing the arts. (Stigler 1967, 5-6)

Wealthier, market-friendly, more “bourgeois equal” societies tend to be fairer. “Globalization and neoliberalism and Milton Friedman have been good for the poor, in an unprecedented fashion” (McCloskey 2016, 73). Why can’t the clerisy read data?

Not Actually a Meritocracy

McCloskey’s answer is that they became “pseudo-neo-aristocrats” who believe in “merit,” but judging merit in strictly non-monetary terms (McCloskey 2016, 124). Her view is in a way similar to Nozick’s: intellectuals resent market societies because they do not prize their efforts as they believe they should. But she expands Nozick’s point, pointing out that intellectuals consider “merit” with the yardstick of aristocratic times. They resent one key feature of market societies: change, of the sort that we observe in changing products and habits, and which makes old hierarchies, including hierarchies of merit, often obsolete.

Modern economic growth was indeed “the great transformation” (McCloskey 2016, 543) [3]; it implied a movement “from status to contract.” This means higher social mobility but also an erosion of hierarchy. This has been a galvanizing story (in three generations, quite a few of our families went from peasants to university-educated professionals) but also a frightening one. Being locked into a social position can be a curse, but it is psychologically comforting. Whatever bad happens, birth and fate can easily be blamed. A society based upon contract is one in which people are rewarded by their ability to meet their fellow men’s needs.

Some people to be sure, are hurt by the application of the rule of profit, in particular the restaurateur who thought it was a good idea to open the bad-food place that, unhappily, turned out to be a bad idea, socially speaking (McCloskey 2016, 568).

McCloskey knows well, and strongly emphasizes, that a bourgeois society isn’t strictly speaking a “meritocracy,” that consumers may be tasteless and businessmen luckier, rather than “better” than their competitors. And yet this is not what the market is for: it doesn’t exist to award the best, no matter how defined, but to give people the stuff they want. In this sense we can read what McCloskey calls the “bourgeois deal,” the imaginary social pact between innovators and businessmen and the rest of us:

Let me creatively destroy the old and bad ways of doing things, the scythes, ox carts, oil lamps, propeller planes, film cameras, and factories lacking high-tech robots, and I will make you-all rich. (McCloskey 2016, XXXIII)

Nobody, of course, ever consciously entered such deals: but in bourgeois societies this is the common sentire, a mutual understanding that “millions of mutinies” are to be celebrated. Such an attitude is, quite frankly, more common in the United States than it is in European countries, where a much smaller number of business successes start in an innovator’s garage.

Uncommon Books

McCloskey’s are uncommon books in that they are easily readable by non-specialists. Her rhapsodic style, in Bourgeois Equality as well as in its predecessors, is engaging and accessible to the layman. Here’s an economist who can write, and who is worth reading, too. Her long-time readers won’t be surprised, as, among more scholarly efforts, she once published an amusing little book on proper writing for scholars (McCloskey 1999). Still, McCloskey is certainly guilty of excessive generosity toward the authors she admires. The reader is showered with names and references that sometimes we could do without. McCloskey is obsessed with giving everybody her due and she won’t avoid mentioning and praising far lesser scholars if they provided her with useful information. Such generosity is remarkable and noble, but often weighs down some otherwise beautiful pages. And yet beautiful pages these books do not lack. McCloskey overwhelms the reader with facts, insights, style.

The importance of the work of Deirdre McCloskey can hardly be exaggerated. If you Google “Deirdre McCloskey bourgeois,” 215,000 results pop up. Her trilogy has been widely reviewed and widely discussed. More importantly, by her indefatigable preaching throughout the world she is helping change the rhetoric of individual scholars and think tanks that tend to stick with the traditional language of classical liberalism, limited government, free markets. The “McCloskey Deal” is to focus on the indisputable material benefits these ideas have produced for the masses in the few cases in which they were put into practice. Remind the audience of the magnitude of changes for good they have experienced since James Watt perfected the steam engine. Learning to appreciate them will help avoid jeopardizing them.

Recently, McCloskey has referred to her approach as “humane libertarianism” (McCloskey 2017, 1). All labels are necessarily imperfect, and this one is, too. On the one hand, libertarianism, as any political theory, is about humans, not birds or flocks. On the other, classical liberalism has been humanitarian since its historical inception: it has been about limiting absolute power, abolishing slavery, allowing people to do what they want with their bodies and with their stuff. That classical liberalism puts “profits before people” is a caricature, as McCloskey knows well.

The greatest value of McCloskey’s oeuvre is that it stresses a point sometimes taken for granted by classical liberals. Classical liberalism is a philosophy for the common man. It doesn’t care much about (aristocratic) visions of greatness and heroism, and it is not passionate about (leftist) crusades for humanity that do not consider the minutiae of the lives of individuals. It embraces the great enrichment precisely because it brought unprecedented prosperity to an unprecedented number of people.

McCloskey has given new, more solid ground to a plea that was made by economist Ludwig von Mises when, in the 1920s, he was basically the only learned advocate of classical liberalism around. Demagogues, Mises wrote, picture the Industrial Revolution as if “all progress in the techniques of production redounds to the exclusive benefit of a favored few, while the masses sink ever more deeply into misery.” But

it requires only a moment’s reflection to realize that the fruits of all technological and industrial innovations make for an improvement in the satisfaction of the wants of the great masses. All big industries that produce consumers’ goods work directly for their benefit; all industries that produce machines and half-finished products work for them indirectly. The great industrial developments of the last decades, like those of the eighteenth century that are designated by the not altogether happily chosen phrase, “the Industrial Revolution,” have resulted, above all, in a better satisfaction of the needs of the masses. The development of the clothing industry, the mechanization of shoe production, and improvements in the processing and distribution of foodstuffs have, by their very nature, benefited the widest public. It is thanks to these industries that the masses today are far better clothed and fed than ever before. However, mass production provides not only for food, shelter, and clothing, but also for other requirements of the multitude. The press serves the masses quite as much as the motion picture industry, and even the theater and similar strongholds of the arts are daily becoming more and more places of mass entertainment (Mises 1927, 10-11).

In an age that earnestly longed for great men, Mises remembered the little guys. For too long the point has been missed. Schemes have been advanced to “soak the rich” without considering possible effects upon innovation and productivity. “Production” and “distribution” of wealth have been distinguished analytically, as if the latter may never harm the first. Consumerism has been blamed for moral decay, and little respect has been paid to people’s freedom to choose.

The few dissenting voices have often lacked the historical understanding that would have made them stronger. A better appreciation of the Bourgeois Era may embolden them. This classical liberalism as a philosophy of the common man is what McCloskey perfected in her stupendous trilogy.

This review is forthcoming in Man and the Economy. 

[1] McCloskey provides a detailed criticism of “continuists” who consider the Industrial Revolution as nothing but a continuation of modestly rising incomes in Europe (McCloskey 2016, 533). It ought to be mentioned that McCloskey herself has been a foremost critic of one of the alleged “discontinuities,” namely the behavior of landlords and peasants before and after enclosures. McCloskey thought that scattering plots helped farmers in minimizing the risk of crop failure, and therefore that moving out of such a system became rational only when technical possibilities allowed for land concentration without greater risk. Thus, it wasn’t institutional change that made rational behavior magically possible, but changing technology and economic conditions. See McCloskey (1991).

[2] As used in Minogue (1963).

[3] In Bourgeois Equality, McCloskey discusses at length the influence Karl Polanyi exerted on the clerisy (McCloskey 2016, 543-552).


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  • Alberto Mingardi is Director General of Istituto Bruno Leoni, Italy’s free-market think tank.