Title: Bourgeois Equality: How Ideas, not Capital or Institutions, Enriched the World
Author: Deirdre McCloskey
Scope: 4 stars
Readability: 3.5 stars
My personal rating: 5 stars
See more on my book rating system.

If you enjoy this summary, please support the author by buying the book.

Topic of Book

McCloskey seeks to explain why so many nations have dramatically increased in their standard-of-living over the last few centuries.

If you would like to learn more about progress, read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.

My Comments

This book repeats many of the same arguments made in her earlier book Bourgeois Dignity: Why Economics Can’t Explain the Modern World, but it does present more supporting evidence. I would recommend reading her other book listed below first.

Key Take-aways

• Capitalism and trade has always been a part of humanity, so it could not have created prosperity.
• The modern world was caused by “egalitarian liberalism”, the belief that ordinary men and women do not need to be directed from above, and when honored and left alone become immensely creative.
• The absolute condition of the poor has been raised overwhelmingly more by the Great Enrichment than by regulation or redistribution.

Important Quotes from Book

 “A novel way of looking at the virtues and at bettering ideas arose in northwestern Europe from a novel liberty and dignity enjoyed by all commoners, among them the bourgeoisie, and from a startling revaluation by the society as a whole of the trading and betterment in which the bourgeoisie specialized. The revaluation, called “liberalism,” in turn derived not from some ancient superiority of the Europeans but from egalitarian accidents in their politics 1517–1789. That is, what mattered were two levels of ideas—the ideas in the heads of entrepreneurs for the betterments themselves (the electric motor, the airplane, the stock market); and the ideas in the society at large about the businesspeople and their betterments (in a word, that liberalism). What were not causal were the conventional factors of accumulated capital and institutional change—which happened, to be sure, but were largely dependent on betterment and liberalism.”

“The modern world was not caused by “capitalism,” which is ancient and ubiquitous, as for example in Japan itself during the seventeenth century. The modern world was caused by egalitarian liberalism, which was in 1776 revolutionary,”

“The main, and the one scientifically proven, social discovery of the nineteenth century—which was itself also in accord with a Romanticism so mischievous in other ways—that ordinary men and women do not need to be directed from above, and when honored and left alone become immensely creative.”

“Yet I have to admit right off that “my” explanation is embarrassingly, pathetically unoriginal. It is merely the economic and historical realization, in actual economies and economic histories, of eighteenth-century liberal thought. But that, after all, is just what the clerisy after 1848 so sadly mislaid,”

“Most societies have always enforced property rights”

“People in Holland and then England didn’t suddenly start alertly attending to profit. They suddenly started admiring such alertness, and stopped calling it sinful greed.”

“An institution works, if it does, mainly because of the good ethics of its participants, intrinsic motivations powerfully reinforced by the ethical opinion people have about each other. The typical human, it has been shown by careful experiments on our own species and on other great apes, is much inclined to indignation and punishment (though other animals punish too) in order to shame and scorn defectors.”

“The crux, that is, is not black-letter constitutions, the written-down constraints, the budget lines, but how the constitutions came about ethically and how they are sustained in social ethics”

“The modern world was made by a slow-motion revolution in ethical convictions about virtues and vices, in particular by a much higher level than in earlier times of toleration for trade-tested progress—letting people make mutually advantageous deals, and even admiring them for doing so, and especially admiring them when, Steve Jobs–like, they imagine betterments. Note again: the crux was sociology, not psychology. Trade-and-betterment toleration was advocated first by the bourgeoisie itself, then more consequentially by the clerisy, which for a century before 1848, I have noted, admired economic liberty and bourgeois dignity, and in aid of the project was willing to pledge its lives, for “tunes, and sacred honor. After 1848 in places like the United States and France and Japan, the bulk of ordinary people came slowly to agree. By then, however, as I also noted, much of the avant-garde of the clerisy worldwide had turned decisively against the bourgeoisie, on the road to twentieth-century fascism and communism.”

“The answer to why England or why Europe, I argue here, does not lie in some thousand-year-old superiority, such as English common law, or in the deep genetic ancestry of Europeans. It lies rather in the surprising, black-swan luck of northwestern Europe’s reaction to the turmoil of the early modern—the coincidence in northwestern Europe of successful Reading, Reformation, Revolt, and Revolution: “the Four Rs,” if you please. The dice were rolled by Gutenberg, Luther, Willem van Oranje, and Oliver Cromwell. By a lucky chance for England their payoffs were deposited in that formerly strife-suffering nation in a pile late in the seventeenth century. None of the Four Rs had deep English or European causes. All could have rolled the other way. They were bizarre and unpredictable.”

See Figure 1 for causes of Great Enrichment

“The economist William Nordhaus has calculated that betterers nowadays earn in profit only 2 or 3 percent of the social value of their inventions.”

“The two centuries of uplift happened most significantly not to the aristocrats or the landlords or the priests of the old ruling class, who were rather uplifted already, but to the commoners, your ancestors and mine. ”

“The absolute condition of the poor has been raised overwhelmingly more by the Great Enrichment than by regulation or redistribution. As the economic historians Ian Gazeley and Andrew Newell concluded in their 2010 study of “the reduction, almost to elimination, of absolute poverty among working households in Britain between 1904 and 1937”: “The elimination of grinding poverty among working families was almost complete by the late thirties, well before the Welfare State.”

“Yet in each of the forty-odd recessions since 1785, big or small, the real income of the poor and of the average wage earner was higher after the recession than it had been at the peak of the previous boom. In the three dozen or so ordinary recessions the previous peak was exceeded after the trough in about two years. ”

“Compared with horses, cars themselves are “robots.” Yet the advent of cars did not produce mass unemployment because of insufficient demand for the output of blacksmiths and horse traders. Fundamentally, all tools—a blast furnace and a spinning jenny, or for that matter an Acheulean hand ax or a Mycenaean chariot wheel—are “robots,” that is, contrivances that make labor more productive.”

“We were poor but now are rich. Why?

Answer: The change in attitude toward the bourgeoisie and creative destruction. But why did they change?

Answer: The egalitarian accidents of 1517–1789. But why were they important?

Answer: Because earlier times were fiercely antibourgeois, being holy and hierarchical,

And they were so even though markets and “capitalism” have always existed, contrary to Karl Polanyi. And so, to return from ancient times to our own times:

Alarmingly, the clerisy after 1848 came to oppose all this good change.

Which is the danger.”

“What changed 1600–1848, and dramatically, as we can learn from the techniques of a humanistic science, was the high- and low-cultural attitude toward trade, numbers, betterment, and the bourgeoisie.”

“Weber thought the new ethic was of endless accumulation as “an end in itself… He was mistaken, as I hope the present book and Bourgeois Dignity will persuade you. The new ethic was of betterment, novelty, risk-taking, creativity, democracy, equality, liberty, dignity. ”

“ The key is rather whether the law and the society praise or damn invention and enterprise and betterment.”

“The development is not simple, but the tendency is clear: a place must revalue the bourgeoisie or else it must become accustomed to economic stagnation.”

“Being obsessed with useful information giving power over nature, as Mokyr puts it, was not new in the eighteenth century, not precisely. What changed was what was deemed useful…  a change in “tastes”—was indeed a shaper of industrial revolutions, if not a deep cause. When war horses and cathedrals were valued, they were what was useful, and knowledge about them was useful knowledge and much sought after with money”

“The rising class in the English sixteenth and seventeenth century was not the (urban) bourgeoisie only, but the gentry… In the 1690s, with a Dutch king, the English William of William-and-Mary translated from Willem van Oranje, the British proceeded in a rush to adopt Dutch institutions such as excise taxes, a central bank, a national debt, an aggressively anti-French foreign policy, a stock market, and a free press. The wonder is that they didn’t adopt the Dutch language. What they admired, and sought, had changed, quickly.”

“During the decades up to 1700 the effective rulers of Britain became in theory and practice more and more mercantilist, drifting away from a much earlier fiscalism under which the King cared only about his own revenues, mainly from his estates or from whatever traditional imposts he could revive. And then by the end of the eighteenth century the rulers became even a little bit free in trading. Anyway they became, after the sixteenth and early seventeenth century, more and more concerned with national profit and loss, instead of ensuring this man’s monopoly profit and that woman’s church attendance, and always the monarch’s glory through revenues for war.”

“Yet it was not in fact warring against the Dutch that made England rich. Wars are expensive, and the Dutch admiraals Tromp and De Ruyter were no pushovers. It was imitating them that did the trick.”

“To the intense irritation of French and German and Japanese people, England, with parts of Wales and lowland Scotland and a few scattered parts of Ireland in attendance, has been since about 1700 the very fount of bourgeois virtues and most particularly their acceptance by the rest of society. Admiration for British merchants, British investors, British inventors, British bankers, and British economists led to the Great Enrichment. Only in the twentieth century have the British passed along some of their international duties to their American cousins, as now the Americans pass them to the East.”

“The answer is that the society Macfarlane praises as individualistic in the thirteenth century (and before: Macfarlane goes back to Anglo-Saxon times) was also deeply hierarchical. It is hierarchy, I have argued—the Great Chain of Being, in the Elizabethan theory, plain in every play of Shakespeare and his contemporaries—that was the main obstacle to betterment”

“Medieval England—with medieval France and Italy and Germany—was already a society of laws, and in particular of property rights. Property laws are necessary but they are nothing like sufficient for the startling betterment that begins in the Industrial Revolution”

“The sneer by the aristocrat, the damning by the priest, the envy by the peasant, all directed against trade and profit and the bourgeoisie, conventional in every literature since ancient times (though there is some doubt concerning Mesopotamia), have long sufficed to kill economic growth. Only in recent centuries has the clerisy’s prejudice against trading been offset and partially disabled by economists and pragmatists and the writers of books on how to win friends and influence people.”

“The usual identification of a “Horatio Alger story” with entrepreneurship is mistaken.”

“What made bourgeois quantification conceivable was the “rise” of the bourgeoisie in northwestern Europe. But the rise was itself more than a matter of numbers. True, the share of the population plausibly counted as bourgeois rose. Yet the “rise” was above all a rise in dignity, expressed in public opinion, and of liberty, obtained by reformation and revolution. Otherwise you are back in China or the Ottoman Empire or the rest of Europe before 1700, in which, after all, there were many conurbations with large absolute numbers of bourgeois.”

“In absolute numbers more Dutch people (360,000 or so) lived in towns of over 10,000 in 1700 than did English people four times as numerous. The United Provinces were bourgeois, all right.”

“The Dutch emphasized what is supposed in the rhetoric of the royalists then and the high clerisy now to be impossible: the virtuous and republican bourgeoisie.”

“The first large bourgeois society in Northern Europe was well known for its Charity.”

“The Netherlands was above all the European frontier of liberalism. John Locke, finally publishing in the 1680s, was in many respects a culmination of Dutch theorizing and, more, of Dutch practice. He spent five years of fearful exile in Holland before returning to England with the Dutch stadtholder Willem, now also the English king. Locke had absorbed in Amsterdam, Utrecht, and Rotterdam the results of the country’s liberal Utrecht, and Rotterdam the results of the country’s liberal thought and practice from Erasmus through Episcopius and De La Court to Bayle.”

“The thirteenth article of the Union of Utrecht in the new United Netherlands had stipulated 120 years before Aikenhead’s execution that “each person shall remain free in his religion,” and that (though observing suitable privacy, since religion was still a matter of state) “no one shall be investigated or persecuted because of his religion.” They were not even to be “investigated”—much less hanged or burned. In 1579 it was a shocking assertion.”

“What is strange about the modern world, in other words, is its utter economic unpredictability. As Nassim Nicholas Taleb puts it, the Great Enrichment was a “black-swan” event, deeply unpredictable, not to be reduced to a probability distribution with finite variance. The premodern world, by contrast, was highly predictable in economic shape.”

“Institutions are conservative. They are routine, predictable, suitable for laying down the future in 1700.”

“Betterments require disobedience, creative destruction, an overturning or remaking or redirecting of what already exists, Steve Jobs and Bill Gates challenging Big Blue, autos replacing horses—not a bigger centralized computer or a faster horse. Unpredictability is characteristic of the major betterments.

Therefore betterments, I have said, depend on liberty. ”

“The outcome of various revolts against hierarchy—from some versions of the Reformation in 1517 to some versions of the French Revolution in 1789—made people bold. Revolts happened elsewhere, frequently, in Japan and India and every other place.”

“The political revolutions of the seventeenth century were more important to more people than, say, the novelties of science.”

“ What made men and women bold in politics and the economy was not Luther’s Magisterial Reformation (from magister, master) in Germany and Scandinavia, and also among high-church Anglicans, but the so-called Radical Reformation, ranging from some Calvinists to all Anabaptists and Quakers, and then even Anglicans in the form of Methodism, and finally a liberal Protestantism and even a liberal Catholicism supporting ordinary people having a go.”

“In the event, however, in the sixteenth and seventeenth centuries in Europe the Reformation does seem to have strengthened economic betterment, on the basis of a spiritual individualism… It just so happened, in other words, that a fuller dignity and liberty for economic actors grew out of some versions of a fuller dignity and liberty for religious actors.”

“What made people bold in the practice of frenetic betterment—not merely defensive saving or hard work—was rather the participation of ordinary people in religious gatherings with weak or no governance from above. The Radical Reformation, as against the more hierarchical one of Luther or Zwingli or Henry VIII, in other words, was a delivery room for a democratic theory long a-borning.”

“In Europe the bishops had long been secular lords, the popes had marshaled armies, and the church had collected a fifth or more of all land rents. Even before the Wars of Religion, to repeat, religion was politics. In the Reformation the political theories shifted away from disputes between popes and emperors, and toward disputes between governments and individual consciences.”

“In other words, it was a small step in logic, if not immediately in practice, from the priesthood of all believers to the citizenship of all indwellers and the entrepreneurship of all commoners.”

“The medieval/mercantilist/socialist/regulatory idea that a hierarchy is necessary for an economy to work (“a worldly kingdom cannot stand unless there is in it an inequality of persons”) was challenged by a notion that God would provide guidance to individual believers”

“The Church of Faith had earlier and repeatedly challenged the Church of Power—for example, the Henricians from the 1110s, the Cathars from the 1140s, the Waldensians from the 1170s, the Lollards from the 1380s—but failed in a Europe without printing and its widening of literacy. The economic historian Jared Rubin has shown a powerful effect on the Reformation of closeness to printing presses.”

“ By comparison with effective censorships further east, the failure of the various projects of centralizing the European subcontinent, from Charlemagne through the medieval popes to Phillip II and at last Napoleon and Hitler, doomed European censorship to only sporadic success… censorship was undermined by publication in other jurisdictions in fragmented Europe, first Venice and then Basel and Holland, and by smuggling the resulting product.”

“What is obvious about the Gutenberg Galaxy is that it greatly multiplies the weak ties of book-reading, and eventually, in the very late seventeenth century, the widening of newspaper-reading”

“Numerous weak ties are characteristic of trading societies, and most societies are trading societies. Killing a network of human communication happens only with the blocking of 60 percent of the lightly traveled roads, the closing of 60 percent of the less popular printing presses—not by deadly censorship in, say, a strongly tied royal court, or shaming within a tightly knit family. It takes an artificial extension of strong ties by a strong state intent on censorship to suppress the rumors of a free society. The Tokugawa régime in seventeenth-century Japan had to destroy thousands of bridges if it was going to check passports effectively at the few remaining ones (it did). With perhaps a similar purpose in mind, it banned (of all things) wheeled vehicles. And it insisted on a Versailles-type centralization of the aristocracy in Edo to strengthen the ties to the shogun.”

“But China and the Ottoman Empire and the rest also had good communication. Why the difference in outcome? The answer has been suggested already: Europe’s political fragmentation,”

“In China and the Ottoman Empire an invention was secret and monopolized and under suspicion. An anarchic fragmentation makes kings eager to innovate in military technology. “Innovate or die” in such a case is to be taken literally. A unified polity, on the other hand, can scorn such betterment—unless indeed the Mongols or the Turks armed with cannon are knocking, or shooting, at the door.”

“On a smaller scale the logic of small-is-beautiful-for-betterment works too. The relative lack of national regulation in England and then Britain, aside from external tariffs, and the exposure of individual cities to the competition of other cities, was good for toleration, I have noted, as it was for betterment. When the Kingdom of the Netherlands was founded in 1815 the intercity competition that had been so fruitful in liberties and betterments began to be suppressed. No wonder the Netherlands was slow to industrialize. The newly unified country became infected with many hundreds of national cartels enforceable at law, down to the present.”

“The narrow focus of North, Wallis, and Weingast on England, France, and the USA obscures the ubiquity of what they call “doorstep conditions”—the rule of law applied even to elites, perpetually lived institutions, and consolidation of the state’s monopoly of violence. Such conditions characterize scores of societies, from ancient Israel to the Roman Republic, Song China, and Tokugawa Japan, none of which experienced a Great Enrichment. Larry Neal nonetheless offers a definition of “capitalism” as (1) private property rights, (2) contracts enforceable by third parties, (3) markets with responsive prices, and (4) supportive governments. He does not appear to realize that the first three conditions have applied to every human society. They can be found in pre-Columbian Mayan marketplaces and Aboriginal trade gatherings. “Capitalism” in this sense did not “rise.” The fourth condition, “supportive governments,” is precisely the doctrinal change to laissez faire unique to northwestern Europe. “What did “rise” as a result was not trade itself but trade-tested betterment. ”

“The second element, universal dignity—the social honoring of all people—was necessary in the long run, to encourage people to enter new trades and to protect their economic liberty to do so. The testing countercase is European Jewry down to 1945, gradually liberated to have a go in Holland in the seventeenth century and Britain in the eighteenth century and Germany and the rest later. Legally speaking, from Ireland to the Austrian Empire by 1900 any Jew could enter any profession, take up any innovative idea. But in many parts of Europe he was never granted the other, sociological half of the encouragement to betterment, the dignity that protects the liberty. ”

“Without such ideas the modern world might have happened, after a while, but in a different way—a centralized, French version, perhaps. It would not have worked well economically (though the food would have been better).”

“An antibourgeois rhetoric, especially if combined with the logic of vested interests, has on many occasions damaged societies. Rhetoric against a bourgeois liberty, especially when backed by governmental violence, prevented betterment in Silver Age Rome and Tokugawa Japan. It stopped growth in twentieth-century Argentina and Mao’s China. It suppressed speech in present-day North Korea and Saudi Arabia. Such words-with-swords-and-guns in 1750 could have stopped cold the modern world beginning in Holland and England. In the twentieth century the bad rhetoric of nationalism and socialism did in fact stop its later development, locally, as in Italy 1922–1943 or Russia 1917–1989. Nationalism and socialism can to this day reverse the riches of modernity, with the help of other rhetorics such as populism or environmentalism or religious fundamentalism.”

“How many children are confined by more than poverty itself to repeat the lives of their parents, the better to reaffirm the parents’ identity and dignity?”

“Contrary to the models of capital-obsessed economists, in other words, human capital has often been a conservative force, as in the imperial Chinese examination system and in the gentiles-only policy of hiring in many American law firms before the 1960s.”

“Zero-sum is the default in thinking about my gain and thine. It is the chief error in economic thinking in the street and in politics. ”

“The attitude toward trade and betterment is central. Imagine an ancient Rome in which most males were fascinated by gadgets, in which work by hand or abacus was viewed as honorable (honestus), in which the occupiers of aristocratic status and other nonworking positions were commonly portrayed as lazy and stupid, in which engineers and inventors were heroes, in which entrepreneurial millionaires had admiring biographies of wide circulation written about them—and you are imagining a Rome that would have had a Great Enrichment. Ditto, with a somewhat different list of counterfactuals, for Song China, say, or the Abbasid Caliphate.”

“France’s policy was like that of the numerous modern states immensely interested in the economic development of their citizens (and it may be a few of the rulers and their cousins) by regulating trade in detail and jailing the competitors of state-sponsored monopolies, such as Uber.

Perform a mental experiment on France in the eighteenth century. In a France counterfactually without the nearby and spectacular examples of bourgeois economic and political successes in Holland and then in England and Scotland and in far America (constituting together what the historian Walter Russell Mead calls “the Anglosphere”), modern economic growth would have been killed”

“Would the descendants eventually have had liberal democracy and human enrichment out of Mayan and Incan or Mississippian civilizations? I think so. Or was there something deeply unique and important about Europeanness? I don’t think so.”

“Trading and profit making and entrepreneurship and betterment have been more or less despised by the aristocracy in pastoral or agricultural societies, and by the neo-aristocratic clerisy in our industrial society.”

“The Christians in their beginnings were among the most anticommercial people of faith, more so than Jews or Muslims or Hindus or Zoroastrians or even Buddhists.”

“The main historical paradox of the present book is that, startlingly, it was a Christian Europe, slowly after 1300 and unstoppably after 1700, that redeemed the bourgeois life.”

“True, a small society of businesspeople protected by the state could itself rather easily set up obstacles to betterment, by arranging for local monopolies.”

“Such killing of betterment by the bourgeoisie itself, de dominee, de dokter, de notaris, was made possible by economic localism enforced by the state. Europe was riven until the nineteenth century by toll gates within countries and at all manner of frontiers—this in sharp contrast to China at the time, I have noted, which constituted one enormous market, and had for centuries. ”

“After the change in rhetoric around 1707 a free-trade area as large as Britain’s could develop sufficient material and intellectual interests in free trade to unbind Prometheus.”

“It would account for the failure of earlier and small and therefore easily monopolized merchant republics to achieve what Holland almost achieved, and then England and then Scotland and then the English colonies in North America did achieve. Scale mattered. What mattered, too, was refraining from (regularly idiotic) central control.”

“Material and legal constraints on the economy and society of Europe, I have said, did not change much in the run-up to 1800, that is, from 1689 to 1789, at any rate not on the scale of the material and legal change from 1789 to 1914, or still more the change from 1914 to the present”

“Betterments were for the first time recognized as factually important in civilian life. They were for the first time defined as good, and not subject to interference… The new stasis shifted the burden of proof, to use another rhetorical concept, from those who advocated creation to those who opposed destruction.”

“Until 1800 new ideas had not achieved anything like a geometric progression, though trade was then already tens of millennia old. ”

“The argument is that there was a sharp rise in the society’s receptiveness to improvers. It was social memes, socially inheritable ideas, that changed—not individual genetics or psychological dispositions or physical strength or ability to read. Liberty and dignity meant that the society was receptive to trade-tested betterment,”

“The core model, in other words, should not be nuclear fission, the reaching of a threshold—at which, with the creative people bouncing against each other, the reaction becomes self-sustaining. It was more like a forest fire. The kindling for a creative conflagration lay about for millennia, carefully prevented from burning by traditional societies and governing elites with watering cans. Then the historically unique rise of liberty and dignity for ordinary people disabled the watering cans and put the whole forest to the torch.”

“Governments cannot do much to nurture human creativity. Free and even government-provided schools can nurture creativity, if not corrupted into sinecures for bad teachers and worse bureaucrats, and not teaching merely traditional or clerisy-approved attitudes. Courts of law can protect it, if not corrupted into protections for the rentier elite. But governments have in addition many, many tools for killing creativity. Majority voting, as much as it is to be encouraged, is not the same thing as dignity and liberty for the betterers who make us rich and free, unless the parallel democracy of the marketplace is encouraged.”

“China had enormous cities and millions of merchants and security of property and a gigantic free-trade area when bourgeois northern Europeans were still hiding out in clusters of a few thousand behind their tiny city walls, with barriers to trade laid on in all directions. Internal barriers to trade in China existed but were centrally and uniformly imposed, and nothing like the chaos of local tariffs in Europe. China for centuries had village schools, and high rates of literacy and numeracy by early modern standards. Until the fall of the Ming (1644), it “undoubtedly had the highest level of literacy in the world.”

“If the theory of technological unemployment espoused by the man in the street (and, startlingly, as I have noted, by some of the economists in the study) were true, almost all of us would be unemployed. Easily four-fifths of the employments of 1850 no longer exist”

“After 1991 and Singh’s liberal allies, much of the culture didn’t change, and probably won’t change much in future. Economic growth, as the Japanese have long shown, does not entail becoming identical to Europeans. Unlike the British, the Indians in 2030 will probably still give offerings to Lakshmi and the son of Gauri, as they did in 1947 and 1991.”

“Take science, which Mokyr puts at the center. The achievements of science relevant to technology and therefore to economic activity were modest until around 1900, did not come to influence large swathes of the economy until after the Second World War, and were not transformative of human fate until about now. ”

“There are too many examples of countries turning their economies around in a relatively short period of time, a generation or less [Korea, Singapore, Thailand, Ireland, Spain]. . . . These successes cannot be squared with the culture-is-everything view.” The same could be said of countries turning their politics around in a short period of time, with little change in deep culture, such as defeated Germany, Franco-less Spain, Russia-freed Poland, enriched Taiwan. ”

“Evolution in biology and in an economy, both, depend on variation and a mechanism of selection from the variation, and then on heritability to fix the selected variation. Legal liberty and sociological dignity for ordinary people provided variation, in the form of cooperation,”

“The new liberty and dignity in the Anglosphere then provided the selection, in the form of competition. (But if the forces of conservation are too strong, as they often are, the variation-cum-selection has no chance of achieving heritability—the third condition for evolution being—and thus of altering matters.) If betterments did not meet a profit test, they died.”

“Smith would not have wasted his breath if he had thought ideas were mere reflexes of the interests. No writer urging better economic or political policy can support without self-contradiction the cynical, amoral theory of prudence-only materialism. If materialist economism is true, put down your pen.”

“The European Civil War of 1914–1989 showed how nineteenth-century theories hatched by the clerisy could kill off liberty and prosperity, and tens of millions of people to the bargain. If you doubt that ideas matter, consider the importance of idea-besotted leaders in that pitiful history, when the right circumstances and the right ideas met.”

“People in the poorest countries nowadays, who assume not unreasonably that their economies are zero-sum, reckon that they can best advance by theft, graft, influence, corruption, rent-seeking. People in rich countries reckon, on the contrary, that the best way to advance is invention and betterment, which is why such countries became wealthy, at any rate until government expenditures got large enough to encourage rent-seeking to take over again.”

“Rent-seeking guilds were unusually weak in Holland and Britain after 1500 by comparison to Italy or Germany or Spain. In London or Amsterdam you could set up in business with a relatively free hand,”

“The trouble with a liberal society is that it has few defenses against the worst of left or right dogma, because its leading principle is pluralistic nondogmatism.”

“Trade-tested supply earns only “normal” profits, as the economists put it. Betterment, by contrast, earns “supernormal” profits. But both profits, I claim, contrary to the customary doubts, are sweet in their effects, if accompanied by the liberty to compete and the dignity to cooperate that inspired the betterment in the first place.

Economic betterment counts as honorable only in the Bourgeois Era. Or to be precise, the honorable activity in the Aristocratic Era was “betterment” without a money-profit test.”

“The rich, or the aristocracy, or the princes of the church, have always had their unadvertised resorts on closed islands. The rest of us, though, now have millions of businesses standing eager to serve us.”

“We as a society are made better off by such a rule of positive profit. The only reasonable exception to following the rule for ordinary goods, I repeat, is when there is some other source of value to add to the scales—”an externality… Factually speaking, such exceptions seems to be rare—or to be precise, no economist has shown that they bulk large in the economy, though many have asserted confidently that they do, and that the present economist knows just where they are.”

“Trade-tested betterment is the most altruistic of economic systems, because everything is directed toward satisfying ordinary customers. ”

“Stowe wanted everyone to be protected in a loving family, which is the root of one’s youthful attachment to socialism.”

“Redistribution, though it assuages bourgeois guilt, has not been the chief advantage to the poor. Economic growth has.”

“The point is that the 25 or 28 percent increases to be had through onetime redistributions are two orders of magnitude smaller—and much less effective in helping the poor—than the 900 or 2,900 or 9,900 percent gains from greater productivity since 1800. ”

“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.”

“A diverted Christianity was another cause, apparent, for example, in the numerous children of Protestant ministers filling the ranks of American Progressivism. And a new prestige for social science and the making of statistical surveys led to the conviction that people could be engineered, with results that would be better than profit-driven trade.

But anticapitalism came in part also because trade-testing disturbed the society without at first enriching ordinary people greatly… When trade unionism, the Bismarckian welfare state, Progressivism, and socialism arrived, they corresponded with the big rise in real wages, and gave the impression of causing it”

“The clerisy is an appendage of the bourgeoisie. The treason of the clerisy in France and England, I have noted, was a treason against their fathers, uniformly bourgeois. So it was in Germany, as with Marx the son of a lawyer and Engels the son of a factory owner… And later the American progressives, advocating a secularized but nonetheless Christian ideal for public policy, were out of all proportion, I just said, the sons and daughters of Protestant ministers, themselves from bourgeois roots”

“After 1848 the Bourgeois Deal and its ethical supports came under attack from two alternatives. The Bolshevik Deal, that is, central-planning socialism and state ownership of property,”

“The other and anti-Bolshevik alternative to the Bourgeois Deal is the Bismarckian Deal,”

“The minimum wage was specifically designed to make the poor poorer.”

“Post–Great Enrichment countries can be pretty careless with exact economic efficiency, because they will nonetheless remain pretty rich… Look at Italy’s inefficiencies as against New Zealand’s honesty, and note their very similar incomes per head.

That is, a clumsily designed social safety net, or rich-kid-enriching free higher education, or further regulation of overregulated industries such as food or banking or housing, or any of the socialism-lite measures so popular in essentially capitalist countries such as Sweden or the United States, are not greatly impoverishing. The extreme case was central planning and complete state ownership, which did greatly diminish communist incomes. Yet even Polish income down to 1989 did not actually fall.”

“The left and right join in opposing the future—the one because it is not a planned future and the other because it is not identical to the past.”

“What makes bad institutions bad are not the formal rules but their ethical or unethical implementations, the spirit, die Geist. If central planners were all incorruptible geniuses of good will, even central planning might work pretty well—in a household, I say once “more, it often does, which is the instinctive basis of its appeal. And a company is a site of planning, as though a lump of conscious control, as the economist Dennis Robertson once put it, floating in a buttermilk of unplanned markets.

It’s a matter of diminishing returns to ethical behavior. At low levels of ethical behavior, as in Malawi now or in the USSR once, the loss of income from the evil is large. But at high levels of ethical behavior, such as in Minnesota now, the marginal gain from additional ethical behavior is small. ”

“Their invulnerability to scientific evidence suggests that they arise from a prior, fixed, and emotional conviction that market-tested betterment is significantly imperfect. The only task is to spot the imperfection, and then turn the state loose to repair it.”

“By now in rich countries, and increasingly in poor countries, equality in consumption has been achieved.”

“Robert Fogel argued persuasively in 1999 that the inequality that matters mainly in a rich country like the United States now is not that of material consumption but of cultural advantage.”

“The left long predicted that “capitalism” would impoverish people. Once it became obvious that such an attack on how we live now was not persuasive, in view of the evident enrichment of poor people, even in the Third World, the left moved to lamenting instead that “capitalism” damages people spiritually. When that theme too was worn out, it shifted to environmentalism. Recently it has insisted on the evil of any difference in personal or regional income whatever. The left, in other words, wants to find “capitalism” nasty, independent of the evidence. ”

“You can thereby make an unattainable best the enemy of an attainable pretty good. But observe that most of the world wants merely the pretty-good hope that Britain or the United States or more widely a European or now an East Asian level of productivity offers.”

“Agricultural societies were highly bossed, even centrally, and were unproductive for the poor because the bosses took the surplus by compulsion. Yet when compelled hierarchy started to creak in the seventeenth century, reinstating a pre-agricultural equality, the societies of northwestern Europe began to allow what turned out to be an extremely productive equal dignity in a modern, arms-length form. People want dignity, even more than they say they want income equality. And in a modern economy they achieve it.”

“The routine of trade or accumulation or exploitation does not explain such creativity in bettering workshops, the tinkering, the shock of the old. We need to focus on how habits change, how people imagine new technologies, improving them in response to economic pressures and especially in response to a new culture of honor, and devising new uses out of old technologies. What changed with accelerating mass from 1600 and 1800 was how people talked about each other, yielding a change in how they thought about technical and then social problems. In other words, a society of open inquiry depends on rhetoric in its politics and in its science and in its economy, whether or not the word “rhetoric” is honored. And because such societies are rhetorically open they become intellectually creative and politically free. To the bargain, I have argued, they become astonishingly rich. ”

Related Books

1. “Why the West Rules-for Now: The Patterns of History” by Ian Morris
2. “Escape from Rome: The Failure of Empire and the Road to Prosperity” by Walter Scheidel
3. “Enlightened Economy: An Economic History of Britain 1700-1850” by Joel Mokyr
4. “The WIERDest People in the World” by Joseph Henrich
5. “A Culture of Growth” by Joel Mokyr
6. “Bourgeois Dignity: Why Economics Can’t Explain the Modern World” by Deirdre McCloskey
7. “The Birth of Plenty: How the Prosperity of the Modern World was Created” by William J. Bernstein
8. “Why Europe?: The Rise of the West…” by Jack Goldstone
9. “Why did Europe Conquer the World?” by Philip Hoffman

If you would like to learn more about progress, read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.