How leaving people alone makes us rich
— March 8, 2021
How leaving people alone makes us rich
In our book Leave Me Alone and I’ll Make You Rich: How the Bourgeois Deal Enriched the World, we claim to achieve two immodest goals.
First, we answer the biggest question in the social sciences. Why is the world of 2021 so radically different from the world of 1721 or 1421 or 1121—vastly more rich, more free, more human scope? Second, we answer the biggest question in the humanities: Is the world wrought since 1721 or 1421 or 1121 still pretty good and approximately true and fairly beautiful?
McCloskey, explored the two questions in a trilogy of doorstop volumes on what she calls The Bourgeois Era—The Bourgeois Virtues (2006), Bourgeois Dignity (2010) and Bourgeois Equality (2016), 1,700 heavily-footnoted pages in all. In about 200 snappy pages, Leave Me Alone provides the executive summary.
Indeed, 2021 is very different from 1721 because beginning around the middle of the 18th century a Great Enrichment began in, of all places, northwestern Europe—until then a wretched little corner of the world. It didn’t happen, as some conservatives tend to believe, because Europeans have special genes or ancient institutions. Nor, to the opposite political tack, was it because Europeans did especially horrible things to their poor people or to poor people abroad.
No. Europeans just got lucky. The confluence of the “Four Rs”—Reading, Reformation, Revolt and Revolution—led to the beginnings of liberty for ordinary people. Liberty permitted then to take a chance and, as the sporting British say, “to have a go.” The result was the economic structure of the modern world, what we call “innovism.” Innovism is an economy of incessant innovation tested in markets. It’s a much better word for what happened than the hopelessly misleading word “capitalism.” By the 18th century in some few countries, innovism came about from a Revaluation of the bourgeoisie, the middle class, and from the new permissions granted to the working class to rise into the bourgeoisie by venturing or least getting a good job at good rates. Boss and worker dealt in markets in aid of innovation.
For example, every year in U.S. and Canadian grocery stores, 20,000 new products are tried out. In the 17th and 18th centuries, public opinion—first in Holland, then Britain, then the United States, then France, then the world, down to China and India nowadays—stopped hating innovism and hating the bourgeoisie for opening new businesses and hating the disturbing venturing of a mobile working class. The world on the contrary went crazy with innovations, big and small, Edison and emigration. How crazy? A three thousand per cent rise in the ability of poor people to buy goods and services—that is, a factor of 30 increase in GDP per person in formerly unspeakably poor places such as Japan or Finland in 1900, or England and Canada in 1800.
Contrary to popular perception, people have not gained the world at the expense of their souls. The Great Enrichment permitted seven times more people on the planet to live lives twice as long and vastly healthier, 30 times better supplied with goods and services and with greatly increased scope to flourish morally and spiritually.
Our book examines, measures and on the whole finds sadly wanting the usual stories about why Europe was so greatly enriched, and why enrichment spread to the world. Coal and coastlines, for example, were nice to have, but coal and coastlines were there when Europe was still a miserable backwater. The iron ore in Birmingham, Alabama’s Red Mountain sat there since time immemorial, and only started enriching in the late-19th century. Historians have tried to explain the enrichment with such things that are nice to have but that don’t have much quantitative oomph. They explain 2 percentage points, or maybe even or 20 percentage points, of increase over the miserable base in 1800.
Good to have. Not to be disdained—trade, banking, railroads. But the scientific job is to explain the Great Enrichment’s 3,000 percentage points in the countries that adopted the Bourgeois Deal—leave me alone and I’ll make you rich. Even countries such as the old Soviet Union, which explicitly rejected the Deal, got spillovers of innovations from it, including the radio, jet plane and farm tractor.
The reigning explanations, that is, don’t work. Basic science, for example, mainly lagged behind technology until very late in the story, and was financed by the rising tide itself. It was usual for people to devise something that worked, such as the steam engine, and only later figure out why it worked (see thermodynamics). Likewise, K-12 schooling and college are certainly nice to have (so two college professors declare), but the Great Enrichment was well under way before mass schooling had much impact. And economists agree that free trade is very nice to have, but even the move to free trade explains only a little of the Great Enrichment. And finally, lawyers and many economists agree that secure property rights are necessary for a Great Enrichment. But property rights are not sufficient, and were in place centuries before the Enrichment happened, and in countries such as China long, long before English common law.
Exploitation of the poor or slaves or foreigners doesn’t do the explanatory work, either. Contrary to what you might hear on TV, the West did not grow rich because of surplus value or imperialism or slavery. As historian Niall Ferguson points out, imperialism was the least original thing Europeans did after 1492. In 1852, Benjamin Disraeli, that great British imperialist, complained that “these wretched colonies are a millstone around our neck.” He was right (though he would later go on to embrace colonialism for political purposes). British imperialism made a few people rich, but reduced the incomes of average people, taxed to pay for the Navy, for example, that protected the sea routes to India, and then taxed and drafted to fight in the Burmese jungles.
The claim that profits from slave-produced cotton and the slave trade financed industrialization is also mistaken. Indian and Egyptian or Chinese cotton, combined with the rapid recovery of the Southern cotton economy after emancipation, suggests that slavery per se was not necessary to produce cotton or its cloth. And slavery, like imperial exploitation, has existed pretty much in all places for pretty much all of agricultural history. The trans-Saharan and Indian Ocean slave trades were enormous, and the slave traders in Algiers and Istanbul buying and selling enslaved Europeans (“slave” < Slav) were every bit as profit-focused as the slave traders buying and selling enslaved West Africans in Recife and Kingston and Charleston. If slavery led to industrialization, then the Great Enrichment should have started somewhere other than northwestern Europe, and long before the 18th century.
But what about the slave trade? Anyone with a ship and an easy conscience—both in abundant supply—could become a slave trader. Profits attract entry. In the highly competitive global market for ships, in other words, no European could expect more than the normal rate of return on slave-trading. As Robert Paul Thomas and Richard Nelson Bean argued in a 1974 article “The Fishers of Men: The Profits of the Slave Trade,” any extraordinary profits would have been captured by African warriors seizing fellow Africans to sell on the coast. The profit didn’t get to England to fund innovation.
Innovism was a long time coming. In 1561, John Calvin wrote “It is the duty of private men to obey, and not to make innovations of states after their own will.” Today, everyone—even a 21st century Calvinist in a U.S. mega church—wants to “make innovations” of states or religions or of making things. A confluence of happy accidents from 1517 onward meant that conservative ideas such as Calvin’s were overcome for the first time in history. Political fragmentation meant that European rulers were playing a game of whack-a-mole they couldn’t win in trying to stop innovations “after the people’s will.” Trying to censor the Gutenberg press or outlaw the knitting machine didn’t work in Europe; it did work in China. Four thousand copies of Luther’s To the Christian Nobility of the German Nation poured out of a printing press in one week in August 1520. The pope could no more suppress it than George Lucas could suppress bootleg copies of the 1978 Star Wars Holiday Special.
By more happy accidents, Revolt by the Dutch against the Spanish and internal Revolution in England, the U.S. and France, spread egalitarian ideas, if imperfectly and slowly—but in the end causing liberating innovism. People had been long forced to accept the Blue Blood Deal, in three acts: “In the first and in the second act, pay your land rents promptly, and bow low as I ride by. And go to war to die in battle for my glory and my gain. By the third act, I will at least not have slaughtered you.” Think of Shakespeare’s Henry V urging on his troops before Harfleur in 1415: “Cry ‘God for Harry, England, and Saint George!”
The Four Rs of Reading, Reformation, Revolt and Revolution—the happy accidents in Europe that could so easily have gone the other way, and did elsewhere, and did earlier in European history—led to a Revaluation of the bourgeoisie and the simple deal it offers—“mind your own business.” Or in the words of Ayn Rand’s character John Galt in Atlas Shrugged, “Get the hell out of my way!” As a three-act drama it was: “In the first act, we of the middle class, or of the working class rising into the middle class—Edison the paperboy or Carnegie the weaver’s son—ask you to leave us alone to buy low, sell high, and come up with what we imagine are better ways to do things. We will do better than the wizards in Washington proposing ‘industrial policy.’ Let us keep the profits if we succeed. We, reluctantly, accept the loss if we fail. (Though, gee, it would be nice if the public purse bailed us out, with say industrial policy; oh, well.) Even more reluctantly, we recognize that in the second act other people will enter the market and compete with us, the rats. (Though, gee, it would be nice if the government would give us a nice, closed monopoly by patent or regulation.; oh, well.) But when the dust settles, in the third act, we will have made you rich.”
And that was just what the bourgeoisie did.
Pre-Great Enrichment, life for most people was solitary, sometimes, and always poor, nasty, brutish and short. The Great Enrichment made possible connected, wealthy, clean, peaceful and long lives, now for much and soon for all of the world. The Bourgeois Deal has partly overcome concentrated efforts to repeal it, from Bolshevism and Nazism to milder efforts such as the New Deal, and now the “Great Suppression” in reaction to COVID-19.
As the world enters the second year of the proposed two-week Suppression (to flatten the curve, you see), it would do well to remember Douglas Adams’s advice in The Hitchhiker’s Guide to the Galaxy: DON’T PANIC. Let’s keep our ethical wits about us. Our futures, and our children’s futures, depend on the Bourgeois Deal.