Free Minds & Free Markets

How Freedom Made Us Rich

Economist Deirdre McCloskey explains the roots of "The Great Enrichment" of the last 200 years.

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McCloskey: I think it's just completely wrong. My friend, Tyler Cowen, my friends at George Mason think maybe it's time for an intervention and Tyler, we think maybe we should send him to dry out somewhere because he seems to have gone crazy on this and he's not alone. I mean, there are people like Bob Gordon wrote a book last year, which was very successful.

Gillespie: Which argued that basically say goodbye to 2%, ...

McCloskey: Exactly.

Gillespie: ... even 2% economic growth.

McCloskey: Exactly. Innovation in the United States is finished and we've invented all the window screens and drop ceilings we're ever going to invent. There are a whole bunch of things wrong with it. One is that it doesn't make a lot of quantitative sense. In Tyler's book, which is called Average is Over, he's got a chart, which he says, "Summarizes my point." It's terrible. See the falling share of labor in national income. You look closely at the chart, which is one of these Time Magazine charts, it goes down like that. It turns out it's gone from 63% to 61%, talking about 2%. Now, come on Tyler. Please. Then, Bob likewise, and lots of others. I mean, in fact, it's a very old theme.

People have been saying since the beginning of modern economic growth, around 1800, that well, it's finished. John Stuart Mill, the great father of us all had that opinion, that the stationary state, as he called it, was around the corner. It hasn't happened yet, that's one thing. Joe Mokyr, my friend, is another optimist. He says, "Look, come on," and biological research. Then, the point that I like to make is we're only talking about the United States. Now, wait a second. Time out. The world is growing. In come per head in real terms is growing faster right now than it ever has in the history of the world. These two countries, China and India, 40% of humankind, are growing like mad, 7% to 10% per year.

Gillespie: Although, they are slowing down. Right?

McCloskey: Yeah, slowing down.

Gillespie: Yeah.

McCloskey: They're going from 10 to seven.

Gillespie: Right.

McCloskey: Hey, wouldn't you like to have 7% growth in your salary? So anyway, there's ample cause for optimism because when those people come online, you get masses of engineers, entrepreneurs, free people, at least in India and we were hoping in China. They'll make inventions that will spill over to us just as our Northwestern Europeans, our inventions spilled over to them. For the next, I don't know, century or two, I see no slowing down.

Gillespie: Well, let's talk about the Bourgeois trilogy.

McCloskey: Yeah.

Gillespie: Virtues, equality, whatnot, in that you talk about the great enrichment ...

McCloskey: I do.

Gillespie: ... and you touched on it. Explain that and talk about its causes. Who are the people you're sparring with?

McCloskey: I'm sparring with Marx, I'm sparring indeed with Mill even. I'm sparring with modern growth theories, so called in economics. I'm certainly sparring with ... Well, I'm sparring with everybody, that's why I have no friends. I'm sparring with the left, I'm sparring with the right. The essential point I'm making is that what happened in 1800, thereabouts, was that people could have a go, as the English say, masses of people, ordinary people. Now, come on, there were slaves in the United States and there were hopelessly poor people in Britain and so forth, so it wasn't really everybody and all through this period, women were not fully emancipated. Still, it was a great improvement over what it had been a hundred years before in the way of allowing people to do stuff. To start a hairdressing salon when they want and where, as against making them get a license to braid hair, which we have now. And of course, these were inventions, not just of a mechanical sort, but of an institutional sort, inventing stock exchanges and the modern university dating from 1810, the University of Berlin.

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  • loveconstitution1789||

    Life, Liberty, and the pursuit of happiness....

  • Jerryskids||

    That's the answer to the precedential question of "What makes us rich?" If I can sit out on the back porch of an evening, sipping a beer and watch the grandkids playing, knowing as I look around that "this is mine", I'm as rich as any king. YMMV, and that's okay - you pursue happiness in your way, me in mine.

  • ChipToBeSquare||

    A lot of leftists try going out of their way to explain why some people are poor without realizing the absurdity of that question. Poverty is the natural state of human existence and a thing we battled for thousands of years. What needs to be explained is wealth. They'll usually throw out some crap about exploitation, but that's easy to destroy: you're telling me there was no exploitation anywhere prior to the 17th century?

  • mtrueman||

    "Poverty is the natural state of human existence and a thing we battled for thousands of years. "

    Same with freedom. People have been subjugating themselves to all sorts of authority figures in return for a measure of security and material comfort.

  • mtrueman||

    I doubt you're as happy as the average Nigerian, happiest people on the planet.

  • Philadelphia Collins||

    unPlanned Parenthood disagrees.

  • SQRLSY One||

    ... and now, next upcoming, how OTHER new ideas made it all come crashing down! Communism, socialism, political correctness, and over-sized Government Almighty that promises to be ALL things to ALL people!

  • Jerryskids||

    The concept of sanitation and modern medicine created a vast over-supply in the labor market and somehow we dealt with that. Not to mention women entering the workforce. To people who croaked left and right from getting a drink of water or cutting themselves on a broken piece of glass or popping out a baby, modern human beings must seem like miraculous self-healing robots impervious to death and disease. How the heck can you expect to keep this many people employed when a substantial part of your workforce isn't dropping dead and creating a job opening every winter?

  • Scarecrow Repair & Chippering||

    Not sure how you prioritize your first and last sentences, if my sarcasmometer is busted ...

    The answer is quite simple, whether it is immigrants "stealing jobs" or newborns doing the same: all those new people are also new consumers and gladly create demand for all the new jobs.

  • Jerryskids||

    Maybe that last sentence should have been in quotes - I'm saying that to somebody from few hundred years ago, it might have been a puzzle as to how you could possibly expect to keep this many people employed for their whole long, healthy lives. Somehow no matter how cheaply and easily you produce everything anybody could possibly want, they find yet more things to add to the list of things they want and create new demands for new jobs. Look at agriculture for example. A mere few generations ago, everybody and their brother worked on farms and now it's all done by machinery. Where did all those millions of unemployed farm workers go? Among other things, they're making apps for iPhones that can remotely check to see how much milk you have in the fridge - and who could have imagined a hundred years ago that there'd ever be a market for such nonsense?

  • Scarecrow Repair & Chippering||

    Thanks for clarifying that. It was what I hoped you were saying, that yes the last sentence was a quote question, not a statement in conflict with the first one.

  • Bra Ket||

    I think we have seen a real problem when these life-supporting benefits of western development trickle down to parts of the world that still restrict the liberty part of the equation. We end up with the fastest population growth in the places least able or willing to absorb the new population.

    Nature on its own had handled the "life extension problem" reasonably well, with minimal reproductive rates for highly-skilled workers, and shrinking populations in developed countries.

  • mtrueman||

    "How the heck can you expect to keep this many people employed when a substantial part of your workforce isn't dropping dead and creating a job opening every winter?"

    If you're an employer, you can lay off employees. You don't need to keep them employed. That's why they're employees and not slaves.

  • Bgoptmst||

    Maybe I am being stereotypical ... but I bet she doesn't fit in well with the majority of the Chicago crowd.

  • mtrueman||

    She works at the University of Illinois, at Chicago. A truly second rate institution along the lines of George Mason University.

  • Sevo||

    As judged by a third-rate intellect.

  • OM Nullum gratuitum prandium||

    Excellent interview, Nick. I was fascinated by it. I didn't know Ms. McCloskey but now that I know I'm going to search for her book.

  • Stephen Mintz||

    Nice article pure informative and knowledgeable thank you for sharing it. visit here

  • SorinGhinescu||

    Very interesting point of view, that ideas, not something else, fuel the enrichment.
    There should be further research available through to demonstrate a strict causality between freedom empowerment and economic development. I will gladly read her book looking for such connections

  • SorinGhinescu||

    ... and it's a bit like the egg - hen problem

  • Johnandrews||

    Bourgeois Equality - nice title. I'm sure that this will be my next book to read. It seems to be a complex topic that contains a lot of facts from economics, history, sociology and other spheres. As for me, as for the freelancer who provides college essay writing service, this could be extremely helpful to make the papers for students. And some historical books even inspired me for writing the blog, and I'm looking forward to reading this one.

  • Mayur Sanitation||

    I am somewhat of a newbie to Internet marketing and blogging. So with that being said, I am very glad to that I found this blog post. I've heard talk of "How freedom made us rich" but never really knew what it was all about, however, I can say that I understand a lot better now. I plan to stay connected to your blog. Can't wait to see what you're going to write next. Thanks.


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