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There's this tremendous up swell coming from ideas, whereas my colleagues, most of them, there's a little tiny group that includes this fellow Joe Mokyr, who believe that ideas are important, but most of my colleagues in economic history and economics believe that it's trade or that it's, if they're on the left, it's slavery or whatever. The trouble with that is that we've had trade and slavery since Cane and Abel. Look, in 1792, if you were going to bet on who was going to have a great enrichment of 3,000% per capita when previous increases has been a hundred percent and then falling back to $2 or $3 a day per person, 3,000% per capita, in 1492 you would have been crazy not to bet on China because China had the most advanced commercial institutions, the most advanced ship building technology, the most advanced machinery all together, indeed the most advanced science at that stage. My claim is that liberty was the key to modern economic growth .
Gillespie: To put it in a context that, as somebody coming out of literary studies, when I looked at your work, you're anti-determinist.
McCloskey: I am.
Gillespie: There are a lot of libertarians or free-market people who will say well, it's because the west was well situated demographically or geographically ...
McCloskey: Yes, so they say.
Gillespie: ... where we had natural ...
Gillespie: ... resources and things.
McCloskey: Lots of ports.
Gillespie: You're saying it's essentially ideas. What are the essential ideas that allowed people to have a go of it?
McCloskey: Well, the essential ideas, as the blessed Adam Smith said, "The liberal plan of equality, liberty, and justice," by which he meant social equality. He was an egalitarian, a somewhat advanced egalitarian for his age. By liberty, he meant this right to open a hairdressing salon and the like, or to invent a Uber, which would destroy the taxi industry. And t hat just, it inspirited people. I think it's very important to not think in mechanical terms. I think socialists and some people, some conservatives, think the economy is just mechanical. People are always talking about, I don't know, increasing economic growth in Youngstown by pouring money into it and that will have multiplier effects. They have this kind of vaguely Keynesian idea that you can make things happen in this mechanical way by just stuffing ... They speak of priming the pump and all that, but it's inventing the pump that's the key .
Gillespie: How did it happen that the west creates a system where a lot of people are relatively equal and can act and live how they want and that even say, you know, business people or rich people, wealthy people, powerful people, will sign on to a system that allows other people to possibly compete with them and beat them and surpass them?
McCloskey: Yeah, well, that's the big one. If you were betting, you would never in the 15th century have bet on Europe. That would have been stupid. This quarrelsome, poor, disease ridden place of fanatics who then became more fanatical in the 16th century. No, it was accidents. For example, the Protestant Reformation, which Max Weber claimed changed the psychology of the entrepreneur. I don't think it did. I think what it did, the radical Protestant Reformation, the Quakers being the most extreme case one can think of, but also the Anabaptists and so forth, got along without hierarchies. In the case of the Quakers, there's no minister. They just gather in a circle and wait until the spirit of the Lord descends. That experiment in getting away from what had been the hierarchy in this very important part of their life, mainly religion, made people think oh yeah, maybe I could get along without bishops.
Gillespie: What was the role of chopping off the head of Charles the First in all of that?
McCloskey: Well, see, these are all contingent.
McCloskey: They're all accidents. There's nothing deterministic about them. Had Charles been a more sensible man, his father was called the, James the First, was called the wisest fool in Christendom, but his son wasn't that much smarter and he said, on the scaffold, he was allowed under English law to give it because he'd been convicted under an English law. Shocked the whole of Europe that an anointed Prince could be tried. I mean, Princes died violently all the time, but could be tried and found guilty. He said, "Don't you understand, a sovereign and a subject are clean different things?" That's what broke down, this conviction that that's true. A conviction actually, which was invigorating in Europe in the 16th, and especially the 17th, century. All across Europe, east and west, the divine right of kings was being asserted, and it could have gone the other way. It could have been that we became Russia or Prussia, for that matter, but we didn't. We became French or British.
Gillespie: Now you're talking, you've made an allusion to Uber and the kind of regulatory burden that companies or new business, new ideas face in 21st century America, hair braiding, occupation licensing. Are we backsliding from that tradition and what do we do to arrest that?