Magazine article The Spectator

'Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World', by Deirdre Nansen McCloskey - Review

Magazine article The Spectator

'Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World', by Deirdre Nansen McCloskey - Review

Article excerpt

Deirdre McCloskey has been at work for many years on a huge project: to explain why the world has become so much richer in the past two centuries, and at an accelerating rate since 1945. This is the third and final volume in the series. In it she argues that 'our riches were not made by piling brick on brick, bank balance on bank balance, but by piling idea on idea'. The Great Enrichment, which she dates from 1800 to the present, depends on the spread of ideas of liberty, seeded in a series of 'egalitarian accidents' in European politics between 1517 and 1789.

The liberalism she describes operates in a very narrow free zone, hemmed in by what she calls the 'clerisy' -- critics on left and right alike who do not accept a full version of liberalism -- and roughly a third of the text sees McCloskey, vorpal sword in hand, slaying the dragons of the state. But she's fighting enemies from the past: her side has won the battle. Globalisation, neo-liberalism, the expansion of monetary assets and instant internet communication have spawned a new world order without any state powerful enough to contain it.

The transfer of Russian and Chinese billions to safe havens in western cities has caused housing crises in many of them. An Indian family business buys the British steel industry for £6 billion, loses lots of money and simply closes it. The UK state can do nothing. This is not the benign progress that McCloskey describes, and nothing like it has happened before. The Financial Times reported recently that at the end of February there were $267 trillion dollars in exchange traded derivatives -- and that's just one class of asset. For comparison, the gross domestic product of the USA is a mere $17 trillion.

The world today produces 70 times more goods and services worldwide than in 1800. McCloskey gives imaginative examples of the improved standard of living by looking at the products in one's room, starting with 'the 20 ballpoint pens stuffed into a mass-produced coffee cup, pens and cups greatly cheapened after the second world war'. I have just that on my desk. Citizens of the most prosperous half of the world are hundreds of times better off than they were even in 1900 or 1945, and that standard of living is spreading quickly to the poorer places on the planet. A small refrigerator at Home Depot today costs 15 hours of work: at Sears in 1956 it cost 116 hours.

The history of western capitalism does owe a great deal to the onward march of ideas of liberty. But it's not the whole story. The greatest expansion of capitalism, the Chinese economic miracle, has taken place under a very restrictive communist regime. Tycoons who annoy Xi Jinping, General Secretary of the Communist Party, President of the Republic of China and Chairman of the Military Commission, 'disappear' for consultation. The People's Congress rubber-stamps the decisions of the Politburo. …

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