Until the 19th century, the average person consumed $3 per day (in today's prices). There were small blips for ancient Rome, the early medieval Arab world and late medieval Europe, but otherwise the figure remained fairly constant. Nowadays, the average person consumes $30 per day, a tenfold increase; in the developed world, the growth in consumption is conservatively estimated at a factor of 16.
In Bourgeois Dignity, Deirdre McCloskey seeks to explain the historically unique growth of the past 200 years. She argues that it was not due to economic causes, but that the crucial factor was a change of rhetoric.
McCloskey's argument strategy is John Stuart Mill's method of "remainders". If we take the Industrial Revolution and work out how much of it can be explained by known causes, then the remainder must be the effect of some cause that has been overlooked.
She surveys the gamut of economic and material explanations for the explosion of the growth rate and finds them all wanting: foreign trade, capital accumulation, coal, literacy, imperialism, property rights, greed, population growth, genetics, science, etc. In each case, she argues that the factor under discussion had been present long before 1800 or outside Western Europe, so it could not have been the cause of the growth explosion.
Take the topical example of science and growth. Until the 20th century, there was no correspondence between scientific leadership and industrial leader-ship. For a long time, Chinese and Islamic science were superior to European science. Late 19th-century inventions depended more on cheap steel and concrete, and on people willing to experiment with these new materials, than on scientific theory. For example, the blast furnace was invented in the 19th century, even though its chemistry was not understood until well into the 20th. Innovation and creativity were more important than science.
Similarly, McCloskey argues that education per se is effective only in increasing growth in a climate of innovation and freedom of thought - witness Communist Russia and late imperial China. As a driver of growth, education is more important for its ability to teach students to think freely than for the subject matter they are taught.
McCloskey contends that the missing factor, which was unique to Western Europe around the 19th century, is a new dignity that was accorded to the bourgeoisie in its dealings and a new liberty for them to innovate in economic affairs. Trade and the pursuit of profits became socially acceptable.
So far, the main support for her conclusion comes from the method of remainders. This is the second in a projected series of six books, with the positive argument for the role of rhetoric to come in the next. But a general problem with the argument strategy in Bourgeois Dignity is that the method of remainders ignores the possibility that the growth explosion was caused by a combination of factors, none of which was individually sufficient. One gets the impression that McCloskey realises this. She occasionally talks of the "background conditions" being in place. Her emphasis on rhetoric is itself rhetorical, to give prominence to a factor she feels has been systematically neglected.
While McCloskey's conclusion may be unpalatable to some economists, her claim that it challenges the standard economic framework is less certain. If there is more esteem accorded to bourgeois professions, then there is a greater incentive to enter them. It is hard to see how changes in rhetoric can have effects unless they translate into changes in incentives or preferences. And some of the reasons she cites for the rise to eminence of the bourgeoisie, such as changes in the law regarding land that made it harder for the upper classes to extract rent, could be straightforwardly accepted by an economist as changes in constraints.
While covering a lot of ground, McCloskey never loses track of her overall argument. She carries the reader with her, and this process is aided by short chapters and frequent summaries of where she has got to in her argument. The style is conversational but erudite. Bourgeois Dignity is packed with ideas: a fact in every sentence, an idea on every page. At times it verges on the polemical, but with a dash of authorial self-irony.
Her big picture is that commerce can be virtuous; that markets have increased freedom, happiness and health; and free enterprise has improved the lot of the worst-off. Her series of books will be a scholarly paean to capitalism, extolling the merits of the economic system we live in.
Bourgeois Dignity: Why Economics Can't Explain the Modern World
By Deirdre McCloskey. University of Chicago Press. 504pp, £22.50. ISBN 9780226556659. Published 13 December 2010