The explanation of the Great Enrichment is people. Paul Romer says so, as do a few others, among whom are some students I did not teach price theory to at the University of Chicago. On the other hand, Paul sets it down to economies of scale, which mysteriously drop down on England in the 18th century and gradually on us all. Yet China had peace, science, and enormous cities when Europeans were huddled in small groups inside town walls, or isolated villae.
In particular, it is ideas that people have for commercially tested betterment that matter. Consider alternating-current electricity, cardboard boxes, the little black dress, The Pill, cheap food, literacy, antibiotics, airplanes, steam engines, screw-making machines, railways, universities, cheap steel, sewers, plate glass, forward markets, universal literacy, running water, science, reinforced concrete, secret voting, bicycles, automobiles, limited access highways, free speech, washing machines, detergents, air conditioning, containerization, free trade, computers, the cloud, smart phones, and Bob Gordon’s favorite, window screens. …
And the Great Enrichment depended on the less famous [but] crucial multitudes of free lunches prepared by the alert worker and the liberated shopkeeper rushing about, each with her own little project for profit and pleasure. Sometimes, unexpectedly, the little projects became big projects, such as John Mackey’s one Whole Foods store in Austin, Texas resulting in 479 stores in the U.S. and the U.K., or Jim Walton’s one Walmart in Bentonville, Arkansas resulting in 11,718 stores worldwide.
Letting people “have a go” to implement such ideas for commercially tested betterment is the crux. It comes, in turn, from liberalism, Adam Smith’s “obvious and simple system of natural liberty”, “the liberal plan of [social] equality, [economic] liberty, and [legal] justice”. Liberalism permitted, encouraged, honored an ideology of “innovism” — a word preferable to the highly misleading word “capitalism,” with its erroneous suggestion that the modern world was and is initiated by piling up bricks and bachelors’ degrees.
Dierdre McCloskey, “How Growth Happens: Liberalism, Innovism, and the Great Enrichment (Preliminary version)” [PDF], 2018-11-29.
July 5, 2022
QotD: The Great Enrichment
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