what mattered were two levels of ideas—the ideas in the heads of entrepreneurs for the betterments themselves (the electric motor, the airplane, the stock market); and the ideas in the society at large about the businesspeople and their betterments (in a word, that liberalism). What were not causal were the conventional factors of accumulated capital and institutional change. They happened, but they were largely dependent on betterment and liberalism.
Pointer from James Pethokoukis, via Don Boudreaux.
Nick Schulz and I call this the software layer of the economy. Innovations account for our prosperity. Bad institutions account for poverty. McCloskey’s thesis is that bad ideas about society account for bad institutions. In terms of the Book of Arnold, when too many people think of merchants and traders as defectors, you get bad institutions.
There is much more to McCloskey’s summary of her thinking. For example,
For reasons I do not entirely understand, the clerisy after 1848 turned toward nationalism and socialism, and against liberalism. It came also to delight in an ever-expanding list of pessimisms about the way we live now in our approximately liberal societies, from the lack of temperance among the poor to an excess of carbon dioxide in the atmosphere. Anti-liberal utopias believed to offset the pessimisms have been popular among the clerisy. Its pessimistic and utopian books have sold millions.
“In terms of the Book of Arnold, when too many people think of merchants and traders as defectors, you get bad institutions.”
This viewpoint seems to fit pretty closely with Jane Jacobs’ “Systems of Survival”:
https://en.wikipedia.org/wiki/Systems_of_Survival
Anywhere the ‘Guardian Syndrome’ dominates over the ‘Commerce Syndrome’, change will repressed and economic growth will stagnate.
I was wondering this about McCloskey’s idea that zeitgeist has a switch but this question would go for Jacobs’ ideas as well as Kling’s description of the treatment of defectors.
Why would a society bifurcate between two collections of features (syndromes)? Do they? Is one right and the other wrong or is it a cycle where the two alternate desirability and sometimes societies over-do it?
For reasons I don’t entirely understand, the clerisy after 1968 turned toward feminism and sexual deviancy, and against biology.
The rifle and the pill, respectively?
It would be fascinating to hear McCloskey’s thoughts about turning “against biology”.
Indeed. And “s”he of all people should have some insight on sudden changes in public morals.
Good sentences:
“In a collection of mini-essays asking “Does the Free Market Corrode Moral Character?” the political theorist Michael Walzer replied “Of course it does.” But then he wisely adds that any social system corrodes one or another virtue. That the Bourgeois Era surely has tempted people into thinking that greed is good, wrote Walzer, “isn’t itself an argument against the free market. Think about the ways democratic politics also corrodes moral character. Competition for political power puts people under great pressure . . . to shout lies at public meeting, to make promises they can’t keep.” Or think about the ways even a mild socialism puts people under great pressure to commit the sins of envy or state-enforced greed or violence or environmental imprudence.”
On net, free-markets enhance rather than corrode moral character by leading people to expand their circles of concern and treat strangers fairly:
https://reason.com/blog/2010/03/18/science-shows-that-markets-mak
True, in a free market, a business in the Jim Crow South would have been free to serve Blacks how they saw fit. Some businesses would not restrict their Black customers and thus gain their custom along with the Whites who didn’t care about the matter. But there had to be laws, followed up by the threat of government violence against business owners who chose to integrate. Not to mention, the unlawful combination, the Klan, that conspired to act against not businesses, their owners and Blacks who didn’t go along with the unconstitutional and against ancient Common Law combinations to harm Blacks.
In a free market, it was in the interest of the seller to seek to supply the needs and desires of customers of all races, or dare we say in the interest of their greed. It was only the socialistic restraints imposed by government to impede the free market that enforced the discrimination across the society.
” (using again socialistic in its proper sense of that which controls personal liberty for the interest of the community or state)”
In ‘The Most Powerful Idea in the World’, William Rosen tracks the development of the steam engine (and the industrial revolution) after the creation of that most powerful idea, that one can own an idea as property. But this property is only protected by the state and that protection is given with the proviso that the idea/invention is shared with the world and become common property after the short term of the patent.
The invention of that exception to the ending of monopolies is credited to Sir Edward Coke. He also argued many other changes in ideas using the Magna Carta. Mostly unknown, he could possibly be the linchpin to the invention of the modern world, the expansion of liberty and the industrial revolution.
The importance of the software layer has been known for decades (though not phrased that way), I feel like maybe the next frontier is to figure out the conditions that give rise to good societal OS, and how to change existing societies with bad OS. Culture, geography, technology, disposition, perhaps even biology may be relevant to whether good institutions arise. People from states with bad institutions do much better when moving to states with good institutions, but do they shift or undermine them over time? Can you impose them on unfamiliar places (ie Iraq)?