NYTimes | What, then, caused this Great Enrichment?
Not
exploitation of the poor, not investment, not existing institutions,
but a mere idea, which the philosopher and economist Adam Smith called
“the liberal plan of equality, liberty and justice.” In a word, it was
liberalism, in the free-market European sense. Give masses of ordinary
people equality before the law and equality of social dignity, and leave
them alone, and it turns out that they become extraordinarily creative
and energetic.
The
liberal idea was spawned by some happy accidents in northwestern Europe
from 1517 to 1789 — namely, the four R’s: the Reformation, the Dutch
Revolt, the revolutions of England and France, and the proliferation of
reading. The four R’s liberated ordinary people, among them the
venturing bourgeoisie. The Bourgeois Deal is, briefly, this: In the
first act, let me try this or that improvement. I’ll keep the profit,
thank you very much, though in the second act those pesky competitors
will erode it by entering and disrupting (as Uber has done to the taxi
industry). By the third act, after my betterments have spread, they will
make you rich.
And they did.
You
may object that ideas are a dime a dozen and that to make them fruitful
we must start with adequate physical and human capital and good
institutions. It’s a popular idea at the World Bank, but a mistaken one.
True, we eventually need capital and institutions to embody the ideas,
such as a marble building with central heating and cooling to house the
Supreme Court. But the intermediate and dependent causes like capital
and institutions have not been the root cause.
The
root cause of enrichment was and is the liberal idea, spawning the
university, the railway, the high-rise, the internet and, most
important, our liberties. What original accumulation of capital inflamed
the minds of William Lloyd Garrison and Sojourner Truth? What
institutions, except the recent liberal ones of university education and
uncensored book publishing, caused feminism or the antiwar movement?
Since Karl Marx, we have made a habit of seeking material causes for
human progress. But the modern world came from treating more and more
people with respect.
Ideas
are not all sweet, of course. Fascism, racism, eugenics and nationalism
are ideas with alarming recent popularity. But sweet practical ideas
for profitable technologies and institutions, and the liberal idea that
allowed ordinary people for the first time to have a go, caused the
Great Enrichment. We need to inspirit masses of people, not the elite,
who are plenty inspirited already. Equality before the law and equality
of social dignity are still the root of economic, as well as spiritual,
flourishing — whatever tyrants may think to the contrary.
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