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oleksandr's review against another edition
4.0
This is the second volume in yet unfinished multi-volume magnum opus regarding history of economic development. The first volume, bourgeois virtues was about how, according to the author change in rhetoric and attitudes created the current world as we know it.
The second volume starts with giving a general overview why the growth is so important – chiefly the problem that throughout the human history most people lived at $3 per day (comparative prices of course), but now the average is the factor of sixteen or $50 per day and some western countries that were the leaders, like the Netherlands have over $130 per day. And this doesn’t account properly for the quality of life – from penicillin to internet TV to not burying half of your children.
After setting ‘the great question’ she starts to take apart all existing hypotheses why that happened. It is done, as she honestly admits, because her own hypothesis, that change in rhetoric, namely liberty and dignity, created the modern world, is quite hard to prove. Thus, by disproving the alternatives she ‘cleans the field’ and the following chapters can be viewed as a review and critique of the existing hypotheses.
The following hypotheses are reviewed and disproved, chiefly by counterexamples from other countries and other time periods, which had similar conditions but it hasn’t spurred the growth:
• It is not exploitation of proletariat, actually the poor won more than rich
• It was not the sheer quickening of commerce, commercial revolution was several centuries earlier
• It was not the struggle over the spoils, exploiting new lands by Europeans
• It was not external trade
• The cause was not science
• It was not better allocation
• It was not better genes and eugenic materialism doesn’t work
• It was not accumulation of capital, inheritance fades
• It were not the better institutions, such as those alleged for 1689
It should be noted that the author is not a mainstream economist, she heavily leans toward libertarian views, but she disagrees with them on idea that liberty is enough, for her a social approval, dignity is important as well.
The second volume starts with giving a general overview why the growth is so important – chiefly the problem that throughout the human history most people lived at $3 per day (comparative prices of course), but now the average is the factor of sixteen or $50 per day and some western countries that were the leaders, like the Netherlands have over $130 per day. And this doesn’t account properly for the quality of life – from penicillin to internet TV to not burying half of your children.
After setting ‘the great question’ she starts to take apart all existing hypotheses why that happened. It is done, as she honestly admits, because her own hypothesis, that change in rhetoric, namely liberty and dignity, created the modern world, is quite hard to prove. Thus, by disproving the alternatives she ‘cleans the field’ and the following chapters can be viewed as a review and critique of the existing hypotheses.
The following hypotheses are reviewed and disproved, chiefly by counterexamples from other countries and other time periods, which had similar conditions but it hasn’t spurred the growth:
• It is not exploitation of proletariat, actually the poor won more than rich
• It was not the sheer quickening of commerce, commercial revolution was several centuries earlier
• It was not the struggle over the spoils, exploiting new lands by Europeans
• It was not external trade
• The cause was not science
• It was not better allocation
• It was not better genes and eugenic materialism doesn’t work
• It was not accumulation of capital, inheritance fades
• It were not the better institutions, such as those alleged for 1689
It should be noted that the author is not a mainstream economist, she heavily leans toward libertarian views, but she disagrees with them on idea that liberty is enough, for her a social approval, dignity is important as well.
omnibozo22's review against another edition
2.0
This series presents short condensations of an author's work, then adds commentary by several authors, with responses by the original author. I had read the blurbs on Amazon about her other econ books and was interested in learning more. Now that I've read this ultra short version and the responses, I doubt if I'll read the other books. Her argument is basically that high level abstract ideas precede and are a precondition for socioeconomic change. Scholars of revolutions have pounded on that premise for a couple centuries, with a wide span of opinion still separating them. This brief piece only reinforced the premise that ideas are necessary for change to occur, but it didn't convince me that as urban capitalists gained social prestige, economies grew as because of that. Seems backward to me, and to some of the commenters.
kevin_carson's review against another edition
2.0
The book's line of inquiry is into the causes of what she calls "the Fact" -- the tenfold or more increase in the average person's standard of living in a couple centuries' time.
Her actual argumentation is a mess. What she's actually engaged in an apologetic *for* seems to be an unstable amalgamation of everything she has an aesthetic affinity for, and varies from place to place in the book. But for the most part the view of the world she's advancing is roughly that of Postrel's Enemies of the Future, but with more footnotes.
Her thesis that "the Fact" owed its origins to a culture of innovation, of openness to experimentation and tinkering, and respect for productive labor, is -- to be fair -- quite persuasive. The problem lies with the rather incoherent way she groups all the things together that she identifies with this culture, and the assortment of things she considers inimical to it.
For example she conflates an amazing list of things in the post-1848 "elite" opinion that shifted against innovation and technological progress, "in nationalism and then in socialism, and then in national socialism, and finally in environmentalism..." And this amalgamated body of "elite" opinion, aka "things I don't like," was characterized by this rigorously defined list of traits: "stubbornly anti-capitalist, protectionist, anti-technological, allied with anti-Americanism." Her concept of what constitutes "elites," incidentally, seems to contain no small amount of Babbitry, roughly coinciding with the Republican Party's understanding of "coastal elites" as people with snotty cultural attitudes -- as opposed to regular fellows who don't know what fork to use, despite being billionaires, CEOs and the like who have (you know) actual wealth and power. She literally presents the Readers Digest as the embodiment of "non-elite" -- and hence "anti-socialist" -- opinion. The "bourgeoisie" is by definition non-elite, even when its wealth is measured in billions and the number of people who own most of the world is numbered in hundreds, whereas the elite consists entirely of intellectual lotus-eaters like Carlyle.
At the outset she notes that she's not defending markets as such, or capitalism as such, but bourgeois values centered on innovation, dynamism, entrepreneurship, etc. It is these ideas, she says, and the forward-thinking attitudes they reflect -- not material factors like accumulation -- that are responsible for the Fact. Material factors can explain second-order phenomena like why the benefits of growth from the Fact are distributed among members of a given society, or why the advance in average material standard of living was a bit faster here and a bit slower there. But the Fact, as such, results from cultural attitudes toward entrepreneurship and innovation.
But it's not clear who she thinks she's arguing against in promoting this thesis, other than perhaps John Zerzan or some Deep Green types. Marx was second to none in celebrating the unprecedented forces of production unleashed by industrial capitalism in its "scarce hundred years" of existence, and socialists in general are quite willing to admit the astonishing, unprecedented rate of technological progress and productivity growth in the modern era. They simply argue that capitalism distributed the gains in a very unequal way, and that increasingly irrational social relations of production are impeding further such growth. And -- getting back to the material factors she acknowledges affecting the actual distribution of gains -- it's simply indisputable that assorted forms of artificial property rights and rent extraction have shifted the bulk of the material gains to the upper stratum of society.
She also denies that primitive accumulation (in the Marxian sense) was responsible for the Fact, but that's sort of talking past the bulk of radical historiography. The latter emphasizes the significance of Enclosure &c in establishing the wage system and facilitating the extraction of surplus value, not in facilitating the takeoff as such. And primitive accumulation played a huge role in creating the structural power differentials and inequality of bargaining power that determined how the fruits of increased productivity were distributed. The latter association would be a much more important thing to disprove, for capitalist apologetic purposes.
I will readily admit, and cheerfully so, that the Marxists are wrong in their degree of emphasis on the scale of capital accumulation as a source of productivity -- an emphasis they share with the Austrians and with mass-production ideologues like Schumpeter and Chandler. Mumford, Kropotkin and Borsodi are IMO much closer to the truth of technological history. Enclosures and other forms of primitive accumulation were far less important as a source of investment capital for the industrial revolution than as a source for the power differentials that enable extraction of a surplus from labor. "[M]odern economic growth did not and does not and cannot depend on the scraps to be gained by stealing from poor people." No; but the distribution of the fruits of economic growth between classes can, did and does depend on the bargaining leverage gained by depriving poor people of direct access to the means of production and subsistence. Primitive accumulation was not the reason for the growth of the pie, but it is very much the reason the rich get such a giant share of the pie.
"Stealing from poor people is not a good business plan." Actually it is. It may not be a good plan for accumulating initial investment capital, but it is an excellent plan for shifting the balance of power in order to steal a major part of the future output of those poor people when you employ them. McCloskey herself at one point argues that human capital is a bigger source of productivity than accumulated investment capital. And the relative bargaining power of workers and employers determines how much of the output generated by that human capital goes to whom. Apparently she is unfamiliar with all the political economists, from Wakefield to Oppenheimer, who have argued that it is much harder to exploit labor when you have to compete with the possibility of self-employment on the land -- or the public polemics and private commentary of the propertied classes of England during the Enclosures, in which they argued that rural laborers would not work for wages as long, as hard, or as cheaply, as desired so long as they had the alternative of subsisting on the commons. The Enclosures may not have been a large source of initial investment capital, but they were vital to creating the defining institutional feature of capitalism: the existence of a propertyless class forced to sell its labor on terms offered by owners of the means of production.
Similarly, she argues that imperalism, slavery, and Apartheid did not benefit the average European, white American, or white South African in the sense of promoting the overall wealth of the country or the rate of growth. But despite her constant -- and irrelevant -- insistence that it didn't benefit imperialist countries "as a whole," she does admit that it benefited a small minority of rich people who directly profited from it. And again, it's the surplus extraction function (the size of the exploiter's slice) and not the growth function (the size of the pie) that's most relevant to a critical analysis of capitalism, in my opinion. Directly analogous, as an example of failure to understand power issues, is the argument of right-libertarians that racist employers are irrational because they limit their own ability to hire the most productive workers without regard to race -- thus ignoring the role of labor market segmentation in weakening labor solidarity and increasing the ease of exploitation. Such is the argument, over and over, of capitalist commentators who argue that mercantilism, the Corn Laws, slavery, etc., were finally ended because people "understood" better -- and not because they were no longer useful to the minority that had previously benefited from them. In referring to this or that extractive policy as a "failure," without specifying clearly for whom it was a "failure," McCloskey reveals her own failure to grasp class analysis, or what constitutes "success" or "failure" from the perspective of a ruling class.
She argues that the Price Revolution of the Sixteenth Century did not "cause the industrial revolution." But it did shape the subsequent institutional structure of capitalism, and the rate of extraction of surplus labor. Specifically, the commodification of land, the abrogation of communal rights in the open fields and common pasture, the conversion of peasants to tenants at will, and the mass waves of rack-renting and eviction, were central in transforming the peasantry into a landless rural proletariat, and in creating the structure of the wage labor market against which background the industrial revolution took place. So McCloskey's asking the wrong questions.
And McCloskey repeatedly makes it clear that, her disavowals notwithstanding, her enthusiasm is not just for innovativeness as such but for the specific model of "free market capitalism" [sic] that emerged in the early modern West. And the things she sees as impeding the innovation and dynamism she supports amount, quite specifically, to significant deviations from the neoliberal model. Take, for example, her reference to "unhelpful economic policies (such as South-African labor laws based on German models and supported by leftist ideologues and trade unionists eager to give the really poor corrupting handouts to keep them away from the job market)." What inherent connection is there between a culture of innovation, as such, and an institutional framework in which labor is rendered so precarious and powerless as to be forced to enter the job market and accept work on whatever terms are offered by capitalists? Why are "handouts" "corrupting" for labor, when the plutocracy's income comes primarily from economic rents on artificial property rights and artificial scarcities enforced by the state, or from state subsidies? The incentives to productivity would be much greater, arguably, given an institutional and property structure in which income was tied more closely to actual productivity (e.g., an economy of commons-based natural resource governance, free and open-source knowledge, and stakeholder cooperative governance of the firm).
This is the same person who repeatedly stresses the relative unimportance of "institutions" and "incentives" compared to cultural attitudes towards innovation. Apparently that flies out the window when it comes to institutions that increase the precarity of labor and reduce its bargaining power, and face it with the incentive to accept work on whatever terms are offered. And apparently economic security or robust bargaining rights -- let alone actually vesting decisions about product and process innovation in workers rather than shareholders -- are inconsistent with a culture of innovation. Growth may result from technological advance and the culture of innovation that fosters it, but apparently giving a greater degree of control over production to the very people who are most directly familiar with the production process is somehow at odds with such innovation.
She also minimizes the extent to which the "free market" model she celebrates was no such thing, but was imposed by state force. 1619 Project. So she has little in the way of coherent criteria from defining the core features of such economies, directly responsible for the Fact, from the accidental ones. Given her negative views of trade unionism and handouts, presumably she considers the predominance of the wage system and what's euphemistically called "labor mobility" or "labor flexibility" to be among the positives, and essential to some degree to the Fact's occurrence. But in fact these things were brought about through Enclosure, etc.
It's ironic that she points to Soviet planners' treatment of capital inputs as a "free good" as an example of calculational chaos, when capitalism has for centuries pursued a growth model of treating enclosed land and natural resources, and state-subsidized material inputs like transportation and trained labor-power, as artificially cheap and abundant goods. And, on the other hand, following a profit model overwhelmingly focused on economic rents from artificial scarcity of information.
Also ironic is the fact that the closest embodiment of her bourgeois ethos of innovation and the dignity of tinkering in present-day society are the open-source peer-producers and open hardware hackers creating means of production scaled to commons-based direct production for use in the informal and social economy, or even the engineers who actually came up with all the ideas Elon Musk profits from. Likewise the related fact that the most significant form of central planning in the world is that of the large transnational corporation which encloses the productivity of such innovators and tinkerers within its walls of intellectual property so that Elon Musk -- every bit as parasitic as any aristocrat living off the labor of peasants on his estate -- can extract rents.
A good example of her obliviousness: "If you personally wish to grow a little rich, by all means be thrifty, and thereby accumulate for retirement. But a much better bet is to have a good idea and be the first to invest in it." With its assumption that the people who have the ideas that increase productivity are the ones who get rich from them, or that venture capitalists play some indispensable role, this could be a line from a John Stossel or Thomas Sowell column.
1/2
Her actual argumentation is a mess. What she's actually engaged in an apologetic *for* seems to be an unstable amalgamation of everything she has an aesthetic affinity for, and varies from place to place in the book. But for the most part the view of the world she's advancing is roughly that of Postrel's Enemies of the Future, but with more footnotes.
Her thesis that "the Fact" owed its origins to a culture of innovation, of openness to experimentation and tinkering, and respect for productive labor, is -- to be fair -- quite persuasive. The problem lies with the rather incoherent way she groups all the things together that she identifies with this culture, and the assortment of things she considers inimical to it.
For example she conflates an amazing list of things in the post-1848 "elite" opinion that shifted against innovation and technological progress, "in nationalism and then in socialism, and then in national socialism, and finally in environmentalism..." And this amalgamated body of "elite" opinion, aka "things I don't like," was characterized by this rigorously defined list of traits: "stubbornly anti-capitalist, protectionist, anti-technological, allied with anti-Americanism." Her concept of what constitutes "elites," incidentally, seems to contain no small amount of Babbitry, roughly coinciding with the Republican Party's understanding of "coastal elites" as people with snotty cultural attitudes -- as opposed to regular fellows who don't know what fork to use, despite being billionaires, CEOs and the like who have (you know) actual wealth and power. She literally presents the Readers Digest as the embodiment of "non-elite" -- and hence "anti-socialist" -- opinion. The "bourgeoisie" is by definition non-elite, even when its wealth is measured in billions and the number of people who own most of the world is numbered in hundreds, whereas the elite consists entirely of intellectual lotus-eaters like Carlyle.
At the outset she notes that she's not defending markets as such, or capitalism as such, but bourgeois values centered on innovation, dynamism, entrepreneurship, etc. It is these ideas, she says, and the forward-thinking attitudes they reflect -- not material factors like accumulation -- that are responsible for the Fact. Material factors can explain second-order phenomena like why the benefits of growth from the Fact are distributed among members of a given society, or why the advance in average material standard of living was a bit faster here and a bit slower there. But the Fact, as such, results from cultural attitudes toward entrepreneurship and innovation.
But it's not clear who she thinks she's arguing against in promoting this thesis, other than perhaps John Zerzan or some Deep Green types. Marx was second to none in celebrating the unprecedented forces of production unleashed by industrial capitalism in its "scarce hundred years" of existence, and socialists in general are quite willing to admit the astonishing, unprecedented rate of technological progress and productivity growth in the modern era. They simply argue that capitalism distributed the gains in a very unequal way, and that increasingly irrational social relations of production are impeding further such growth. And -- getting back to the material factors she acknowledges affecting the actual distribution of gains -- it's simply indisputable that assorted forms of artificial property rights and rent extraction have shifted the bulk of the material gains to the upper stratum of society.
She also denies that primitive accumulation (in the Marxian sense) was responsible for the Fact, but that's sort of talking past the bulk of radical historiography. The latter emphasizes the significance of Enclosure &c in establishing the wage system and facilitating the extraction of surplus value, not in facilitating the takeoff as such. And primitive accumulation played a huge role in creating the structural power differentials and inequality of bargaining power that determined how the fruits of increased productivity were distributed. The latter association would be a much more important thing to disprove, for capitalist apologetic purposes.
I will readily admit, and cheerfully so, that the Marxists are wrong in their degree of emphasis on the scale of capital accumulation as a source of productivity -- an emphasis they share with the Austrians and with mass-production ideologues like Schumpeter and Chandler. Mumford, Kropotkin and Borsodi are IMO much closer to the truth of technological history. Enclosures and other forms of primitive accumulation were far less important as a source of investment capital for the industrial revolution than as a source for the power differentials that enable extraction of a surplus from labor. "[M]odern economic growth did not and does not and cannot depend on the scraps to be gained by stealing from poor people." No; but the distribution of the fruits of economic growth between classes can, did and does depend on the bargaining leverage gained by depriving poor people of direct access to the means of production and subsistence. Primitive accumulation was not the reason for the growth of the pie, but it is very much the reason the rich get such a giant share of the pie.
"Stealing from poor people is not a good business plan." Actually it is. It may not be a good plan for accumulating initial investment capital, but it is an excellent plan for shifting the balance of power in order to steal a major part of the future output of those poor people when you employ them. McCloskey herself at one point argues that human capital is a bigger source of productivity than accumulated investment capital. And the relative bargaining power of workers and employers determines how much of the output generated by that human capital goes to whom. Apparently she is unfamiliar with all the political economists, from Wakefield to Oppenheimer, who have argued that it is much harder to exploit labor when you have to compete with the possibility of self-employment on the land -- or the public polemics and private commentary of the propertied classes of England during the Enclosures, in which they argued that rural laborers would not work for wages as long, as hard, or as cheaply, as desired so long as they had the alternative of subsisting on the commons. The Enclosures may not have been a large source of initial investment capital, but they were vital to creating the defining institutional feature of capitalism: the existence of a propertyless class forced to sell its labor on terms offered by owners of the means of production.
Similarly, she argues that imperalism, slavery, and Apartheid did not benefit the average European, white American, or white South African in the sense of promoting the overall wealth of the country or the rate of growth. But despite her constant -- and irrelevant -- insistence that it didn't benefit imperialist countries "as a whole," she does admit that it benefited a small minority of rich people who directly profited from it. And again, it's the surplus extraction function (the size of the exploiter's slice) and not the growth function (the size of the pie) that's most relevant to a critical analysis of capitalism, in my opinion. Directly analogous, as an example of failure to understand power issues, is the argument of right-libertarians that racist employers are irrational because they limit their own ability to hire the most productive workers without regard to race -- thus ignoring the role of labor market segmentation in weakening labor solidarity and increasing the ease of exploitation. Such is the argument, over and over, of capitalist commentators who argue that mercantilism, the Corn Laws, slavery, etc., were finally ended because people "understood" better -- and not because they were no longer useful to the minority that had previously benefited from them. In referring to this or that extractive policy as a "failure," without specifying clearly for whom it was a "failure," McCloskey reveals her own failure to grasp class analysis, or what constitutes "success" or "failure" from the perspective of a ruling class.
She argues that the Price Revolution of the Sixteenth Century did not "cause the industrial revolution." But it did shape the subsequent institutional structure of capitalism, and the rate of extraction of surplus labor. Specifically, the commodification of land, the abrogation of communal rights in the open fields and common pasture, the conversion of peasants to tenants at will, and the mass waves of rack-renting and eviction, were central in transforming the peasantry into a landless rural proletariat, and in creating the structure of the wage labor market against which background the industrial revolution took place. So McCloskey's asking the wrong questions.
And McCloskey repeatedly makes it clear that, her disavowals notwithstanding, her enthusiasm is not just for innovativeness as such but for the specific model of "free market capitalism" [sic] that emerged in the early modern West. And the things she sees as impeding the innovation and dynamism she supports amount, quite specifically, to significant deviations from the neoliberal model. Take, for example, her reference to "unhelpful economic policies (such as South-African labor laws based on German models and supported by leftist ideologues and trade unionists eager to give the really poor corrupting handouts to keep them away from the job market)." What inherent connection is there between a culture of innovation, as such, and an institutional framework in which labor is rendered so precarious and powerless as to be forced to enter the job market and accept work on whatever terms are offered by capitalists? Why are "handouts" "corrupting" for labor, when the plutocracy's income comes primarily from economic rents on artificial property rights and artificial scarcities enforced by the state, or from state subsidies? The incentives to productivity would be much greater, arguably, given an institutional and property structure in which income was tied more closely to actual productivity (e.g., an economy of commons-based natural resource governance, free and open-source knowledge, and stakeholder cooperative governance of the firm).
This is the same person who repeatedly stresses the relative unimportance of "institutions" and "incentives" compared to cultural attitudes towards innovation. Apparently that flies out the window when it comes to institutions that increase the precarity of labor and reduce its bargaining power, and face it with the incentive to accept work on whatever terms are offered. And apparently economic security or robust bargaining rights -- let alone actually vesting decisions about product and process innovation in workers rather than shareholders -- are inconsistent with a culture of innovation. Growth may result from technological advance and the culture of innovation that fosters it, but apparently giving a greater degree of control over production to the very people who are most directly familiar with the production process is somehow at odds with such innovation.
She also minimizes the extent to which the "free market" model she celebrates was no such thing, but was imposed by state force. 1619 Project. So she has little in the way of coherent criteria from defining the core features of such economies, directly responsible for the Fact, from the accidental ones. Given her negative views of trade unionism and handouts, presumably she considers the predominance of the wage system and what's euphemistically called "labor mobility" or "labor flexibility" to be among the positives, and essential to some degree to the Fact's occurrence. But in fact these things were brought about through Enclosure, etc.
It's ironic that she points to Soviet planners' treatment of capital inputs as a "free good" as an example of calculational chaos, when capitalism has for centuries pursued a growth model of treating enclosed land and natural resources, and state-subsidized material inputs like transportation and trained labor-power, as artificially cheap and abundant goods. And, on the other hand, following a profit model overwhelmingly focused on economic rents from artificial scarcity of information.
Also ironic is the fact that the closest embodiment of her bourgeois ethos of innovation and the dignity of tinkering in present-day society are the open-source peer-producers and open hardware hackers creating means of production scaled to commons-based direct production for use in the informal and social economy, or even the engineers who actually came up with all the ideas Elon Musk profits from. Likewise the related fact that the most significant form of central planning in the world is that of the large transnational corporation which encloses the productivity of such innovators and tinkerers within its walls of intellectual property so that Elon Musk -- every bit as parasitic as any aristocrat living off the labor of peasants on his estate -- can extract rents.
A good example of her obliviousness: "If you personally wish to grow a little rich, by all means be thrifty, and thereby accumulate for retirement. But a much better bet is to have a good idea and be the first to invest in it." With its assumption that the people who have the ideas that increase productivity are the ones who get rich from them, or that venture capitalists play some indispensable role, this could be a line from a John Stossel or Thomas Sowell column.
1/2
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