May 2024
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2 Reads
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May 2024
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2 Reads
February 2023
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75 Reads
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1 Citation
Any innovation—mechanical, biological, institutional, scientific, artistic, personal—begins of course as a new idea in a liberated human mind. The point is obvious. But it has not been prominent in economics. The agent in economic models does not have agency. He merely accedes to a budget line or to a law or to a custom or to a habit of thought facing his already known utility function. He does not create, that is, but reacts in requisite fashion. Human action, the liberated will, is absent. He is a vending machine, not an innovator, or not even an ordinarily choosy consumer exploring her tastes. Therefore the unprecedented economic growth since 1800, a Great Enrichment of a fully 3,000 percent increase in real income per person, has been traced by economists not to “innovism,” as one might call it. The Enrichment has been traced rather to various routine and intermediate and largely material causes—investment; exploitation; the rule of law. Some of these are necessary, but none is sufficient to explain our enrichment. They are ancient. They are often trivial. They are sometimes necessary, but never have the great oomph to explain the Great Enrichment. The creation of new ideas in human minds, in other words, has been firmly set aside by economists. The non-economists who might save the ideational day, meanwhile, have seized on the wrong ideas, such as the labor theory of value or disenchantment or the Enlightenment or sheer modernity. The economic trouble with the economist’s non-ideational causes such as investment and institutions or exploitation is that they are merely allocative, and are, further, subject to sharply diminishing returns, and are commonly indeed zero sum. They are routine, not transformative. They are small potatoes beside the 3,000 percent increase in human material welfare. And the historical trouble is that most of them, and even most of the non-economist’s ideational causes, are of very, very long standing—in ancient Mesopotamia, commercialization; in ancient Athens, enlightenment; in ancient Rome, good property rights; in ancient China, long canals; in medieval Italy, skilled craftsmen; in early modern Japan, long peace; in 18th century Prussia, cameralist policy; in pre-1860s Sweden, Protestantism; in Russia 1917-1989, fierce pursuit of profit; in China 1948-1978, fierce pursuit of central planning. Yet no Great Enrichment ensued in such places. Early on, the cause of the Enrichment was said to be piling up physical capital, emphasized by Adam Smith, with the division of labor. Then it was indeed an ideational cause, put forward on the left or right of politics by anti-economists, such as the rise of “capitalism,” or “possessive individualism,” or “secularized asceticism.” All have all been rejected in later research. Then it was the alleged routinization of innovation, such as Joseph Schumpeter came to believe, against his early belief in human creativity. Then it was human capital, from elementary education to craftsmen’s skills. Then it was institutions of various sorts, from legal to scientific. But all of them depend of course upon ideas conceived in somebody’s mind—and foundationally on her ideas about ideas, such as ethics, ideologies, political philosophies supporting the liberated imagination. The change of ideas in human minds, that is, seems a more promising hypothesis. The ideational change is called liberalism. The idea of a non-slave society, it can be shown, has the oomph and the novelty to account for the 3,000 percent. I propose here, mathematically and quantitatively, by historical comparison and by the paradoxical logic of creativity, to offer, that is, a fresh ideational explanation for why the modern world became so very rich—well, “my” explanation is as “fresh” as can be a restatement of the 18th-century promise of human liberation. The crux, I claim, was liberalization at the level of ideas in the Netherlands and then in Britain, favoring a culture of somewhat free speech and an economy of quite energetic enterprise. It was followed during the next century by actual liberalizations and a consequent explosion of creativity—in the U.K the civil emancipation of Catholics, the abolition of Jamaican slavery, the free importation of wheat from Kansas and Ukraine, and then similar liberalizing measures in the U.S., Sweden, Italy, Japan, and the rest. Adam Smith and Thomas Jefferson and Mary Wollstonecraft had put forward in the Anglophere the then-bizarre notion that no one should be a slave, that all people are created equal, and should be permitted liberated speaking and liberated voting, and liberated buying and selling. Richard Cobden and John Stuart Mill in the mid-19th century extended the idea. The equality of permission in liberalism proceeded to erode the inequalities of hierarchies anciently stultifying. It made people bold to venture. As the British say in their sporting manner, appropriated by the economic historian Peter Matthias, ordinary people were permitted by liberalism for the first time, after 1776 or 1789 or 1848 or 1865, to “have a go.” And go they did. Liberalism was gradually implemented in northwestern Europe, as lately it has been, at any rate in the economy, even in far China and India. And the Great Enrichment came. Both economists and their critics, in other words, need to understand the conditions for the flourishing of liberty and its fruits in novel ideas for enrichment, and to see that good laws and long railways and honored science and skilled craftsmen and strong institutions are all good, but are not themselves originating. Creativity depends on liberty and its ethical accompaniments, every time. Liberation in ethics and ideology yielded an innovism, not a “capitalism” that one can find in Mesopotamia in 2000 BCE or in England in 1066 CE or Mesoamerica in 1492 CE. To use a mechanical image, the gearing in the historico-economic watch was, to be sure, investment and institutions, necessary for any economy at any time, from the caves of Lascaux to the caves of Wall Street, or for that matter in Crusoe’s cave. But liberal thinking was the new and largely sufficient spring imparting motion to the old and stiff gears. It happened in Britain, but not immediately in, say, France. It could have happened in Japan or the Ottoman Empire, but in the contrived corridors of history it did not. The implication for policy is straightforward. Ideas in human minds, as Keynes said, largely rule the world. The Ukrainians defend themselves for the idea of liberty, not for the policies of left, right, or middle. Encouraging a loving and responsible liberty, with its mighty material and spiritual consequences, should be our chief aim. Coercive, illiberal nudges and taxes and subsidies and regulations and fines and imprisonments, of which policymakers are so very fond, are not the path forward. The liberal path of an honest and competent but restrained state, under which ordinary people are permitted without let or hinderance from other people to have a go, has already led in much of the world to a stunning enrichment of the poorest. It’s the Bourgeois Deal: “Leave me alone and I’ll make _you _rich.” In the next couple of generations, it promises to permit the rest of the wretched of the earth to raise themselves up. The illiberal path of statism, by contrast, leads to the radical populisms of left and right, to Maduro and Putin. And even its middle path of well-meaning regulation and redistribution it leads adults back into childhood under the masterful state. It turns back to the subordination that characterized agricultural societies until 1776, and to its corresponding poverty of body and mind and spirit. Liberalism worked to overcome such childishness and subordination. It works yet.
January 2023
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2 Reads
International Review of Environmental and Resource Economics
October 2022
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94 Reads
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3 Citations
The Review of Austrian Economics
In an otherwise amiable review of a book by Peter Boettke, McCloskey observes that the neo-institutionalism of North, Acemoglu, and Boettke is statist, top-down, centralizing, constructivist, and therefore inconsistent with Austrian liberalism. One source of the inconsistency and liberalism is a too-wide definition of “freedom.”
January 2022
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166 Reads
I propose, in brief, an intimate, perhaps desirable, but anyway necessary, connection between free will in Abrahamic theology and free action in liberal ideology. The economy, its work, its consumption, even its banking, are not inconsistent with a Christian life if achieved by free will. That is to say, contrary to a century-long supposition among theologians and their enemies, belief in a just and loving God does not entail socialism. The Christian gospels and many a Christian theologian attack wealth, surprisingly harshly by the standards of the rest of the world’s religious canon. It is not surprising, therefore, that in the nineteenth century, a bourgeois but Christian Europe invented the idea of socialism. But statism is by no means necessary for a Christian community. I gesture here towards a much longer case made earlier and recently by me and other Christian admirers of commercially tested betterment. The great liberal era was brief, from 1776 to 1848. It established freedom of religion. But freedom is freedom is freedom. A free-willed person should be, in God’s eyes, free from human interference in religion and behavior and business.
December 2021
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8 Reads
The Journal of Economic Education
July 2021
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131 Reads
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4 Citations
Erasmus Journal for Philosophy and Economics
Paolo Silvestri interviews Deirdre Nansen McCloskey on the occasion of her latest book, Bettering Humanomics: A New, and Old, Approach to Economic Science (2021). The interview covers her personal and intellectual life, the main turning points of her journey and her contributions. More specifically, the conversation focuses on McCloskey’s writings on the methodology and rhetoric of economics, her interdisciplinary ventures into the humanities, the Bourgeois Era trilogy with its history of the ‘Great Enrichment’, her liberal political commitments, and the value and meaning of liberty, equality, and solidarity. Finally, the conversation returns to McCloskey’s ‘humanomics’ approach: an economics with the humans left in.
July 2021
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114 Reads
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5 Citations
Journal of Public Finance and Public Choice
In a long review of Acemoglu and Robinson’s 2019 The Narrow Corridor McCloskey praises their scholarship but criticizes their relentless statism—their enthusiasts for a bigger and bigger Stato, so long as it is somehow “caged.” Their case is mechanical, materialist, and structuralist, none of which is a good guide to history or politics. Their theory of social causation mixes up necessary with sufficient conditions, though they are not unusual among political scientists an economists in doing so. They downplay the role of ideas, which after all made the modern world through liberalism. They recognize how dangerous the modern “capable” state can be, what they call The Leviathan, after Hobbes. But their construal of “liBerty” is the provision of goodies to children by a beneficent Leviathan. It is not the adultism that in fact made the modern world of massive enrichment and true liberty. Their vision is deeply illiberal, and mistaken as science.
May 2021
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368 Reads
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18 Citations
Journal of Institutional Economics
Silvestri interviews McCloskey about her forthcoming book, ‘Beyond Behaviorism, Positivism, and Neo-Institutionalism in Economics’, critical of recent economics, especially of neo-institutionalism. Neo-institutionalism uses the ugly character ‘Herr Max U’ as its central idea: the elevation of Prudence to the only virtue. Institutions are mainly intermediate, not ultimate, causes in society. Ethics, rhetoric, identity, ideology, and ideas matter. McCloskey's turn to defending liberalism is in the background of her critique of behaviorism, positivism, and neo-institutionalism as anti-liberal, reducing the analysis of people to a model of childish slaves. Liberalism is the theory of non-slave adults. Of the big ideas of the past few centuries, only liberalism treats people with suitable dignity, and permits them to have a go, and make others rich. Neo-institutionalism shares the two sins of modern Samuelsonian economics: a devotion of mere existence proofs; and a deviation to arbitrary tests of statistical ‘significance’. And in its tale of a rise of ‘capitalism’, it shares the errors of amateur economic history. The better word for the modern economic world of the Great Enrichment – fully 3,000% increases in real income per person – is ‘innovism’. Neo-institutionalism, as the method of historical economics, must be replaced by ‘Humanomics’.
April 2021
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9 Reads
Journal of Contextual Economics – Schmollers Jahrbuch
... A number of recent texts reflect heightened interest in the questions raised by this area of study. Prominent, is a call for a professional economic ethics (DeMartino, 2011;DeMartino and McCloskey, 2016;Dolfsma and Negru, 2019), that the economics profession pay greater attention to the societal context of economic policy, the way it is implemented, and the theory that underpins it (see also Stiglitz, 2019;Sen, 1999;Desai, 2015 who query the authoritarianism implicit in the go-to, top down model of economic policy formation). Of central ethical concern here are the significant harms that can emanate from policy implementation, harms that are too little anticipated in the design of economic policy (DeMartino, Chapter 3, this volume). ...
March 2014
... Mas além disso, esperamos receber contribuições mais voltadas às discussões da atualidade. Por exemplo, relacionadas à filosofia liberal e libertária, liberdades Individuais e os possíveis "limites da liberdade", em especial nas democracias modernas (Bagus et al., 2024;Gauderie, 2024;Karlson, 2024;McCloskey, 2019;Rectenwald, 2019;Rothbard, 1978;Weimer, 2025); o surgimento de modelos políticos populistas e (proto)totalitários (Boos, 2024;Heinisch et al., 2024;Lee, 2022); as propostas de soluções que visam proporcionar maior liberdade como cidades livres (charter cities, Free Cities, zonas econômicas especiais) e os problemas relacionados à tais propostas (Müller, 2016); e aplicações e debates das teorias austríacas em análises de realidades ou ficções (Catharino, 2014;Dominiak & Fegley, 2022;McCloskey, 2024). ...
Reference:
What we want to publish in 2025
October 2022
The Review of Austrian Economics
... Although much attention has been given to the role of formal institutions (FIs) in fostering VC activity, there is a growing critique of the neglect of informal institutions (Boddewyn and Peng, 2021;Bustamante et al., 2021;Grilli et al., 2019). Culture, as a significant information institution, shapes behaviours and attitudes beyond purely economic considerations, as it interacts with other factors such as ethics, rhetoric, and ideologies (Kaasa and Andriani, 2022;McCloskey and Silvestri, 2021). Therefore, when examining how cultural values influence entrepreneurship (Mickiewicz and Kaasa, 2022), it is essential to delve beyond surface measurements and consider the complexities of the phenomenon. ...
May 2021
Journal of Institutional Economics
... All agree that it's "inequality that kills" but how does this actually work? Sub-clinical pellagra stunts and slows individuals and fails to develop prosperity and a bourgeoisie creating bradykinetic macroeconomics and poverty from the pathology of ill health [8][9][10]. First, however, lets recap on some basic building blocks of civilisations starting with water but then majoring on meat and nicotinamide. ...
January 2020
... The separation is not so clean in the p-hacking scenario, but can be mapped back to the cheating scenario. The mechanism of the left-hand panel of Figure 1 is analogous to the Lombard effect in psychoacoustics: [26][27][28] speakers increase their vocal effort in response to noise. ...
Reference:
Spurious Precision in Meta-Analysis
October 2019
The Journal of Economic Education
... This can facilitate the greater acceptance of entrepreneurship and supporting formal institutions (McCloskey, 2013(McCloskey, , 2017, which is not always well-accepted in many countries and regions, where it is thought better to work for a big firm or government than a small firm (or starting your own company). In addition, new soft law and cultural changes in a region can encourage macropolicy setting and lead to changes in formal institutions in support of new ventures (Acs et al., 2008;Ahlstrom, 2010;McCloskey and Carden, 2020;Mokyr, 2016). ...
January 2018
SSRN Electronic Journal
... According to the society amplification framework of risk (SARF), the risk of events can be amplified through government authority, expert opinions, traditional mass media, relatives and friends, internet communities and other channels [3,4]. This "groundless worry" behavior will hinder the effectiveness of market or policy interventions, which can slow down product or technology adoption and even the speed of economic growth [5]. This paper uses transgenic crops as an example product to investigate the factors influencing producers' adoption of new technologies under risk amplification. ...
March 2018
... Lachmann (1970, p. 22) preferred explanations in terms of general ideas such as "the maximization of prots, or the avoidance of the risk of insolvency." The reason for this is his rejection of both philosophy and psychology as sources for economic analysis: on the one hand, he rejected behaviorism (McCloskey, 2019;cp. Dold & Stanton, 2021); on the other hand, he wanted to keep all philosophy away from economics. ...
March 2019
The Review of Austrian Economics
... Ankarloo (2002) argumentou que a tentativa de North de incorporar a história na economia falhou, deixando a economia ainda ahistórica. McCloskey (2018) argumentou que a abordagem de North fracassou em se separar do cientismo, enquanto que seu foco em ciências cognitivas não deixou espaço para considerações éticas. North reconheceu os problemas: "ainda não explicamos a transição completamente. ...
September 2018
Cliometrica
... When we accept this proposition, it renders serious implications for how we theorise entrepreneurship. If entrepreneurial decision-making cannot be reduced to calculativeness, this also implies that the utility maximisation is a model that cannot capture the phenomenon of entrepreneurship in full (McCloskey, 2006(McCloskey, , 2010(McCloskey, , 2016. Applying McCloskey's rhetoric: entrepreneurial values cannot be reduced to prudence (wealth maximisation), and if we accept this then our understanding of the motivation to enter entrepreneurship and to engage in entrepreneurial actions is richer. ...
Reference:
Entrepreneurship as Trust
January 2015