Deirdre McCloskey interviewed.
In her view, about 200 years ago there was in northwest Europe a shift in values regarding merchants and people engaged in commerce. Previously, they were treated as low status. Now, they were given respect. She argues that the industrial revolution followed from that change in status.
I think she poses a challenge to Robin Hanson’s theme of farmers vs. foragers. She is suggesting an important shift of values within the farmer era, but not a return to forager values. Consider:
You can measure the shifting significance of bourgeois words: honesty, profit, responsibility, monopoly, etc., by looking in historical dictionaries and historical texts in all the languages of commerce, from 1600 to 1848. “Responsibility,” for example, is entirely modern (and thus measurable: It’s zero before 1800, commonplace afterward). The equivalent word before 1800, as one can see from the Oxford Thesaurus (based on the Oxford English Dictionary), is “duty.” In a hierarchical society, one has one’s duty to one’s master, period. In a modern and bourgeois society, the duty is turned inward and becomes a character trait essential for a modern enterprise: responsibility.
READER COMMENTS
Troy Camplin
Dec 4 2010 at 1:14am
Clare Graves’ psychology gives a much more complex description of emerging attitudes, values, social structures, etc. that does in fact take McCloskey’s shift into consideration. It is a shame few people know about his work, as it explains the development of changing attitudes better than any other model I know of.
Robin Hanson
Dec 4 2010 at 8:30am
Well 200 years ago was around the start of the industrial revolution, and yes not all the industrial revolution changes were movements back toward foragers. The other changes were those essential to enabling the industrial revolution, which includes responsibility.
Chris Koresko
Dec 4 2010 at 11:38am
I may have missed it, but I didn’t see anything in the interview about the reason for this profound shift in the social status of the merchant class.
My personal suspicion is that technological changes increased the effectiveness of wealth creation and made some members of the commoner class able to compete with the nobility in overt displays of wealth. If the technical and social organization was still simple enough that the relationship between hard work and wealth was not obscured (as it often is in modern times), then the character traits which made some commoners wealthy would tend to be perceived as virtuous.
Plausible?
ziel
Dec 4 2010 at 5:55pm
Chris K – the relationship seems to have been the other way round – changes in behavior (low-time preference, e.g.) pre-dated the technological changes of the industrial revolution. The ability to save money and become wealthy existed well before the I.R. It was not until this behavior became more common did the revolution take place.
Chris Koresko
Dec 4 2010 at 6:40pm
@ziel OK, but that still leaves the question of what caused the original change in peoples’ behavior, no?
I like the idea of technology as a trigger because that offers a mechanism which could account for the long time that passed between the rise of civilization and the advent of what we would recognize as modern capitalism. I tend to see social values as arising from the potentialities and limitations imposed by the environment, more than as the creators of the environment, at least over the long term.
When the technological level is low, there’s not enough benefit to capital (in terms of raising productivity) to make accumulating it worthwhile. A farmer might own dozens of horse-drawn plows and the horses to pull them, but that does him little good if he can only use one at a time.
There will likely be a slow but nonzero rate of progress in such a situation. At some point the tech crosses a threshold beyond which capital accumulation starts driving productivity. In the case of our farmer, a more efficient plow (iron blade instead of wood?) might be an expensive piece of capital that boots his productivity and makes him better off.
Once better tech becomes widespread, the people as a whole have some surplus they can invest, part of which goes into developing still better tech. So you have a positive-feedback loop. If you assume that tech improves at a steady rate, such that productivity grows at a fixed percentage year-over-year, you get an exponentially growing economy.
Then you can imagine a kind of Darwinian process kicking in: people who have values and character traits well suited to benefit from this situation do well, and their heirs dominate and define the cultural environment.
Hyena
Dec 4 2010 at 7:26pm
Mr. Koresko,
This kind of rubs against the history and archaeology available in the West. We know from Roman authors, for example, that cattle were an excellent investment. So too was real estate in Rome. Trade records from the Mediterranean indicate that, from a very early date, building a a good cargo vessel was an excellent idea. Examples go on and on, they were just difficult to participate in and the resident rentiers tried desperately to control all good investments.
Hyena
Dec 4 2010 at 7:42pm
I think Prof. McCloskey is onto something but I don’t think we need to refer back to Prof. Hanson’s division, largely because it seems elastic rather than explanatory.
Rather, I think Prof. Hanson’s discussions of status would seem more important. I suspect that a lot of these trends are started in the Imperial cities, Italian republics and simple principalities. These states lacked large aristocratic hierarchies and, since you can’t invent a European aristocracy, status competition had to take place on alternative lines.
cassander
Dec 4 2010 at 8:39pm
Hyena> I’m not certain about the free cities, but the Italian city states definitely had a native aristocratic class. So did Rome with the senatorial class. Sometimes they were even the same families.
And just because there were good returns to trade in the ancient world doesn’t mean that technology didn’t increase those returns and push them over some tipping point. There were a lot of mercantile societies in the world before the 17th century Dutch/English, but no one else made the transition that they did. Something about them must have been different, and technology is a reasonable answer.
Chris Koresko
Dec 4 2010 at 10:07pm
@Hyena: Interesting points. I may have to re-think my narrative. It may be that as someone with training in physical science and technology that I have a bias toward over-estimating its impact on the human condition.
@cassander: I’m starting to think along these lines too, but unfortunately my knowledge of history is a little weak for this task.
I’d be glad to hear any more ideas you guys come up with.
Hyena
Dec 5 2010 at 11:38am
Mr./Ms. Cassander,
By “aristocratic hierarchy”, I mean the system of titles and privileges we usually associate with the French and English feudal systems. These were noticeably absent or highly atrophied in the Baltic states and Italy.
Rome’s patricians were an aristocracy, but they lacked the critical feature of feudal hierarchy: you couldn’t become a patrician, really. In medieval Europe, you could become ennobled and men of talent often were. So it was a good idea to compete for the king’s, rather than the customer’s, affection.
Hyena
Dec 5 2010 at 11:45am
Mr. Koresko,
You might want to look into Needham on China’s technological prowess. The interesting feature is how it never did add up to an industrial revolution. China was notably lacking in respect for the merchant class.
India and Japan were much the same. But all three were ahead of Europe scientifically and technologically for centuries. They also all had the necessary elements for an industrial revolution, but none ever came.
Kai
Dec 5 2010 at 5:30pm
Just to add some interesting information. I remember reading in an economic history book, that one of the deciding factors for the different developments of China, India or Europe were the differences in government. The author claimed that governments in Europe were by far more competitive (lot of small kingdoms, many nations). On the other hand in China the government was strongly centralized and spend most of its time trying to hold their empire together. India was not much different, a largely inefficient centralized state. Should look up some more details, but that were the main points 🙂
Hyena
Dec 5 2010 at 6:30pm
Ms./Mr. Kai,
The Chinese state was less centralized than, for example, the French and German states. India had never been or really had a centralized state until the Raj.
fundamentalist
Dec 6 2010 at 9:51am
I don’t know if you’ll find the answer to the change in any particular book, but one that comes close is “The Disciplinary Revolution: Calvinism and the Rise of the State in Early Modern Europe” by Philip S. Gorski. Gorski shows how the Protestant emphasis on reason transformed the Dutch State from the traditional closed (in North’s terms) to a modern open society. Although Gorski give Calvinists too much credit because the ruling class in the Dutch Republic tended to be more Erasmian than Calvinist.
You can also trace the change in values by what people invested in. For most of Europe’s history wealthy merchants would buy land, a title to nobility and give to the Church. Land was the safest investment and they needed the title to nobility to become part of the inner circle and protect the property from theft by other nobility. Monopolies granted by the king, bribes, and warfare were the other acceptable means of getting wealth.
But the Dutch outlawed all of those means and left people with nothing but commerce and manufacturing as means to wealth. Why? They adopted the philosophy of the late Scholastics, particularly of Salamanca, Spain.
fundamentalist
Dec 6 2010 at 9:57am
Decades ago when I first started studying the history of capitalism I was stunned by the amount of confusion among PhD economists and historians. For every 10 economists there were 20 different definitions of capitalism and explanations of its origins. Confusion still reigns today. But you can eliminate the most popular contestants by simply looking at China and the Ottoman Empire of the 1600’s and asking “did those empires have the same trait that is being promoted as the cause of development?” If so, that rules out that cause because neither empire experienced an industrial revolution. China and the Ottoman’s were far wealthier than Europe, had large cities and more cities, had much more advanced science, medicine and trade. In fact, there is almost no area we can think of in which the Chinese and the Ottoman’s were not superior to Europe. Ottoman’s traded with China and India but refused to trade with Europe because they saw Europeans as savages in the 17th century.
Jeff Singer
Dec 7 2010 at 2:20pm
The answer is in Greg Clark’s book:
http://www.econ.ucdavis.edu/faculty/gclark/a_farewell_to_alms.html
The British bred for those traits that McCloskey is so interested in.
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