Sunday, August 1, 2010

"The Enlightened Economy"

The book had passed under everyone's radar, mine included. It looks like an academic treatise; it is published by a university press; it was barely reviewed, not even in the blogosphere.

One review had appeared in The New Republic in June. In it Edward Glaeser engaged if a good dialogue with the book's ideas, and declared it to be a "splendid achievement." Link here.

And yesterday, another more important review appeared in the Wall Street Journal. Link here

By "more important" I mean that Trevor Butterworth's review will, for better or worse, reach far more readers than will a review in The New Republic.

The excellent book that has suffered this near-blackout in the media is Joel Mokyr's: The Enlightened Economy: An Economic History of Britain 1700-1850 (The New Economic History of Britain series)

The book addresses a critically important cultural and economic question. Why did the Industrial Revolution, which Mokyr calls one of the most important transformative events in human history, occur in Great Britain and not elsewhere? Why did it not occur in France or the Netherlands?

It sounds like a serious academic question, but not something that the average citizen will spend too much time on. Clearly, the book is not beach reading.

And yet, the Industrial Revolution has not yet passed beyond controversy. You might think that the advances in sanitation and hygiene that it made possible, and that have saved millions of lives, would suffice to win it full acceptance.

Those who care about living standards in countries that have fully accepted the Industrial Revolution should, one would expect, revel in the fact that the average middle class citizen has more access to more goods and services than anyone at any time and place in human history.

To paraphrase Mokyr, the life of the average American today would be the envy of Charlemagne.

And yet, we are surrounded by thinkers who spend their time degrading the Industrial Revolution. They see a glass half empty and insist on embracing the emptiness.

From its inception in 18th century Britain the Industrial Revolution has always been under attack. Today, people inadvertently join this grand reactionary tradition by declaring that industrialization is destroying the planet Earth.

When they wax poetical about the supreme impracticality of windmills and solar panels, they place themselves within a tradition started by the 19th century Luddites who wanted to stop industrialization in its tracks and return to more traditional hand craft and cottage industries.

Today, in one of life's great ironies, those who insist on this socio-economic regression call themselves progressives.

But that is not the half of the reason why there has been a near blackout of Mokyr's book. For many members of the intellectual elite the worst part is Mokyr's argument that without the ideas of classical liberal philosophy the Industrial Revolution would not have happened.

The ideas that spurred the Industrial Revolution sought to grow the economy and to generate wealth. These ideas replaced earlier theories that wanted to use economic policy to redistribute income.

Perhaps you are beginning to see why this book is rather inconvenient.

Let Butterworth summarize Mokyr's argument: "The reason for Britain's exceptionalism, Mr. Mokyr says, lies in the increasing hostility to rent-seeking-- the use of political power to redistribute rather than create wealth-- among the country's most important intellectuals in the second half of the 18th century. Indeed, a host of liberal ideas, in the classical sense, took hold: the rejection of mercantilism's closed markets, the weakening of guilds and the expansion of internal free trade, and robust physical and intellectual property rights all put Britain far ahead of France, where violent revolution was needed to disrupt the privileges of the old regime."

I am sure that this brings the problem into focus. Currently, we have an administration that does not seem to understand why its policies have not revived the economy. And yet, it has rejected the precepts that launched and sustained the Industrial Revolution in favor of the precepts that caused continental European economies to lag Great Britain.

The Obama administration is about redistributing, not creating, wealth. It and its Congressional cohorts have stymied all free trade agreements and have written Buy American provisions into stimulus bills. It has done everything in its power to strengthen labor unions, the modern successors to guilds, and has consistently disrespected the will of the people.

Mokyr emphasizes the importance of physical and intellectual property, but don't these really amount to an exercise of freedom? Having the freedom to do as you will with your physical property, to say nothing of your earnings, is not quite the same as having your property and earnings taxed so that your money can be redistributed  in order to provide welfare for people who are not working.

Mokyr's point is that without these classically liberal ideas, and without a government that allowed people to put them into practice, the Industrial Revolution would not have happened.

I would add that Great Britain and America would never have become what they are without a strong work ethic. A redistributionist culture does not value work. It values leisure and the pursuit of pleasure, financed by collecting rents, or else, by collecting welfare.

Obviously, you cannot live very well in America by collecting an allowance from the government. But, on continental Europe, in France and Germany, you can live reasonably well indeed.

No comments: