Dec 9, 2012

Boettke on McCloskey: The Spiritual in Economic Growth

McCloskey’s narrative of modern economic growth is not focused on the mechanics of economic growth-- neither the division of labor, nor technological innovation, and not even the development of a tolerable administration of justice (institutions!). McCloskey’s narrative of modern economic growth is ultimately about the spiritual in economic growth. I am not sure if she would agree with my language choice since she focuses on the rhetoric and the active “talk”, but basically she is arguing that when commercial activity is not only legitimated, but applauded, by the people (including but not limited to the elites) in any specific society at any specific time, then the mechanics of economic development will be unleashed. In other words, the cause of economic development is ideas that give dignity to the bourgeoisie, while the various mechanisms through which economic development is realized are unleashed due to shifts in ideas. As McCloskey goes to great pains to point out, the timing and the historical specifics do not align to simply rely on the mechanisms alone to tell the story of modern economic growth. But a documented shift in ideas in each of the particular national circumstances does, and the same can be seen she argues in the contemporary world when we look at China and India. When the ancient virtues of the warrior are supplanted by the commercial virtues of the bourgeoisie, economic growth follows. Modern civilization is a consequence of ideas, and its biggest threat is ideas. This is why the central message of The Bourgeois Virtues is so vital for setting the stage for the argument in Bourgeois Dignity (p. 7-8). 
From a recent Peter Boettke's paper in the Journal of Socio-Economics (December 2012). A draft is here. The paper is titled: "A behavioral approach to the political and economic inquiry into the nature and causes of the wealth of nations."

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