Deirdre McCloskey is a very unorthodox economist. Even though she did a lot of classical work on the history of the industrial revolution in England, she is best known for her critical examination of the 'rhetoric' of economics. A good example of her attacks can be found in her latest book on that issue (The Cult of Statistical Significance, with Stephen Ziliak), in which she criticizes the slippery use of 'significance' in statistics (see this post). But McCloskey has now engaged in an even larger enterprise: explaining the unprecedented economic growth observed over the last two centuries. The ambition of the project is reflected in the sheer volume of the treatment: six books, one published in 2006 (The Bourgeois Virtues), one that just came out (Bourgeois Dignity — that is briefly reviewed here), one available in draft form (The Bourgeois Revaluation), and three more that should appear over the next few years. McCloskey's main these is that the period of growth we have experienced was due to a shift in the rhetoric about bourgeois values.
After having been frowned upon — think of the scorn for the merchant in Shakespeare — the bourgeois values started to be honored, and more liberty was given to the entrepreneurial, or innovative, actors in society — first in Holland in the 17th century and then in England in the 18th. This is a fascinating idea, well outside the mainstream of explanations usually advanced by economists and historian to account for the industrial revolution. In Bourgeois Dignity, McCloskey does not present much by way of positive arguments — this will be done in the next two books. Instead, she relies on a negative argument: none of the other explanations work, so mine must be correct. She defends this strategy at the beginning of the book, mentioning successful instances of its use, such as the elimination of all other hypotheses by Penzias and Wilson in order to conclude that the white noise they recorded was in fact a product of the Big Bang. However, it is much less clear in the case at hand that all other hypotheses have been exhausted. To some extent, the very fact that she's able to offer a novel explanation herself shows that it's still possible to do so, unless she assumes that anybody else but her can do it.
Even if her negative argument offers little support for her own thesis, it is still immensely useful in its refutation of many common ideas about the cause of the industrial revolution. The titles of her chapters provide us with a quick list of unsatisfactory explanations. It was not accumulation, nor improvements in transportation or in trade, nor geography, nor imperialism, nor institutions, and so on and so forth. As non-expert, it's hard to judge whether all of her dismissals are equally sound, but her arguments are usually strong, relying on recent historical statistics (against the economists' hypotheses) or well-accepted economic arguments (against the historians' hypotheses). Even if each rebuttal were to be sound however, they would still offer only limited support for her own thesis. Many of the arguments are of the form: "this explanation relies on this factor, but this factor was also present in other times / places, and so it cannot successfully explain the specific event that happened in England in the early 19th century." This still leaves open the possibility of interactions. Maybe it was not only trade, or geography, or institutions, but the interaction of these different factors that was unique of this time and place. While such an argument remains to be made, it shows that the exhaustion of current alternatives offers only limited support for McCloskey's own point.
In any case, McCloskey's thesis promises to open doors for an approach to the problem that would take "cultural epidemiology" into account. Even though she's careful to talk of 'rhetoric', focusing on what people say rather than what they may think, the question is still fundamentally one of spread of cultural elements — here, beliefs about the bourgeois virtues and beliefs about what is appropriate to say about them. Why did these beliefs spread at that particular time and place? If they are really responsible for our modern wealth, why did they not spread before? Hopefully, McCloskey will address these questions in more depth in the future installments of her series. Unfortunately, she seems to have nothing but scorn for (and apparently little understanding of) psychology, in particular any kind of psychology inspired by the theory of evolution (she dismisses Pinker as a eugenist for suggesting that language is probably in part innate). So there is little hope that she relies on psychology to do any of the explanatory work. This is a shame since some well-established human cognitive proclivities could help explain the resistance to some of the bourgeois values. For instance, many innovations make most people better off but some people worse off. The status quo bias (a bias to prefer the status quo) and loss aversion (losses loom larger than gains of equal value) could help explain why innovations are not more commonly accepted.
McCloskey's refusal to take psychology into account also leads her to discount happiness research. Her main argument seems to be that since people do not say that they are much happier now than thirty years ago — in rich, Western countries — but that their purchasing power has increased, then the happiness research must be bunk. To account for this puzzle, she invokes the increased number of possibilities that have become open to people (Sen's capability approach), saying that this is good for people even if it doesn't show up in the answers to happiness questions. So at least she seems to agree that purchasing power is not everything that matters, or even that it may not even be the most important goal for a society. It is regrettable, then, that the increase in purchasing power is the only thing she focuses on in the book. Granted purchasing power is easier to measure, especially when it comes to, say, 18th century data. Granted also, purchasing power and increased capability are correlated. But there are also likely to be deviations from a perfect correlation. It seems as if her occasional sneer at the Swedish or the German economic models might be tempered if she took into account more than sheer purchasing power, in line with her own statements about the importance of capabilities.
Finally, the book could probably have used more editing. Five hundred and fifty pages of negative argument is a lot, and it could certainly have been made shorter. Some digressions may have been skipped — about the billiard skills of McCloskey's father or biographical details of the life of Douglas North. And some chapters may not have been entirely necessary. For instance, spending three chapters on Gregory Clark's absurd thesis that the industrial revolution was caused by English bourgeois out-reproducing the poor and thus spreading their values was probably too much. Still, the book is an invaluable review of the explanations for what may be the most important event in human history, and McCloskey's verve and breadth of knowledge shine throughout. She offers a truly unique perspective on this fascinating topic, and we should look forward to reading the next volumes.
Thank you for your reasonably just and enthusiastic review of Bourgeois Virtues: Why Economics Can't Explain the Modern World. When I was your age, and hadn't written any books, I was much more stern than you are!
Your main point on the substance is my "refusal to take psychology into account." I see what you mean, and your point is fair—though I don't think "refusal" is quite the word. I do admit to the ignorance you criticize of psychology, and will try to do better, using even this very website as a library.
As to the historico-scientific grounds for my "refusal" of psychology: Take your example, that status-quo bias and loss aversion would "explain why innovations are not more commonly accepted." Sure, got it. But so too they would "explain" the lack of acceptance at all times and places relevant to comparison with the birth of the modern world, wouldn't they? So how did the lack change? Except on the multi-deca-millennial time-scale of most evolutionary psychology, aren't such psychologies merely background conditions, scenery—rather than potential explanations for what after all is a change in the acceptability of innovations? I argue in the book that there's not in the relevant period much evidence of psychological change (this against Max Weber's hypothesis—which he in fact dropped after first articulating it in 1905). The historian Keith Thomas says wisely in a recent, brilliant survey of early modern England (Thomas, The Ends of Life, 2009, p. 186), that "it is very likely that the desire to be valued by others [and likewise other psychology mechanism such as status-quo bias, and loss aversion, and the fundamental attribution fallacy, and so forth] is a human universal. . . . But that desire can take many different cultural forms," having, I would argue, radically different economic consequences. It's after all the main point of my own book that what exactly was valued—whether aristocratic gestures in court or castle, or venturing in trade to the Levant, or making a steam engine—is what changed. The changes, I argue, were mainly sociological and political and literary and philosophical. Not psychological. I imagine you would agree, though urging us both to look for more evidence, as I would, too.
One scold, though. You will learn I hope to resist, as you do not resist here, the Reviewer's Chief Temptation—that is, to claim as your own insights the modest concessions the very author makes at length! For example I concede at length, with full philosophical justification (you give the impression that my only comparison is with the Big-Bang observation), that the book is mainly a comprehensive review of the other, materialistic, and, as it turns out, quantitatively weak explanations of how we went from $3 a day in 1800 to $125 a day in 2010. You jump on this, take it as your own point, and then claim that I therefore offer few positive arguments for the hypothesis of a Bourgeois Revaluation (the very vocabulary here of "positive" and "negative," by the way, is again my own). In truth—though "negative" arguments are not to be set aside as inconclusive in science—I present quite a few "positive" arguments for it, perhaps 30 or 40 page's worth, though reserving to the next volume (The Bourgeois Revaluation) a fuller exploration. For example, I speak (on pp. 13, 26, 63) of "the scorn for the merchant in Shakespeare," as you put it (you leave the impression that you are the one who noted it). Likewise, you make my very own point, as though I had neglected to make it, about the "the possibility of interactions," to which I devote many pages (e.g. 192-193; all the discussion of trade and economies of scale; much of the discussion of imperial power and domestic prosperity; and so on throughout). I conclude about the possibility of interactions and multiple causes that "the still deeper problem is that what needs to be explained is why the multiple causes converged in the late eighteenth century. To this question I have an answer. The historians who hypothesize a happy conjuncture of otherwise routine economic forces do not."
In short, you'll want to resist The Temptation, and remove it from your rhetorical armamentarium. Yes?
But as I say, your summary of my book is on the whole fair and accurate ("fair and balanced" has been ruined as a commendation!). Perhaps you should read with a little less confidence that you understand a moderately complicated scientific and political position. For example, I don't "sneer," as you claim, at the Swedish and German social democratic model. On the contrary: take down the book and slowly read pp. 444-445. But let me repeat: you write well, think well, and are scholarly and open-minded. Bravo!
Deirdre N. McCloskey