To say it in a little more detail:
In Dante’s time a market was viewed as an occasion for sin. Holiness in 1300 was earned by prayers and charitable works, whereas buying low and selling high was deemed a great danger to the soul. As the holier-than-thou Albigensians in southern France put it a century before Dante, the truly holy people were the “poor of the faith,” that is, rich people like St. Francis of Assisi who chose “lady poverty, a fairer bride than any of you have seen.” 492 Still in Shakespeare’s time a claim of “virtue” for working in a market was flatly ridiculous. “Let me have no lying,” says the rogue Autolycus in The Winter’s Tale, “It becomes none but a merchant.” 493 Ulysses says in Troilus and Cressida, “Let us like merchants show our foulest wares /And think perchance, they’ll sell.” 494
A secular gentleman, who was allowed to wear a sword, earned his virtue by nobility not by bargaining. He was a soldier,/ Full of strange oaths and bearded like the pard,/Jealous in honor, sudden and quick in quarrel,/ Seeking the bubble reputation/ Even in the cannon’s mouth. The very title of “gentleman” in Elizabeth I’s time meant someone who attended the Cadiz Raid or Hampton Court, engaging in nothing so demeaning as actual work. Among the Dutch, too, as late as 1743 a report on the conditions in the tiny colony around Cape Town noted of the denizens that “having imported slaves, every common or ordinary European becomes a gentleman [meneer from mijn heer, my lord, would be the word: De Heer in Dutch is The Lord God] and prefers to be served rather than to serve.” 495 The distinction haunted Afrikaner society down to the twentieth century, and kept it for a long time non-bourgeois, and poor. 496
The mid-Victorian moralist Samuel Smiles, much scorned by people who have never read him (he praises the bourgeoisie; and after all he has a funny name), held up in the final chapter of Self Help (1859) “The True Gentleman” as his ideal. But the way Smiles mixes aristocratic and Christian/democratic and bourgeois notions of gentlemanliness is not the main line of the word until very late. Admittedly, sense 2a in the Oxford English Dictionary is “a man in whom gentle birth is accompanied by appropriate qualities and behavior; hence, in general, a man of chivalrous instincts and fine feelings,” with an instance as early as 1386, in Chaucer. The lexicographers of Oxford note further that “in this sense the term is frequently defined by reference to the later derived senses of ‘gentle’,” that is, “mild mannered,” an early and unusual use being 1552. Yet much more usually until modern times the word “gentle” continued to mean “well-born.” In their book Shakespeare’s Words: A Glossary and Language Companion (2002) David and Ben Chrystal put “gentle” among their selection of the 100 most frequently encountered words that would mislead a modern reader of the Bard. They define “gentle” simply as “well-born.” 497 (The alternative spelling and pronunciation, “genteel,” means much the same as “gentle” in seventeenth-century English, “appropriate to persons of quality,” as in Pepys writing in 1665 that “we had the genteelist dinner.” But in its various shades of meaning recorded in the OED “genteel” becomes in the eighteenth century a bit of a joke, and is used “now chiefly with sarcastic implication.” Thus Jane Austen in 1815 says of an unfortunate family that “they were of low origin, in trade, and only moderately genteel.” 498 Note Austen’s gentle, and genteel, amusement at the distinction.)
Smiles’ modern assertion on the last page of his book that “Gentleness is indeed the best test of gentlemanliness” may serve well enough now in our egalitarian times, originating in the crazy notions of Levelers in the 1640s or Wat Tyler’s mad talk in 1381 that rank and birth should not matter: “When Adam delved, and Eve span/ Who then was the gentleman?” But it has nothing to do with the self-confident society of sneering rank and birth that Shakespeare praised. Until the rhetoric started changing in earnest around 1700 English people thought it was quite absurd to claim, as Smiles did, that gentlemanliness “may exhibit itself under the hodden grey of the peasant as well as under the lace coat of the noble.” 499 Smiles’ “hodden grey” [that is, undyed homespun cloth mixed of white and black wool] is an unmarked quotation from Burns’ leveling poem of 1795, “A Man’s a Man for a’ That”: “What though on hamely [homely] fare we dine,/ Wear hoddin grey, an’ a that; /Gie [give] fools their silks, and knaves their wine; /A Man’s a Man for a’ that.” But Burns’ is modern, democratic, revolutionary talk, the talk of the Scottish kirk meeting, where any devout man could speak up, or the Scottish marketplace, where a poor man’s penny was as good as that of yon birkie ca’d a lord. The very word “noble” was transformed by Calvinists in the seventeenth century into a spiritual condition, “true nobility.” 500 The change in the rhetoric, the honoring of people who claimed no privilege of robe or sword and merely worked at the business of ordinary life, serving rather than being served, yet finding honor in such a task, the shift to a bourgeois civilization — which came (as causes do) before the material and political changes it gave rise to — was historically unique. “The pith o’ sense an’ pride o’ worth/ Are higher rank that a’ that./ Then let us pray that come it may,/ (As come it will for a’ that,)/ That sense and worth, o’er a’ the earth, /Shall bear the gree [be thoroughly superior], an’ a’ that.” It was a change in ethics, a change in earnest talk about the good life, spreading at length to poets and plowmen.
By the very end, by 1848, notoriously, in Holland and England and America and their imitators in northwestern Europe, a busy businessperson was routinely said to be good, and good for us, except by an angry and as yet tiny clerisy of anti-capitalists, gathering especially in France. The new form of innovation, dating from its precursors in the northern Italian city states around 1300 to the first modern bourgeois society on a large scale in Holland around 1600 to a pro-bourgeois ethical and political rhetoric in Britain around 1776 to a world-making rhetoric around 1848, grew for the first time in history at the level of big states and empires to be acceptable, even honorable, even virtuous.
The former aristocratic or Christian or Muslim or Confucian elites had contempt for business, and taxed it or regulated it at every opportunity, keeping it within proper bounds. That was the chief constraint on the march to the modern — withholding honor from innovation, and dignity from ordinary life. But indeed a small society dominated by business could itself rather easily set constraints, by arranging for a local monopoly. If the dominate classes of merchants worked at it long enough, as the Venetians did, they could reproduce a society of strict rank and birth. The killing of innovation by the bourgeoisie itself was made possible by economic localism, Europe being riven until the nineteenth century by toll gates within countries and at frontiers — this in sharp contrast to contemporary China, which constituted one enormous free trade area. By contrast, beginning in 1738 the Prussian tax collectors, having torn down the old defensive city walls (no longer effective against modern guns) , erected a twenty-foot tall customs wall (Akzisemauer), which itself was torn down only in 1866 — a fitting symbol of the rise and fall of European’s self-defeating mercantilism. 501 The third act of Puccini’sLa BohÃ¨me (1896, from a novel of 1849 referring to the 1830s) takes place at a toll gate into Paris. It would not have seemed odd even in post-War Europe, at any rate before the full blooming of the Common Market. In 1968 we waited in our car for hours with hundreds of lorries to cross from Austria to Italy.
Thus Deventer, a Hansa town in the Netherlands, was in 1500 strictly bounded by tariffs and protections for existing trades. Constraints on trade were the illiberal equilibrium of Europe before the Industrial Revolution. You could not innovate in producing cloth without permission from the guild. In Germany during the fourteenth and fifteenth centuries even the urban poets of each little town were organized into guilds, that of Wagner’s Die Meistersinger von NÃ¼rnberg, for example, with their tunes and meters laid out in rule books in a most unRomantic way.
In the style of central planning and regulation now — as against the wild, self-organizing free market now — people expected their economy to be predictable. Stanislav du Plessis speaks of his Afrikaner great grandparents, and of their parents, and theirs, and theirs: “for these couples, as for humankind generally for almost all of history, parents lived the same lives as their children.” The children “grew rich, if at all, and rarely, by accumulating more land and more cattle, more labor. . . . It is the same model we read about in the Old Testament (Genesis 13:1-30; Genesis 30: 25-43).” 502 The model was zero sum. In 1600 England, even though a big society, at any rate by Deventer or NÃ¼rnberg standards, still affixed chains on enterprise, under a theory that a trade was zero sum. Many believed that “to add more persons to be Merchant Adventurers is to put more sheep into one and the same pasture which is to serve them all.” 503 Let us have predictable lives. It is what is behind modern revivals of mercantilism, as in Lew ***check spelling Dobbs on U. S. television or the French vintners demanding still more protection or the anti-globalization rioters at the meetings of the Group of Seven.
But a free-trade area as large as Britain in the eighteenth century, after the change in rhetoric around 1700, could develop sufficient material and intellectual interests in free trade to unbind Prometheus. 504 A balance of interests against passions, in other words, is not merely a modern liberal fancy. Interests grew up in the British eighteenth century that had a stake in free markets. When the new rhetoric gave license for new businesses, the businesses could enrich enough people to create their own vested interests for carrying on, creating a toleration for creative destruction, and for unpredictable lives. Ideas and conditions intertwined into a uniquely modern rope. The first task of Napoleon’s conquering armies was to abolish restrictions by guilds, and the abolition was lasting. The result was the unprecedentedly rich societies of Europe and the world. The interests of a bourgeois civilization overbalanced the accumulated interests of traditional clergy, peasants, aristocrats, and local bourgeois monopolists, sufficiently.
From 1300 to 1600 in northern Italy and the southern and then the northern Low Countries, and the Hansa towns, and then more broadly and decisively down to 1776 in Britain, and still more broadly and still more decisively down to 1848 all over northwestern Europe and its offshoots, something changed in elite talk. In England the change in the rhetoric about the economy happened during a concentrated and startling period 1600 to 1776, and especially during an even more concentrated and even more startling period from 1689 to 1719. The heralds in England gave up trying to enforce the rule that only a gentleman could wear a sword. 505 Innovation, a “system of property rights coordinated by prices,” as the economist P. J. Hill puts it, and the bourgeois work in support of it came to be spoken of as virtuous. In some ways — though not all — innovation and other bourgeois work came to be virtuous in fact.
It was a close call, because rhetoric matters. The material and legal constraints of the economy and society of Europe did not change vastly from 1689 to 1789, at any rate not on the scale of the material change from 1789 to 1914, or still more the change from 1914 to 1989. People traveled in carriages and sailing ships in 1789 as they had in 1689; they ate grain raised mainly locally and spices raised entirely in the Indies as they had in 1689; they lived for the most part in small towns or the country as before; they worked for masters with whom they were personally acquainted; they were routinely beaten by their masters or their husbands if they misbehaved; they died at high rates from water-borne diseases; they could not vote; the laws under which they lived were ferociously slanted towards the rich. Not a great deal of a narrowly economic or political or legal sort changed in the eighteenth century. Therefore narrowly economic or political or legal changes cannot be the cause of that Industrial Revolution stirring in the late eighteenth century. The economist’s instinctive materialism, in short, looks inadequate to the task of explaining the modern world.
What did change astoundingly, and at the right time to explain subsequent enrichment, were ideas and their rhetoric. The ideas and the rhetoric depended on the close call going a particular way. Imagine the denouement of eighteenth-century politics without Freemasonry — Franklin, Washington, Lafayette were masons, continuing a movement begun in Britain (and spread by Desaguliers), becoming in Holland the home of the early “radical Enlightenment,” and spreading throughout Europe. Fully 300 lodges were scattered across even princely Germany, elevating discussion and encouraging fraternal equality (and even some sororal pseudo-equality) right down to the Austrian Mozart’s Magic Flute (1791). 506
Or imagine the Enlightenment without Diderot and his EncylopÃ©die (from 1751 on), by 1772 in 17 folio volumes of text and 11 volumes of 2,885 illustrations, with 140 contributors (for example, Rousseau on music), with 71,818 entries, and as early as 1754 having 4,255 subscribers, and in its cheap octavo editions in the late 1770s “reproduced and distributed on a mass scale throughout Europe,” 25,000 copies between 1751 and 1782, and many more translations and cheap editions later. 507 A half a century earlier, as Joel Mokyr has noted, the Chinese encyclopedia Gujin Tushu Jicheng, fully 100 million characters (the EncyclopÃ©die had only one fifth as many words), was printed, but was devoted to declaring an anti-enlightened orthodoxy in Confucianism (contrary to an ancient and vigorous spirit of dispute in Confucian thought) and was printed in a mere sixty copies — enough for enlightenment in traditional wisdom of only the very top of the Chinese mandarinate. 508 This in a country in which literally hundreds of thousands of copies of books published a thousand years ago have survived to the present (the fact stuns European students of texts as important as, say, the New Testament, which have survived from so long ago in handfuls, when they have at all). Printing was not the constraint. Liberty was. China in the eighteenth century wanted to play its intellectual cards very close to the Emperor’s chest. By contrast every moderately enlightened town in Europe had access to Diderot’s EncylopÃ©die, breaking theological custom and showing how machines were made (though beware again of Orientalism: the Chinese and Japanese at the time were also prolific in practical handbooks).
For that matter imagine how the close call might have gone the other way without certain individual callers — Locke, Newton, Bayle, Vico, Voltaire, Diderot, Rousseau, Smith. The speakers were not determined by the material base. The base was changing only sluggishly by later standards, or indeed by some earlier standards. Show this from growth figures, scale of foreign trade, urbanization up to 1700 What mattered most were the very words of such people. So at least has been assumed in the numerous attempts, often successful, to control behavior through controlling voice, not always backed by violence, such as Cato the Censor in Rome or theatre censorship in England or the U.S. Post Office Inspectorate or trips to the Gulag for people like Solzhenitsyn who could not keep their mouths shut.
Yet many people still believe stoutly, without much evidence, that ideas were not important. One needs to persuade them sweetly of their error. Without Adam Smith, for example, the rhetoric of innovation would have developed in different ways, if at all. He himself wrote eloquently in 1776 against the notion that only material interests matter: after all, the entire point of The Wealth of Nations was to assault what he called the “commercial system,” that is, mercantilism, another system of ideas. Slowly his own eloquence came to matter. He would not have wasted his breath had he thought ideas were mere reflexes of the interests, as the numerous vulgar Marxists of the left and the right claim to believe. Thus the great American economist, George Stigler asserted in The Economist as Preacher (1982): “We live in a world that is full of mistaken policies, but they are not mistaken for their followers. . . . Individuals always know their true self-interest [except perhaps Stigler's students, who needed to be instructed?]. . . . Each sector of the public will therefore demand services from intellectuals favorable to the interests of that sector.” 509 That part of his argument is identical to Antonio Gramsci’s on the role of the intellectual: “every social group. . . creates together with itself, organically, one or more strata of intellectuals.” 510 But Gramsci the Italian Marxist (1891-1937) was much less of a historical materialist than was Stigler the Chicago-School economist (1911-1991). With Lenin, Gramsci believed in a role for rhetoric and the Party, and was opposed to an “economism” such as Stigler advocated in his old age, the cynical half truth that the Interests will always out.
Smith knew the Interests well, and spent the last third of his book of 1776 railing against them. But he knew as well the other half of the truth, too, the force of raillery, and knew that intellectuals can have a historical role independent of the interests of a sector or social group. “To found a great empire for the sole purpose of raising up a people of customers, may at first sight appear,” he thundered, “a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers, but extremely fit for a nation whose government is influenced by shopkeepers.” 11 A government influenced by shopkeepers was the Deventer and the Merchant Adventurer’s case. Repeatedly the shopkeepers and corporations since then have attempted to re-impose mercantilism, using their influence on the state to protect American sugar growers (and thus killing innovation in the use of sugar for auto fuel) or to extend the copyright on Mickey Mouse (and thus killing innovation in the use of images). Worse, sometimes much worse, has arisen from the military-industrial complex that Eisenhower warned us against. We must, as Smith said and did, marshal our rhetoric against “the clamorous importunity of partial interest.” 512 Indeed. Down with corporate welfare! Overthrow the military-industrial complex! Prevent monopolies from using “regulation” as a tool to block entry! Don’t be fooled! Aux presses, citoyens.
But in modern times the bigger danger than corruption by the bourgeoisie itself, real though that danger is, has been the re-imposition of neo-aristocratic or neo-Christian notions of the proper place of business, expressed as nationalism or socialism. Such notions have in the twentieth century caused great slaughters of people and great violations of liberty: Kaiser Wilhelm, Mussolini, Lenin, Stalin, Hitler, Franco, Tojo, Mao, Castro, Ho Chi Minh, Pol Pot, King Saud, Saddam Hussein, Kim Jong-il. A dreary record. Corporate welfare by contrast has merely enriched a few well placed people with seven houses.
Fascism and communism arose through rhetoric armed as much as did liberty, since rhetoric matters in the attacks on economic or political liberty as much as in their defense. The aristocracy or the country club, for example, favors a nationalist rhetoric nurturing military power, and a version of neo-aristocracy, in the name of King and Country. For a moderate showing of such tendencies in the United States see any Republican Party national convention. The progressive Christians or the clerisy favors a socialist rhetoric nurturing the leading members of the Party and selected trade unions, in the name of the wretched of the earth. For a moderate showing of such tendencies in the United States see any Democratic Party convention. The defeat in the twentieth century of the extremes of each was a close call, and the rhetoric of the country club and the clerisy has mattered. In the 1930s the country club sidled up to fascism, the clerisy to communism. The European Civil War 1914-1989 showed how high-minded theories of nationalism or socialism or, God help us, national socialism could kill off liberty and prosperity, and tens of millions of people to the bargain. If you doubt that ideas matter, consider the importance of individuals in that pitiful history, when conditions were ripe. The “ideational” literature in recent political science calls the vital few “carriers,” “capable of persuading others to reconsider the ways they think and act.” 513 No Lenin, with his pen, no October/November 1917. No Hitler, with his voice, no January 1933.
The rhetorical and ethical change around 1700 caused modern economic growth, which at length freed us from ageless poverty. Modern economic growth did not corrupt our souls, contrary to the anti-bourgeois rhetoric of the clerisy since 1848, and contrary to an older line of aristocratic and religious criticism of bourgeois life. The rhetorical and ethical change at the national level was necessary for the first Industrial Revolution. It was even perhaps jointly sufficient — with property rights standing as a supersaturated solution into which the crystal of the dignity of ordinary life was dropped. 514 British people in the eighteenth century came to accept the creative destruction of old ways of doing things, becoming in a famous phrase of Blackstone’s “a polite and commercial people.” 515 The economy paid them back with interest. The Marxists call the acceptance of innovation “false consciousness,” and it may be. But unless the masses in a democracy accept innovation, falsely or not, they can be led by populists to rise up and kill the goose, as in Hugo Chavez’ Venezuela.
European people in the nineteenth century came to think of themselves as endowed by their businesslike Creator with inalienable rights, especially to liberty and property. More innovative rhetoric. The rhetoric paid them back at length, paradoxically, with freed slaves and freed women. People in the late twentieth century from the Philippines to Ukraine came to expect to have a say in their governments, as in their markets. The polity, too, paid them back with democratic liberalism, a free press, the Iowa caucuses, the South African constitution, and all our joy.
We need now to guard the resulting precipitate against cynicism and utopianism. One might well worry about the “cultural contradictions of capitalism” articulated with horror or glee by Daniel Bell and Polanyi and Schumpeter and Weber and Lenin and Marx. Innovation can indeed produce its own gravediggers. 516 “Is it possible,” asked the liberal historian Macaulay in 1829, “that in the bosom of civilization itself may be engendered the malady which shall destroy it? Is it possible that, in two or three hundred years, a few lean and half-naked fishermen may divide with owls and foxes the ruins of the greatest European cities — may wash their nets amidst the relics of her gigantic docks?” 517 As Macaulay noted, under democracy such an outcome is implied by the strictly short-run, prudence-only, interest-rules, people-know-which-side-of-their-bread-is-buttered-without-instruction theory of the act-utilitarians among us.
But we do not have to admit the utilitarian, prudence-only theory. It hasn’t worked very well as a descriptive theory outside certain narrowly economic contexts — it has failed, for example, in realist studies of foreign policy. It encourages an unethical version of ethics. On the contrary, ideologies matter. People are in fact open to instruction that bourgeois life can be virtuous and that bankers should be wise. And anyway, to repeat, no writer urging better economic or political policy can propose without self-contradiction the cynical, amoral theory. If economism is true, put down your pen. If you’re so smart, why are you urging others to ignore their selfish interests? Let the short-run self-interest of the poor and the powerful come to wreck innovation, in the style of twentieth-century Argentina. Let us welcome a life of lean and half-naked fishermen, and the ruin of cities. Perhaps it is mistaken to assert that rhetoric in favor of innovation, a new neural pathway in the brain, was sufficient to initiate prosperity and liberty, and that it is still necessary to retain them. We shall see. But at least such assertion are not a performative self-contradictions, such as persuaders trying to persuade you that persuasion is a nullity.
The modern world required a Bourgeois Revaluation. Indeed, it still does. Russia will not fully enter the modern world until it abandons its hostility to any tall poppy, any successful businessperson. China and India are trying to. But from the clerisy left and right comes the irritated reply: “You mean you want me to accord dignity to the wretched promoters and profiteers? Are you nuts? I’m barely willing to give them the mere liberty to forward their schemes. They get their reward here below, in cash. They hardly need to be admired! I’m sticking with holy equality [thus the left] or glorious distinction [thus the right]. My admired people are saints and soldiers, not innovators and managers. Lenin not Rockefeller. Dorothy Day not Herbert Hoover. Leni Riefenstahl not Walt Disney. Patton not Eisenhower. Tom Joad not George Babbitt.” I wish they would stop to think.
The Bourgeois Revaluation was an ethical event, of course. Northwestern Europe came to honor the outcome of markets, in both senses of “honor.” It accorded dignity to them. And it gave them the liberty to happen, as in “honoring” a contract. But laissez faire was ethical in another sense, too. 518 It was a decision to treat markets as ethically privileged, to stop according privilege to hierarchy (“Stand aside, knave”) and to start according privilege to exchange (“The price is the price”). Hierarchy of course did not disappear. Men, elders, guildsmen, millionaires, officials, whites, and citizens of the town still lorded it over women, minors, apprentices, paupers, subjects, blacks, and foreigners. The Chicago School’s and the Marxists’ cynical version of the Golden Rule still held sway: those who have the gold, rule. But hierarchy less commonly after the Bourgeois Revaluation trumped the outcome of markets, and especially so in the crucial matter of innovation. Even a person with bags of gold could not so often delay an innovation, unless indeed he could corrupt the existing institutions of hierarchy, such as the state, and bring in a regulation. In Florence in 1430 an innovation in making cloth that disturbed the profits and therefore offended the standing of give correct name of guild from Florence book, and use a real name of the time was forbidden. An outrage. In Manchester in 1830 similar innovation that disturbed the profits of English name, preferable Clough’s father was admired, or at the least not whined about, whatever its effects on his standing. Clever, that. In other words, laissez faire, laissez passer comes with the Bourgeois Deal: if you let me innovate and make profits, in the long run I’ll make us all rich. (And he did.)
In a way that illuminates the point at issue here, economists routinely fumble the definition of one of their favorite bits of twentieth-century jargon, an “externality.” “External effects” are supposed to be grounds for state intervention to repair the misdeeds of markets. The economist will write that “in the presence of externalities, an institutional arrangement could be efficient for the individuals transacting (i.e. in their best interests), while being inefficient for society as a whole because it affects the welfare of third parties. ” But wait. Every action in a society has effects on the welfare of third parties. If I bid for something on E-Bay I affect all the other people by raising its price. Not much, but a little: an effect. Something is wrong. By such a definition the state should intervene when you, buying a loaf of bread, take it out of the mouth of some poor and worthy person, or when you innovated in making cloth, taking profits out of the pocket of NNN as above in Florence. The jargon of “externalities” was on the contrary invented to speak of the contrast between effects within markets and those outside of it, such as the alleged inability of beekeepers or lighthouse keepers to get market compensation for their beneficial activities. The correct definition must therefore contain a phrase like “because it effects the welfare of third parties in ways other than supply and demand.” The claim to achieve (to use more of the beloved jargon) “efficiency” is only about events happening within unregulated markets. The economist says, “if property is secure and exchange permitted, then people will achieve by supply and demand the ‘contract curve’ in an ‘Edgeworth box,’ subject to the limits of ‘transaction costs.’” Whew.
The blizzard of such jargon has made it hard for economists to see their ethical feet. The point is that deciding what is in and what is out of the market is an ethical decision. No man is an island, entire of itself. Only Crusoe on his island, before Friday, does not cause spillovers on other humans. We humans then decide to let some spillovers pass, and others not. We decide to let innovations in making cloth go forward unimpeded, or not. We decide to let markets in babies to take place, or not. As disturbing as it is to the claim that economics is free of values, like chemistry (but consider Nobel and his dynamite; consider the trigger for the first atomic bomb; consider Dow Chemical and Agent Orange; keep considering), the Bourgeois Revaluation declared markets ethical. Its servants in forming a historical block (the economists) declared much later that good spillovers are to be called supply and demand, while bad spillovers are to be called externalities.
Such ruminations will irritate both left and right. The left wants it to be obvious that we should intervene to stop the outcome of markets and innovation when they appear to hurt some poor and worthy person. But I am claiming that an ethical decision to let some — most — innovations go forward has been necessary to the gigantic enrichment of the world’s poor. It might have turned out another way. It might have been, as Marx expected, that innovation would be immiserizing. But in the event it wasn’t. On the contrary, innovation has been vastly more effective in making us better off than regulations and unions and taxes and redistributions and planning. If you want poor people to prosper — and left and right the ethical people do — you need to buy into the Bourgeois Deal.
Marxist conflict theory, such as that of Brenner or Wallerstein, supposes that the correct way to start is class conflict. Elias Khalil observes that
Feminist theory . . . envisions the boundary between the genders, but not the boundary between classes, to be the ultimate entry point of analysis. For feminist theory. . . the family cannot have an identifiable objective function as long as the male and female have unequal power. One can envision similar theories of boundaries that draw the lines according to religion, race, or nationality. 519
Indeed one can. The economists’ position as social philosopher, adopted first in the eighteenth century, claims that one can and should think of the welfare of the world as a whole, not according to class, gender, religion, race, or nationality. Political economy, later to be called economics, came into its own when the objective function became People instead or this or that interest. The distinctive mark of the politics of economics since Turgot and Smith is its claim—which may be disputed on realistic or conspiratorial or false-consciousness grounds—to take into account all of humanity. The conflict theorists do dispute the claim to represent all humans: “Don’t be naÃ¯ve: the real world starts from the divisions by race, class, gender, nationality.” And in a zero-sum world of hierarchy they are surely correct. Yet the Bourgeois Era led to such gigantic enrichment that zero-sum no longer makes sense.
The hard-minded right, on the other hand, wants it to be obvious that markets and innovation are just desirable, no weepy-eyed ethics about it. Perhaps they should have noticed that “desirable” is an evaluative term, and “justice” a virtue, and ethics necessary for any human life. But in any case. . . .