On Monday, October 11, the Royal Swedish Academy of Sciences will name the recipient of the 2021 Nobel Prize in Economic Sciences. My fingers will be crossed for professor of economics, history, English, and communications Dierdre McCloskey. No living economic historian has done as much to solve humanity’s most important riddle: What caused the Great Enrichment that took hold in Holland and England at the end of the 18th century and now has spread to most of humanity?
McCloskey looks beyond mechanical explanations based on an “industrial revolution,” as though the steam engine itself chugged humanity to new standards of living. She documents that the primary causal factor was ideas – the legitimization of the wealth-creating behaviors of innovators, traders, investors, and marketers. In earlier ages, such people were considered outcasts, rather than celebrated. For centuries, people thought that economic growth was reducible to the accumulation of capital, but McCloskey argues that it was innovation, and not capital, that explains modern prosperity. Once the spirit of “innovism” (her word) afforded dignity to bourgeois pursuits so that people felt liberated to improve their lot in life, the magic of Adam Smith’s invisible hand lifted communities and countries to never-before-seen heights of prosperity.
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