In the past two centuries, the average human income has increased 10 times, and the increase in the number of goods and services available is even more difficult to calculate. For such an explosive increase in wealth, Deirdre N. McCloskey, emeritus professor emeritus of the Department of Economics, History, English and Communication at the University of Illinois at Chicago, believes that it is the "mating" of ideas, ideas and ideas that releases the productivity of capital; and the more areas that value freedom, the more they can promote the "mating" of ideas.
Here are her specific points:
Author: McCloskey
Source: Sun Liping Social Observation
Today's human standard of living is simply too high. Two centuries ago, the world's per capita daily income was converted to $3 in real terms, and it has remained at that level since the birth of human society. Now, that number has increased 10-fold to $33. Moreover, statistics do not take into account the great abundance of goods and services available to humanity since 1800.
The Great Enrichment of this magnitude is unprecedented. Exponential income growth is not uncommon in history, and has appeared in ancient Greece, Rome, or China during the Northern Song Dynasty, or India during the Mughal Dynasty. But people at that time would also quickly fall to the standard of living in Afghanistan today, where the average person earns less than $3 a day. Moreover, the increase in income and the abundance of goods and services available has led to an earthy 10,000% increase in the comfort of life, which was unprecedented in human history two centuries ago.
How did the "Big Bang of Fortune" come about?
Different ideologies have different interpretations. The left's interpretation, starting with Karl Marx, argues that the key factor is exploitation. Since 1800, capitalists have squeezed the surplus value of workers and then invested in the "dark satanic mills," the sweatshops of the industrial age, which they saw as the key to growth. The right-wing interpretation, descending from Adam Smith, argues that the key is to save and accumulate. As Smith said, as long as they could routinely save and accumulate capital, the savage Scottish Highlanders could have a very high degree of wealth like the Dutch.
Later, Nobel laureate in economics Douglass North made an extension of Smith's doctrine. He believed that institutions were the real panacea: laws flourished, corruption was eliminated, and countries would become extremely rich because of the accumulation of capital.
But what makes the world rich is not capital extracted from the workers, not capital accumulated by the virtues of frugality, nor by a system of systematic accumulation of wealth. Capital and institutions are important, but so are labor, water, and time.
What unleashes the productivity of capital?
The answer is concrete ideas that want to improve and innovate—ideas from people like a carpenter in a remote rural area (James Hargreaves, inventor of the Jenny spinning machine), a little boy who is a telegraph operator (Thomas Edison), and a young computer genius from Seattle (Bill Gates).
As Matt Ridley put it in The Rational Optimist (2010), over the past two centuries, "different ideas have begun to mate." For example, the idea of train transport stemmed from the combination of a high-pressure steam engine with a minecart on railroad tracks, while the idea of a lawn mower was the product of a combination of a scaled-down gasoline engine and a scaled-down harvester. This is true of all kinds of imaginative inventions. The convergence of these ideas in the mind led to the explosive emergence of various mechanical improvements.
If capital accumulation or the rule of law were relied upon alone, then the "Great Explosion of Wealth" should have occurred in Mesopotamia more than 2000 BC, Rome in 100 AD, or Baghdad in 800 AD. Before 1500 or even 1700 AD, China was the most technologically advanced country in the world, such as China's canals were much longer than in Europe, and the invention of canal locks was hundreds of years earlier than in Europe. The free trade and legal system in ancient China was also far more extensive than that of the monarchical Europe at that time, which was full of small countries and heavy tariffs. But it was northwestern Europe, not China, that gave birth to the Industrial Revolution and the "Big Bang of Fortune."
Why did the idea learn to "mate" right here and now?
Why did this phenomenon first appear in the Netherlands around 1600, then spread to England around 1700, and then to the North American colonies, Scotland, Belgium, northern France and the Rhine?
Because of "freedom". It turns out that the most ingenious person is the one who has been freed from bondage, not the slave, the serf, not the subordinate woman, not the person bound to the hierarchy or bureaucracy. In some fortuitous political event ...
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Over the past 200 years, the average global income per person per day has grown from $3 to $33.
Which public policies contributed to the "wealth explosion"? Almost nothing. As Smith said, the proposal of the maharajahs and ministers of England to oversee the private economy was the most wanton and arbitrary act. We can indeed take the money ourselves out to help the poor. Smith himself gave alms to the poor. In fact, no matter which religion will advocate charity. But note, however, that since 1800, 95 per cent of the wealth of the poor has come not from charity, but from an increase in economic productivity.
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