A Discussion of Bourgeois Equality Chapter 14 “Because Ethics Matters, and Changes, More”
I’ll be honest. If the first few chapters read like this one, I never would have thought to do this chapter by chapter review! That is not because this chapter is bad, but it did challenge me.
I know there is a lot I don’t know. I know there is a lot in economics I do not know. But when I read an economics article, I never feel as lost or as uncomfortable as I did reading this chapter!
Which is a long-winded way of me acknowledging how much I have been shaped by my economics training and how woefully inadequate is my training in ethics and the humanities.
And that is pretty much McCloskey’s point in this chapter — that economics training is lacking an understanding of ethics, logic, and the humanities and the role they play in understanding the relationship of good institutions leading to growth.
In many ways, this chapter is a more in-depth exploration of the ideas exposited in the previous chapter.
The Right’s Story of Economic Growth is Wrong, Too
Rules of Logic for the Win
It is a common teaching in economics that it is good institutions that cause economic growth. McCloskey is arguing Institutions AND Ideas cause economic growth. (p. 119)
Part of her argument uses the rules of logic, a field not widely studied anymore. I primarily know it as an adult because of my daughter studying it in a classical school.
Essentially, if economics argues:
- Good institutions cause economic growth is a true statement;
- Then by the rules of logic, the lack of economic growth means you have bad institutions has to be a true statement. (More precisely, not growth means not institutions.)
Some countries that are not growing have bad institutions but others do not. For example, over the last 10 years, Japan has had an average growth rate of 0.348%. They have private property, the rule of law, and other good institutions, but they have almost no growth.
McCloskey’s point is the rules of logic mean the economists’ original statement that good institutions cause economic growth is wrong if the second statement is wrong.
McCloskey wants to change the first statement to
- Good institutions AND good ideas cause economic growth.
- Then by the rules of logic, the lack of economic growth means that you have bad institutions OR bad ideas.
McCloskey notes that the institutions of England did not substantially change from the 1600s to the 1800s.
It is quite wrong to think that the institutions faced by British entrepreneurs in 1800 were radically different from the ones they faced in 1685. But ideas of what was honorable, appropriate, allowed, among right-thinking folks did change, radically. (p. 122)
Thus it was the change in ideas that kicked off the Great Enrichment, not a change in institutions. And the lack of growth in the 1600s was not due to bad institutions, but bad ideas.
McCloskey details the change in ideas.
As the word “honest” shifts, between 1600 and 1800, from aristocratic to bourgeoise honor, the sort of deals we can make, the sort of action we can countenance, change…Economic betterment counts as…honorable only in the Bourgeois Era. Or to be exact, what was honorable in the Aristocratic Era was innovation without a trading test. No one asked, I have noted, whether a new machine of war was profitable. (p. 124)
This reminds me of her earlier discussion in chapter 3 of the Aristocratic Deal giving way to the Bourgeois Deal.
Capitalism and the Hockey Stick
Conclusion
Essentially, economics treats institutions too simply as rules of the game, devoid of the humanity that is embedded in them.
If the science of economics…needs meaning, it needs deontically, not merely rules of the game or a phrenological version of brain science but the humanities, all the way up to the Department of English. (p. 128)
Economics is about creating models to explain the world and models do require simplification. McCloskey though here is arguing that perhaps we went too far, given our belief in institutions causing economic growth breaks the rules of logic.
We can continue to posit the role of institutions in our models as a source of economic growth as long as we also include the role of good ideas. Both are needed to explain economic growth and missing either one or both, can explain the lack of growth.
Reference: McCloskey, Deirdre Nansen, 2016. “Because Ethics Matters, And Changes More,” Chapter 14 of Bourgeois Equality, The University of Chicago Press.
By Ellen Clardy, PhD on .
Exported from Medium on December 15, 2022.
