Was there ever an era when entrepreneurs created vast wealth on their own, without revolutions of social and political processes enabling them?
Or is this argument an absurd example of right-wing historians who cherry pick a few examples while ignoring what was happening in much of the world?
Deirdre McCloskey is a well known economic historian, and she has out a new book, "Leave Me Alone and I’ll Make You Rich: How the Bourgeois Deal Enriched the World." They offer this book review over at Economic History:
The book makes a powerful case for a classical liberal society: what accounts for economic success and growth is liberty. Other elements such as institutions, science, trade, resources and so on may have a mattered a bit, but the indispensable element that did it all was freedom from coercion, from regulation, and from oppression. That freedom was absent for most of human history, and it emerged only in Britain and the Low Countries in the seventeenth century. The Bourgeoisie, a group much maligned by the “left-wing clerisy,” are really the heroes of our prosperity and the “bourgeois deal” as they call it and as reflected in the well-chosen title of the book was the main driver that led to modern prosperity. The deal was simple: give us our freedom and we’ll make the economy grow. We’ll take the risks, but if we succeed, we’ll be rich and so will (almost) everyone else. The idea was so powerful and successful that it spread worldwide and has lifted up most economies on the planet. Hence, the majority of humanity is immensely richer than ever before and material life is better than ever before. That is the economic history of the modern world in a nutshell.
But I'm confused, when exactly was this era, when the state left people alone? Was it when Spain conquered and enslaved much of South America, and Portugal conquered and enslaved Brazil? Was it when the Portuguese conquered Goa and used the threat of violence to extort concessions from Indian princes? Or when Portuguese gunboats sailed into, and conquered, Malacca, in 1511, which at the time was the largest trading port in the world? Or when the Dutch overran Java and set up vast slave plantations to maximize the production of spices? Or was this era later, when the English colonies began to spread across North America, especially after they became an independent country? Was the genocidal mass murder of the native peoples of North America an example of the government leaving people alone? What about the slave plantations of the USA south? Was the system of totalitarian violence aimed at controlling the slave population an example of the government leaving people alone?
What exactly is the real argument here? Are we being told that if the government simply leaves slave owners alone, then the slave owners can use their slaves to produce great wealth? If that is the argument, then I agree that slave owners did use their slaves to produce great wealth, but this isn't an example of the government leaving people alone, since ultimately it was the government that was final guarantor of the slave system.
The whole argument is based on cherry picking a few anecdotes and ignoring most of the real oppression still suffered by large sections of the population throughout the British empire.
The idea "liberalism leads to innovation" is true in a few clear cases. When it comes to Jethro Tull and Charles Townsend, the two men who are credited with starting the Agricultural Revolution, religious toleration was a big factor, as well as a widening allowance of behavior that might have seemed odd (Townsend's bizarre obsession with cow poop eventually lead to modern ideas of fertilizers, but while he was alive it must have seemed odd that he took such careful notes about every poop).
As late as the 1680s England was still burning witches at the stake, for any behavior that seemed odd or unusual, but Jethro Tull could start his career in 1701, and do odd and experimental things, because England had stopped burning witches at the stake. It's not that Jethro Tull was smarter than any previous farmer in England, but he belonged to the first generation that grew up knowing they could do odd, experimental things and not get burned at the stake. So I get, we can cherry pick these anecdotes and argue "Not burning people at the stake lead to an increase in innovation." I'm sure that's true, but it's also true that large categories of the Empire's population was still being tortured and killed as a matter of course -- just not white males living in England.
Turning a blind eye to torture and murder, as an intellectual strategy, seemed to reach its peak in the 1970s, when the two most famous libertarians in the world (Milton Friedman and Friedrich Hayek) both gave their public support to the new military dictatorship in Chile. After General Augusto Pinochet murdered Allende, he established a brutal dictatorship in Chile, but Pinochet favored free-trade, so both Friedman and Hayek went to Chile to offer their support to Pinochet. Of Chile, Hayek said "If I have to chose between a democratic society and a liberal society, then I must choose a liberal society."
That idea has been at the heart of Western political theory since Plato, who also suggested that it was better to live in a liberal society than a democratic society, but Plato was reacting, specifically, to the democratic murder of Socrates. Socrates had advocated for a style of probing philosophy that would wake people up by forcing them to "Question everything" and this made the people of Athens uncomfortable, so they accused him of "corrupting the youth of Athens" and they sentenced him to death. And Plato's analysis of the democratic murder of Socrates set up the conflict between democracy and liberalism that the West has spent the last 2,500 years discussing. The criticism of the "tyranny of the majority" usually starts with a discussion of the democratic murder of Socrates.
(Socrates expounds upon the immortality of the soul as he drinks hemlock after the government of Athens democratically sentenced him to death for his dangerous ideas.)
But in Chile, it was clearly Pinochet who was the one doing the murder, so in what possible sense could Friedman or Hayek look at that situation and conclude that Pinochet was overseeing a liberal regime? They wanted to treat him like he was one of the great liberal princes from history, like Friedrich The Great of Prussia or the Roman Emperor Hadrian, but Pinochet was simply a murderer, and the only "liberal" thing he ever did was allow free trade.
I'm puzzled how the libertarians got to a mental space where their definition of "liberal" was so narrow that a military dictator could engage in mass torture and mass murder but still be considered "liberal" because they allowed free trade. Such forgiveness for a murderer is an extreme, fundamentalist interpretation of the liberal tradition, with every good and beautiful idea sacrificed except for the least important part of the tradition.
In 1966, Hayek wrote Principles of a Liberal Social Order, in which he seems to suggest that only a deep devotion to the principle of private property can protect a society from the “tyranny of the majority.” And yet since the 1700s the Western democracies have instead been relying on the principle of “checks and balances” to limit the damage done by the majority. All reasonable people agree that the majority can abuse its power and become tyrannical — that much has been clear since the democratic murder of Socrates. Much of the debate during the European Enlightenment of the 1700s focused on the question, how can tyranny be restrained? The philosophers of the 1700s were worried about both the tyranny of a single prince, as well as the tyranny of democracy. In 1748, Montesquieu published The Spirit of the Laws, and it was in this book that he invented the phrase “checks and balances.” He suggested that so long as a government had several branches of government, each independent, and each able to block the action of the others, then this interlocking system of institutions could protect society from tyranny. And for the last 250 years, this idea has been tried and has managed to work, with some flaws, but still it has worked better than any other system of government that has ever been tried.
But for some reason, which I cannot fathom, both Friedman and Hayek seemed to ignore the whole 250 year tradition of “checks and balances” and instead they insisted that private property, and only private property, could hold back the tyranny of the majority. And yet, when we look round the world, we see no cases where a society seems liberal simply because it defends private property. Almost everywhere, we see the opposite: a society that resorts to dictatorship to defend private property is not a liberal system by any possible definition.