The Enriching Idea of Freedom

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The enrichment of humans has been recent and gigantic. It was caused, I claim, by a sustained ideological change in northwestern Europe in the 18^th and 19^th centuries. It spread to the rest largely through the ideology of liberalism, that uniquely recent notion of equality of permission – much disdained in these latter days by the left and the right, by the Pikettys and Deneens, not to speak of the Maduros and Putins.

During the millennia from the caves down to 1800 the average person on the planet earned and spent in today’s prices some $2 or $3 a day, as now in the Central African Republic. By 1800 the average person in the richest countries, such as Holland and Britain and Britain’s newly independent daughter in the New World, had attained perhaps $6 day, as now in Afghanistan. Still pitiful.¹ Switzerland was worse.

But in the 19^th century, after a precarious beginning during the 18^th century in Britain, a Great Enrichment transformed western European countries and their offshoots. Later, of course, enrichment spread to more and more of the planet – not by policy, which was usually counterproductive, but by ethics and ideology. In the comedy “John Bull’s Other Island” (1904), Ireland had not shared in the recent comparative prosperity of Britain, even at the $6 level. As late as 1970 it was still notably lagging. Yet Ireland today, after adopting liberal economic ideas, is the fourth or fifth richest substantial country in the world. The Chinese, who not so long ago were thought to be trapped in an Asian Dilemma, adopted liberal economic policies after 1978, and are now enriched by a factor of upwards of 20, earn roughly $45 or $50 a day per person. It is the level of Brazilians – which is roughly the World Bank’s reckoning of the global average. The global average is a factor of 20 of enrichment over that $2 or $3 a day worldwide in 1800. The numbers are dizzying, and gratifying. Look at the charts, and stand amazed.

They make the recent obsession on the left with inequality within countries look very strange. Seizing in France the riches of all the people like the disgraceful Liliane Bettencourt, the ethics-less heiress to the L’Oréal cosmetics fortune, and giving it to the poor ­people of the country might do as much as double their incomes in one year. Good. But instituting an attainable liberal equality of permission increases incomes permanently by a factor of 20, or by much, much more. It has recently in Hong Kong or Botswana or Italy, and in France itself from the time of “Les Misérables.”

Along with the economic improvement has come along a social and cultural one. Life expectancy and literacy have increased dramatically, while child mortality has dropped around the world. We also ended slavery and the subjection of women, we care about the far Uighurs and the animals around us.

There is little chance that the Great Enrichment will now stop, unless we try hard – as for instance the European Civil War (1914–1945), which had an impact until 1989. A less violent way to stop the world’s enrichment, is to fall prey to imagined fears, finding every couple of years a new “headwind” requiring urgent tackling by the ship of state. The economist Robert Gordon in 2016, for example, pointed to such headwinds to justify extensions of statist policies.² And the economist Tyler Cowen in 2011 and 2013 worried, too, about the headwinds, though with less enthusiasm for statist tacking.

Neither Gordon nor Cowen note that internationally there is, Covid-19 aside, no evidence of a slowdown in growth. The World Bank expects long-term growth in world income to be about 2 percent per year, indefinitely. Real incomes will double in one long generation. If we can avoid stopping growth with bloody war or panicked policy, a continued Great Enrichment bids fair in the next fifty or one hundred years, that is, to bring every human out of history’s poverty.

Ideas matter

Why did it happen? The timing, location, and magnitude of the Enrichment sets tight limits on possible scientific explanations.

Yet economists and economic historians tend to ­focus on asking why growth varies a little or a lot from place to place, as in the old debate over British as against American and German growth in the late 19th century, or in the recent econometrics of convergence, or in the history of the Great Divergence of the West from, say, a lagging China. Such a turn is like the atheist’s claim that an account of what happened after the Big Bang serves to refute a theistic account of why there was anything to bang in the first place. The divergers are looking in the wrong places for the answer to the question why the Enrichment happened at all. And the answer to this deeper question is what matters for understanding the one reason nations succeed, as against the myriad of ways they have found to fail. All happy families are alike; each unhappy family is unhappy in its own way.

Why then did it happen, after 300 000 years of stagnation among Homo sapiens?

Any innovation – mechanical, biological, institutional, scientific, artistic, personal – begins of course as a new idea in a liberated human mind. The point is obvious. But it has not been prominent in economics. The agent in economic models does not have agency. He merely accedes to a budget line or to a law or to a custom or to a habit of thought facing his already known utility function. He does not create, that is, but reacts, in requisite fashion. Human action, the liberated will, is absent. He is a vending machine, not an innovator, or not even an ordinarily choosy consumer exploring her tastes.

Therefore, the unprecedented economic growth since 1800, a Great Enrichment of a fully 3000 percent increase in real income per person, has been traced by economists not to “innovism,” as one might call it rather than the misleading word “capitalism.” The ­Enrichment has been traced to various routine and ­intermediate and largely material causes – investment of capital; exploitation of colonies; the rule of law. Some of these are necessary, but none is sufficient to explain our enrichment. Many are ancient. Many are trivial. None has the great oomph sufficient to explain the Great Enrichment.

The creation of new ideas in human minds, in other words, has been firmly set aside by economists. The non-economists who might save the ideational day, meanwhile, have seized on the wrong ideas, such as an alleged coming of individualism, disenchantment or ­enlightenment.

The economic trouble with the economist’s non-ideational causes such as investment and institutions or exploitation is that they are merely allocative, and are, further, subject to sharply diminishing returns, or even zero sum. They are routine, not transformative. They are small matters beside the 3000 percent increase in human welfare.

And the historical trouble is that most of them, and even most of the non-economist’s ideational causes, are of very, very long standing – ancient Rome had good property rights, ancient China had long canals, early modern Japan experienced long peace, modern Russia sees fierce pursuit of profit, ancient Athens had enlightenment. Yet no Great Enrichment ensued.

Early on, the cause of the Enrichment was said to be piling up physical capital, emphasized by Adam Smith, with the division of labor. Then came an ideational cause, put forward on the left or right of politics by ­anti-economists, such as the rise of “capitalism,” or “possessive individualism,” or “secularized asceticism.” All have been rejected in later research. Then it was the alleged routinization of innovation, such as ­Joseph Schumpeter came to believe, against his early belief in human creativity. Then it was human capital. Then it was institutions of various sorts, from legal to scientific.

But all of them depend of course upon ideas conceived in somebody’s mind – and foundationally on her ideas about ideas, such as ethics, ideologies, political philosophies supporting the liberated imagination. The change of ideas in human minds seems a promising ­hypothesis.

The ideational change is called liberalism. The idea of a non-slave society, it can be shown, has the oomph and the novelty to account for the 3000 percent.

The belief in social and economic progress

The crux was liberalization at the level of ideas in the Netherlands and then in Britain, favoring a culture of free speech and an economy of enterprise. It was followed during the next century by actual liberalization – in the UK the civil emancipation of Catholics, the abolition of Jamaican slavery, the free importation of wheat from Kansas and Ukraine, and then similar liberalizing measures in the US, Sweden, Italy, Japan, Switzerland, and the rest.

Adam Smith and Thomas Jefferson and Mary Wollstonecraft had put forward in the Anglosphere the then-bizarre notion that no one should be a slave, that all people are created equal, and should be permitted a liberated speaking and liberated voting and liberated buying and selling. The equality of permission in liberalism proceeded to erode the inequalities of hierarchies anciently stultifying. It made people bold to venture. As the British say in their sporting manner, ordinary people were permitted by liberalism for the first time, for example, after the French Revolution (1789) or with the abolition of slavery in the United States (1865), to “have a go.” And go they did. Liberalism was gradually implemented in northwestern Europe, as lately it has been, at any rate in the economy, even in far China and India. And the Great Enrichment came.

Both economists and their enemies, in other words, need to understand the conditions for the flourishing of liberty and its fruits in novel ideas for enrichment, and to see that good laws and long railways and creative ­science and strong institutions and eager innovators are all good, but are not themselves originating. They depend on liberty and its ethical accompaniments, every time. Liberation in ethics and ideology yielded ­innovism, not a “capitalism” one can find in Mesoame­rica in 1492 CE.

To use a mechanical image, the gearing in the historico-economic watch was, to be sure, investment and institutions, necessary for any economy at any time, from the caves of Lascaux to the caves of Wall Street, or for that matter on Crusoe’s island. But liberal thinking was the new and largely sufficient spring imparting ­motion to the old Swiss watch. It happened in Britain, but not immediately in, say, France. It could have happened in Japan or the Ottoman Empire, but by chances of history it did not.

Leave me alone and I’ll make you rich

The implication for policy is straightforward. Ideas in human minds largely rule the world. The Ukrainians ­defend themselves for liberty, not for the policies of left, right, or center. Encouraging a loving and responsible liberty, with its mighty material and spiritual consequences, should be our chief aim. Coercive, illiberal nudges and taxes and regulations and fines and imprisonments, of which policymakers are so very fond, are not the way forward. The liberal path of an honest and competent but restrained state, under which ordinary people are permitted without let or hindrance from other people to have a go, has already led in much of the world to a stunning enrichment of the poorest. Leave me alone and I’ll make you rich. In the next couple of generations, it promises to permit the rest of the wretched of the earth to raise themselves up.

«Encouraging a loving and responsible ­liberty,
with its mighty material and spiritual
consequences, should be our chief aim.”

The illiberal path of statism by contrast leads to the radical populisms of left and right, to Maduro and Putin. And even its middle path of regulation and redistribution leads adults back to a childhood, to a masterful state. It turns back to the subordination that characterized agricultural societies until 1776, and to its corresponding poverty of body and mind and spirit. Liberalism worked to overcome such childishness and subordination.

It works yet. Liberty, that is.