I asked this of the eminent author and economist Deirdre McCloskey at a recent public forum in London, and somewhat to my surprise she admitted she could not answer the question.
And yet McCloskey is perhaps better prepared to do so than any living economist that I’ve encountered, now that Milton Friedman and Friedrich Hayek are no longer with us.
She prominently established the foundation for a satisfactory answer to this important question in the first two books of her soon-to-be-completed Bourgeois Era trilogy. Particularly in the second book, Bourgeois Dignity, she demolishes every theory of the right and the left about the factors that created this massive shift in the trajectory of human political economy, and points out that it occurred because of a singular change in the collective inner consciousness of human beings in Holland and England during the seventeenth century.
Now, McCloskey doesn’t actually say “singular shift in the collective inner consciousness”; what she does assert is that there was a discernible and decisive shift in the rhetoric of social value.
. . . three centuries ago in places like Holland and England the talk and thought about the middle class began to alter. Ordinary conversation about innovation and markets became more approving. The high theorists were emboldened to rethink their prejudice against the bourgeoisie, a prejudice by then millennia old. . . . The North Sea talk at length radically altered the local economy and politics and rhetoric. In northwestern Europe around 1700 the general opinion shifted in favor of the bourgeoisie, and especially in favor of its marketing and innovating. The shift was sudden as these things go. In the eighteenth and nineteenth centuries a great shift occurred in what Alexis de Tocqueville called “habits of the mind”—or more exactly, habits of the lip. People stopped sneering at market innovativeness and other bourgeois virtues exercised far from the traditional places of honor in the Basilica of St. Peter or the Palace of Versailles or the gory ground of the First Battle of Breitenfeld.
It’s a shame that, in the very beginning of her insightful argument, she pulls back from examining the habits of the mind whose transformation resulted in those “habits of the lip.” Rhetoric, after all, is a product of inner consciousness and perspective. Talk is the crystallization of thought seeking social viability. That people “stopped sneering” happened for a reason, and McCloskey’s argument would be more deeply served by examining and applying that reason.