Is ‘Capitalism’ Really Capitalism?
Deirdre McCloskey’s book Bourgeois Dignity on the economic miracle of the modern world and why it happened is truly dazzling. I wrote about it in my column today but couldn’t do justice to its sweep and erudition. Her basic argument is that the key to our world is the new respect that the bourgeoisie, the creators of wealth, began to get roughly 200 years ago, starting in Holland and Britain. Combine this new dignity with liberty and you get the amazing run-up in the world’s wealth over the last two centuries in contrast to what had been relative stasis throughout the rest of human history (put it in a graph and you get a real “hockey stick”–flat forever, then spiking upwards). One of McCloskey’s contentions is that capitalism is a bit of a misnomer. We don’t create wealth on the order of the last two centuries merely by accumulating capital. We create it through ceaseless change and entrepreneurialism. McCloskey suggests the neologism “innovism,” although she knows that’s awkward, so settles simply on the word “innovation.” (George Gilder e-mailed this morning to say he still prefers capitalism, derived from caput, for the head or mind.) Anyway, all of this is a long way of saying that in the contemporary debate over the economy and fiscal policy, we shouldn’t lose sight of the ultimate goal: preserving and fostering an innovation economy. Otherwise, we’re just shifting around what we already have and balancing the books of a stagnant enterprise.
(For more on Bourgeois Dignity, check out Matthew Shaffer’s interview with McCloskey.)