I should disclose that I came in with a low opinion of McCloskey due to the Bailey thing.

Via Marginal Revolution, I found this review of Greg Clark’s A Farewell to Alms by Deirdre McCloskey. I could say in brief that it disagrees with Clark, but I would add that I am not sure they even agree on what the review claims they do. What they are supposed to have in common is praise for capitalism and “the bourgeois virtues”, but Greg only seems to be willing to acknowledge the effects of capitalism in (relatively) brief institutional differences, like East vs West Germany and North vs South Korea. In the long run inefficient institutions go belly-up (in this respect he is at odds with pretty much the entire economics profession). Furthermore, backward Malthusian England was, in Greg’s eyes, arguably more conducive to growth in institutional terms than post-Industrial Albion. Clark doesn’t even seem to think that the evolutionary process he posits made people more virtuous. It was the least charitable people who had the most children, so we are descended from the assholes of the past. Perhaps we are less physically violent, but that may be more due to he who runs away from a fight living to breed another day rather than growth in empathy.

A rich bourgeois of London in 1400 devoted most of his effort to arranging special protection for his wool-trading monopoly. His younger sons might well have taken away the lesson, repeated again and again down to Elizabethan England and Lou Dobbs, that it’s a good idea to regulate everything you can, and quite a bad thing to let people freely make the deals they wish to make. And a Brave Sir Botany who had stolen his riches, say, or was a successful courtier who had received them from Henry VIII dissolving monasteries, say, would not automatically, one would think, transmit sober bourgeois values to younger sons. A society that extravagantly admired aristocratic or Christian virtues could corrupt even a Medici banker into thinking of himself as quite the lord and yet also a godly son of the Church.

McCloskey’s view of pre-Industrial England may be considered an example of “Whig history“. The economy was dominated by kings and aristocrats and getting ahead meant pleasing them rather than customers, which was all upended when the People (or at least the educated middle classes) broke their power and capitalism was ushered in. This take is a popular one for pro-capitalist types and libertarians, which allows them to say to the lefties who they are likely to interact act with “We’re the real liberals, you should be on our side” (I discussed that a bit here). Like Bertrand de Jouvenel and (to a lesser extent) John Nye, Clark views the rulers of the past to be, if not benevolently abstaining from exploiting their subjects, without the means to squeeze out much taxes. According to Clark, the reason people were poor was not because the State was in the way but because the average working stiff just wasn’t very productive (though perhaps it may be wrong to focus on the average, and instead we should focus on something like La Griffe’s smart fraction).

Clark and McCloskey’s differences are over not just what they think was important that happened but how to go about discovering it. The latter characterizes the attitude of the former as “when you cannot measure, your knowledge is meager and unsatisfactory” (I forget who first said that, brownie points to the commenter who first points it out), contrasted with “written sources can themselves be counted, and in any case that how people speak is part of the empirical evidence”. To bring up John Nye again, what people say can be misleading. Everyone believed England was the free-trader and France the protectionist because of what people wrote until Nye actually looked at the numbers and it turned out not to be so. McCloskey states that Clark “does not calculate enough”, “has failed to show how much Enrichment depends on Work, state 4 [Enrichment of All in McCloskey’s diagram] on state 3 [More patience, work, ingenuity]. He hasn’t done a calculation on the size of C [arrow from state 3 to 4]. He hasn’t asked about its oomph. And so he naturally has no answer” (McCloskey on the difference between statistical significance and “oomph” here and Razib on a similar subject with some bits about numbers, texts and historical causality here). McCloskey is not about to measure the unmeasured and falsify or confirm Clark’s hypothesis:

Nor does he do a calculation on link B [arrow from state 2 to 3], to show that state 3 depended mightily on state 2 [Rich-people’s values spread], that, say, that ingenuity depended on the spread of bourgeois values. It’s deucedly hard to do. I myself agree the link was very important yet I can’t think of ways to quantify it, and have had to rely instead on the metaphysically unsatisfactory but enormously rich and ubiquitous qualitative evidence which Clark spurns and which the other students of ingenuity such as Mokyr have exploited. Given his methodological rule of number, Clark is not to blame that even his admirable if strictly quantitative historical imagination is stymied by the question of how much bourgeois values acted to increase ingenuity. Still, his methodological stridency about number does make it embarrassing that he doesn’t even mention that for link B he can’t provide numbers. We fools like Jack Goldstone or Deirdre McCloskey—who merely listen to what people at the time were saying about B—get a certain satisfaction that Clark is thus hoist by his own methodological petard.

Those who decline the method of “proof by assertion” are likewise hoisted by their methodological petards, yet oddly such a decision is not generally derided by economists. As a result, McCloskey is a critic of the positivist economic mainstream and advocates “rhetoric”, perhaps summed up as “talk, talk, talk all the way down“. Milton Friedman, in Essays on Positivist Economics denounced this fact-free method as unable to lead to a conclusion without one of the parties physically beating the other to submission, and while this will disappoint the Austrians I know I think he was right. A possibly falsifiable difference in their beliefs is how optimistic they are about economic growth in the countries that the Industrial Revolution passed over, with Robert Solow aggreeing with McCloskey that Clark is too pessimistic. To longbets.org I say! Let money be put where there is now nothing but mouths.

One of the strangest parts of the review where the concept of “regression to the mean” is used to attack Clark’s theory of the values of the rich being transmitted to their many children (whether culturally or genetically). Clark’s theory is clearly one in which a selective force operates over many generations, so that the mean itself shifts. He doesn’t say that the children of the rich end up being just like their parents, in fact most of them experience downward mobility.

On a final goofy note, McCloskey says in an endnote primarily about Clark not acknowledging the contributions of other economic historians (primarily McCloskey) “his distinctive hypothesis is going to appeal only to the Steve Sailers, Stephen Pinkers, and Seth Roberts of the world and is going to repel everyone else”. I can’t think of anyone other than McCloskey who considers the three to be like-minded outcasts of polite society. Perhaps they are imagined all as one amorphous mass, drinking flaxseed oil whilst analyzing the language used by sports-casters in between plotting their assaults on Truth, Justice and the American Way.