The history of capitalism is not only a vital component of the Classical Liberal tradition, but it is also at the bleeding edge of a variety of disciplines in academia today. Understanding capitalism’s beginning, its implications for society, and its development over time and space can not only help us understand why the world is the way it is today but it also enables Classical Liberals to offer both sharper defenses and critiques of capitalism the way it actually exists. During this colloquium, students will discuss important modern scholarship on the subject from Joel Mokyr’s The Enlightened Economy and Dierdre McCloskey’s Bourgeois Dignity to Joyce Appleby’s The Relentless Revolution and Douglas Allen’s The Institutional Revolution.

Session I: Ideology, Knowledge, and Economic Change. Joel Mokyr argues that economic change in all periods of history depends on what people believe. What are, according to Mokyr, the beliefs that are responsible for the emergence of modern economic growth? How much of capitalism is the product of conscious understanding and how much of it is a product of material circumstances? What is the importance of science in Mokyr’s explanation of the Industrial Revolution?

  • Mokyr, Joel. The Enlightened Economy: An Economic History of Britain 1700–1850. New Haven: Yale University Press, 2009. Introduction, “Ideology, Knowledge, and Institutions in Economic Change” (pages 1–12), Chapter 2, “Enlightenment and Economy” (pages 30–39), and Chapter 3, “Useful Knowledge and Technology” (pages 40–62).

Session II: Culture and Institutions. What is Mokyr’s understanding of culture? What is the role of institutions in Mokyr’s account of the importance of culture in the origins of capitalism? Does Mokyr underestimate the importance of formal institutions relative to the importance of social norms? What was the significance of the enforcement of property rights through private-order institutions in Britain during the eighteenth century?

  • Mokyr, Joel. The Enlightened Economy: An Economic History of Britain 1700–1850. New Haven: Yale University Press, 2009. Chapter 4, “An Enlightened Political Economy” (pages 63–78) and Chapter 16, “Social Norms and a Civil Economy” (pages 368–391).

Session III: Factor Prices and Profit Opportunities. Why did the Industrial Revolution take place in eighteenth-century Britain and not elsewhere in Europe or Asia? Answers to this question have ranged from religion and culture to politics and constitutions. Robert Allen argues that the explanation of the Industrial Revolution was fundamentally economic. The Industrial Revolution was Britain’s creative response to the challenges and opportunities created by the global economy that emerged after 1500. He shows that in Britain wages were high and capital and energy cheap in comparison to other countries in Europe and Asia. As a result, the breakthrough technologies of the Industrial Revolution were uniquely profitable to invent and use in Britain. Is it possible to understand the Industrial Revolution as the mere combination of “high wages and cheap coal”? What is the importance of human capital in Allen’s theory? What is the importance of market size? Are Allen’s and Mokyr’s competing or complementary accounts?

  • Allen, Robert C. The British Industrial Revolution in Global Perspective. Cambridge: Cambridge University Press, 2009, 2011. Chapter 1, “The Industrial Revolution and the Pre-Industrial Economy” (pages 1–22) and Chapter 6, “Why was the Industrial Revolution British?” (pages 135–155).

Session IV: Transaction Costs and the Measurement of Nature. Douglas Allen claims that an improvement in the measurement of nature made for lower transaction costs and the Industrial Revolution. His argument is a typical example of neo-institutionalism in the style of Douglass North. According to Allen, fundamental in the shift in institutions, or the rules that govern society, were significant improvements in the ability to measure performance—whether of government officials, laborers, or naval officers. What is the role of culture in Allen’s explanation? Does Allen’s reliance on the improvements in public administration overestimate its effects on private incomes? Do large modern enterprises face smaller or greater problems of assessing the contributions of individuals?

  • Allen, Douglas W. The Institutional Revolution: Measurement and the Economic Emergence of the Modern World. Chicago: University of Chicago Press, 2012. Chapter 1, “Introduction” (pages 1–21), Chapter 2, “Variance Everywhere” (pages 22–43), and notes (pages 229–231).

Session V: Bourgeois Dignity. McCloskey argues not for the centrality of information,nor even general values respecting the exploitation of nature, but forthe affirmation and celebration of wealth creation and individual liberty. According to McCloskey, only by understanding the radical nature of these values inpraise of capitalism and personal betterment can we come to understand the moral fervor that unleashed humanity’s latent creative potential. In relation to her theory, we ask, what explains the development of this moral fervor for wealth creation? Is it plausible to see it as a cause, rather than a consequence, of economic growth? What is the role of“rhetoric” in McCloskey’s view of the origins of capitalism? Are these values in anyway connected to the values Appleby attributes to science? If so, how can one know which set of values should take on causal primacy; or in other words, do the values of personal betterment come first, or the values of scientific inquiry and expertise?

  • McCloskey, Deirdre N. Bourgeois Dignity: Why Economics Can’t Explain the Modern World. Chicago: University of Chicago Press, 2010. “Preface and Acknowledgements” (pages xi–xvi), Chapter 1, “The Modern World was an Economic Tide, but did not have Economic Causes” (pages 1–9), Chapter 2, “Liberal Ideas Caused the Innovation” (pages 10–19), Chapter 4, “Many Other Plausible Stories Don’t Work Very Well” (pages 31–39), Chapter 5, “The Correct Story Praises ‘Capitalism’” (pages 40–47), Chapter 19, “Nor Was It Accumulation of Human Capital, Until Lately” (pages 161–167), and Chapter 38, “The Cause was not Science” (pages 355–365).
  • Appleby, Joyce. The Relentless Revolution: A History of Capitalism. New York: W. W. Norton & Company, 2010. Selection from Chapter 5, “The Two Faces of Eighteenth-Century Capitalism” (pages 141–145).

Session VI: The Future of Capitalism.In this session we examine the general issue of the technical versus cultural understandings for gauging a sense of capitalism’s future. In the former, it is the know-how to compel the forces of nature to serve human purposes that drives growth, rather than the specific moral orientation or values of human communities. In this latter conception, McCloskey’s views argued that the perceptions of the self came prior to changes in the perception of nature and technology. Which though is more important for understanding capitalism persé? Do the authors agree about the conceptual problems involved in understanding the origins of capitalism? Are the four accounts ultimately compatible with each other? What practical lessons can we learn from the debate about the historical origins of capitalism and the problems it now faces? Is this debate relevant for explaining the current wealth and poverty of nations?And if Schumpeter is correct, that the technological mindset ultimately paves the way for socialism, does McCloskey offer a way out, or a dead-end?

  • Allen, Robert C. The British Industrial Revolution in Global Perspective. Cambridge: Cambridge University Press, 2009, 2011. Chapter 11, “From Industrial Revolution to Modern Economic Growth” (pages 272–275).
  • McCloskey, Deirdre N. Bourgeois Dignity: Why Economics Can’t Explain the Modern World. Chicago: University of Chicago Press, 2010. Chapter 41, “It was Words” (pages 385–392) and Chapter 42, “Dignity and Liberty for Ordinary People, in Short, Were the Greatest Externalities” (pages 393–405).
  • Mokyr, Joel. The Enlightened Economy: An Economic History of Britain 1700–1850. New Haven: Yale University Press, 2009. Chapter 19, “The Results: The British Economy in 1851” (pages 475–489).
  • Allen, Douglas W. The Institutional Revolution: Measurement and the Economic Emergence of the Modern World. Chicago: University of Chicago Press, 2012. Chapter 9, “Conclusion” (pages 217–227) and notes (pages 248–249).
  • Schumpeter, Joseph A. Capitalism, Socialism and Democracy. New York City: Harper Perennial Modern Thought, 2008. “The March intoSocialism” (pages 415–425).