©Deirdre Nansen McCloskey | COPYRIGHTED MATERIAL

"Human Capital and the Onset of Economic Growth"

by Deirdre McCloskey
March 26, 2012

Filed under articles [Bourgeois Dignity] and bourgeois era

Manuel Bautista
Deirdre commented on March 26, 2012 on the NEP-HIS blog by Manuel Bautista on Jan Luiten van Zanden's views about how we got here. Since Jan Luiten, an old friend of Deirdre's, thinks that Human Capital Did It, and such a thought is quite common among economic historians and economists (who unhappily persist in reducing the greatest secular surprise in history to routine investment), Deirdre thought it worthwhile to comment as follows:

Dear Manuel,

I reflected at grotesque lengths (571 pages) on such matters in Bourgeois Dignity: Why Economics Can't Explain the Modern World (U of Chicago Press, 2010). Shamefully, I had not read Sen's Development as Freedom (1999) when I wrote the book, out of a misplaced aversion to fashionability. But Amartya (who has always been kind to me: I should do him better) managed to summarize in 1999, by a miracle of time travel, what I was to conclude in 2010. In his words, which you most aptly quote:

the freedom of agency that we individually have is inescapably qualified and constrained by the social, political and economic opportunities that are available to us. There is a deep complementarity between individual agency and social arrangements. It is important to give simultaneous recognition to the centrality of individual freedom and to the force of social influences on the extent and reach of individual freedom. To counter the problems that we face, we have to see individual freedom as a social commitment (Sen 1999: xi-xii).

I do hope that in Jan Luiten van Zanden's paper you are commenting on, which I will now hasten to read, he engaged with my criticism in my own book (p. 324) of his reduction of dignity and liberty to human capital in his own recent book (The Long Road to the Industrial Revolution, 2009). It's not an open and shut issue, of course. But I argued that, from the historical evidence we have, the accumulation of human capital:

(1.) is far too small in effect to explain much of the 2000 percentage increase in real incomes per head, if the mere accumulation is the point, and if therefore its oomph can be judged by crossection returns to years of education;

(2.) is, unlike some physical capital if durable and most ideas if written down, not a long-run accumulation, because it depreciates, alack, alas, too soon, too soon, which means it must be reproduced (as the Marxists correctly observe) in the surrounding conditions of every generation, and so it is the surrounding sociological and political conditions that matter;

(3.) is often conservative in the bad sense, being complementary with existing techniques, such as activity analysis in economics, briefly fashionable c. 1960 but then frozen into the minds of otherwise wonderful scholars such as Bob Allen, the trouble being of course that (once) existing techniques are sometimes not the best. The Chinese examination system is the standard example, but classical education in Europe (though containing the poison pill of Lucretius within it) is another.

As I say, I hope Jan Luiten faces such criticism in the spirit given: consider this seriously, my friend, so that in answering it, if you can, you will improve your hypothesis; and if you can't, so that you will modify or abandon it. In the present case, I don't think growth-theory routines, amusing as they undoubtedly are, and put forward by such eminences as my student Paul Romer and my former colleague, notable for his views on changing gender, Bob Lucas, are worth much scientifically. They are merely another attempt by economists to make everything, simply everything, lie down on a bed of "accumulate, accumulate! That is Moses and the prophets" (as the Master put it). And they certainly do not fit the humanomics that Amartya was articulating (and in fact which Lucas, too, exhibits, in a remarkable passage analyzing the Naipaul novel A House for Mr. Biswas at the end of his central article).

As to Professor Walter Johnson, the young and leftish historian at Harvard whom you commend (I am assigning myself to read his essay, too): yes, Sen believes, as I do, and as Johnson accuses us liberals of believing, that bourgeois dignity and liberty are central to the modern world. But the claim that the bourgeois era has been bad for us, especially us formerly poor people, which I gather Johnson is assuming without evidence, is not correct, as one can see by consulting those remarkable chapters on imperialism and exploitation and many other wonders in Bourgeois Dignity.