And what a Great Fact it is! It's great not only in the sense of being amazingly, resplendently good for ordinary men and women, but also in the sense of being the single most surprising and astounding change that we humans have experienced in our 70,000 or so years on this planet.
For 99.7 percent of the time that we bipedal, scantily haired, language-blessed apes have trod this globe, we did so under material conditions that you and I from 2011 would find utterly intolerable. As another economist, Todd Buchholz, correctly noted, "For most of man's life on earth, he has lived no better on two legs than he had on four."
Then all of a sudden, starting a mere 200 or so years ago in northwestern Europe, boom! Material riches start pouring forth not only into the castles and manor houses of royalty and the nobility, but into the humble homes of peasants, of hoi polloi, of human creatures who, generation after generation -- tracing back all the way to their single-celled ancestors -- lived lives poor, nasty, brutish and short.
What did our great-great-great-great-grandparents do to suddenly deserve access to new and remarkable goods such as underwear made of tightly woven cloth that could be vigorously washed without unraveling? What did our great-grandparents do to deserve access to "Tin Lizzy" Fords?
What did our grandparents do to deserve access to antibiotics and televisions? What did our parents do to win access to air conditioning and inexpensive jet travel? What did we do to deserve access to cellular telephony, GPS driving directions and supermarkets that routinely stock 50,000 different items?
Scholars, of course, have for decades offered answers to these questions. Some of these answers are favored by folks with a leftist political bias, such as the hypothesis that capitalist wealth was wrung by capitalists from the muscle and sweat of colonized subjects or slaves or the working classes.
Some other of these answers are favored by people who lean politically rightward, such as the belief that Judeo-Christian values prompted Europeans to work harder and save more so that productive capital was "accumulated."
In her remarkable new book "Bourgeois Dignity: Why Economics Can't Explain the Modern World," McCloskey examines these, and many other, arguments in detail. She finds all of them inadequate to explain the Great Fact.
Some of the arguments are simply mistaken. Consider, for example, the argument that credits the Great Fact to historically unprecedented European rates of saving.
Unfortunately for this hypothesis, in the 18th and 19th centuries neither Europeans generally, nor the British in particular, saved, on average, larger shares of their incomes than did, say, Ottomans in the 16th century or Romans at the time of Christ. (And even if the Brits had saved more -- even much more -- the amounts in question would have been far too small to produce such a gigantic increase in living standards.)
Some of the other arguments are downright head-scratchers, such as the Marxist insistence that capitalist wealth was created by the exploitation of the working classes.
Trouble is, of course, that no class of people over the past two centuries enjoyed such an absolute (and relative) improvement in their standard of living than did the very working classes from whom capitalist wealth was supposed to be extracted through exploitation. If that's the fate that exploitation visits on its victims, I pray to be exploited good and hard and often!
One by one, McCloskey reviews each of the hypotheses that have been offered over the years to explain the Great Fact. None works. Not even the one that comes from a scholar who is deeply admired by both McCloskey and me: Adam Smith.
Smith certainly was correct that increased specialization and a widening of markets increase the wealth of nations. But the Great Fact is too great to have been the result merely of more specialization.
Something else happened -- something else that has, until now, been overlooked.
That something else is what McCloskey calls "the Bourgeois Revaluation." Only when merchants, tinkerers and practical seekers of profit in markets came to be respected -- and to be widely spoken of with respect, even with admiration -- did the social status of the bourgeoisie increase enough to make membership in that group desirable to large numbers of people. And when this Bourgeois Revaluation happened, innovation skyrocketed.
It's this innovation -- mad, fevered, historically off-the-charts amounts of innovation -- that really is what we today call "capitalism."
I'll have more on this innovation and the Bourgeois Revaluation that unleashed it in my next column.