Bourgeois Dignity: Why Economics Can’t Explain the Modern World

Bourgeois Dignity is the second in a planned series of six volumes under the collective title The Bourgeois Era. The final volume is to be subtitled The Case for an Ethical Capitalism, and this is the key to Deirdre McCloskey's project. An economic historian and a rigorously schooled economist, she is on a mission to humanise her subject. Much of her work concerns the methodology and rhetoric of economics and its technical sidekick, econometrics. However, the Bourgeois Era series addresses instead the central questions of economics: what makes us better off? What causes growth?

A reader with no knowledge of this context could mistake Bourgeois Dignity for just another book about the causes of the Industrial Revolution. There is no lack of appetite for the experts to say more about this revolution - why it happened, and why it started in Britain. Indeed, it is an emotive subject - recently the normal scholarly calm of Radio 4's In Our Time studio evaporated in a blazing row about just this question. The answer matters, because it would shed light on how to kick-start economic growth in pre-capitalist economies now, and because it speaks to treasured ideas about how societies should be organised. Was Britain the cradle of capitalist dynamism because it was lucky enough to have cheap coal, because it exploited its colonies, or because of its political freedoms and the consequent development of free markets?

Needless to say, historians and economists have not answered these questions definitively. McCloskey has a new theory. Her central claim in Bourgeois Dignity is that: "The North Sea economy, then the Atlantic economy, and then the world economy, grew because of changing forms of speech about markets and enterprise and invention." It became respectable to engage in manufacture and trade: "Trade and investment were ancient routines, but the new dignity and liberty for ordinary people were unique to the age."

McCloskey rejects the conventional explanations put forward by economic historians to account for the huge increase in growth in Britain and then other nations from the late 18th century onwards. The first section of the book sets out to establish the drama of the Industrial Revolution, with the 16-fold (or more) increase in living standards in the space of two centuries after millennia of snail's-pace improvements. We still describe the phenomenon as an "economic miracle", like those that took place in Japan and then South Korea in the 20th century, and the ones now occurring in China and India in the 21st - something at once mysterious and spectacular.

The middle section of the book turns to demolishing at some length the conventional explanations for the British economic miracle of the 18th and 19th centuries. According to McCloskey, it cannot be explained by thrift, or capital accumulation, or transportation, or coal; nor can it be attributed to the slave trade, to imperialism, to institutions or to the legal protection of private property. In each instance her argument is the same: the supposed explanatory variable changed too slowly and its potential effects were too small to account for the scale and speed of the acceleration in growth. The only argument left standing is something less tangible - the power of ideas.

McCloskey goes beyond the argument, made by the American economic historian Joel Mokyr in his book The Enlightened Economy (2009), that innovation holds the key to the miracle. Rather, she believes the principal drivers of this transformation were the power of "rhetoric" and a fundamental change in social attitudes towards worldly wealth. "Ideas are the dark matter of history," she writes.

Her thesis reminds me of that old joke about the number of psychiatrists it takes to change a light bulb: only one, but the light bulb has really got to want to change. This is not to dismiss the argument made in Bourgeois Dignity. The power of ideas should not be underestimated. Indeed, they play a central role in economics, although economists often describe them in other terms, as "expectations", "animal spirits", "tacit knowledge" and "innovation".

Yet McCloskey is wrong to argue that miracles cannot have small beginnings. Both modern growth theory and the non-linear mathematics widely used in the sciences would suggest that tipping points are not unusual. Economic growth miracles might well be phenomena of this kind, when small changes in broadly favourable conditions feed on themselves and eventually gather pace, like an avalanche. In which case, all of the conventional explanations for the Industrial Revolution may have a part to play - just as multiple preconditions must be fulfilled if a modern growth miracle is to take place.

McCloskey is just as harsh in her dismissal of "economics", by which she means not the subject as a whole, but rather the "neoclassical" focus on small shifts in prices set by all-powerful markets. But the "humanistic science of econo­mics" she advocates in place of the neoclassical paradigm is becoming influential in the universities, even if bankers and traders have been regrettably slow to catch up.

McCloskey's laudable aim in this book, and in the series of which it is a part, is to rehabilitate capitalism for those who regard themselves as "progressives", keen to improve the lives of the poor. As one chapter title sums it up, "Opposing the Bourgeoisie Hurts the Poor". She is a compelling advocate for globalisation and markets (in their social-democratic guise).

We ought, she concludes, to redignify the bourgeois, and to recognise that it is only economic growth which lifts people out of poverty and creates the space for intellectual and spiritual development, too. l

Diane Coyle runs the business consultancy Enlightenment Economics. Her new book, "The Economics of Enough: How to Run the Economy As If the Future Matters", will be published by Princeton University Press in April

This article first appeared in the 17 January 2011 issue of the New Statesman, War on WikiLeaks

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Cake or Death: why The Great British Bake Off is the best thing on television

Those who are complaining that the show has “caved in to political correctness” have missed the point.

The Cake is a Lie. That’s what viewers of the Great British Bake Off, now in its fifth season, are complaining about in the run-up to this week’s final. Out of thousands of amateur bakers who applied, three have made it through the gruelling rounds of Mary Berry’s disapproving pucker and faced down blue-eyed Cake Fascist Paul Hollywood’s demands without a single underbaked layer or soggy bottom in sight - and two of them aren’t white. The subsequent crypto-racist whining from PC-gone-madattrons in the press - one paper suggested that perhaps poor Flora, who was sent home last week, should have baked a "chocolate mosque" - runs against the whole spirit of Bake Off.

The charge is that the competition is not merit-based, and the entire basis for this complaint seems to be that two out of the finalists are of Asian origin - which makes total sense, because everyone knows that white people are better than everyone else at everything, including baking, so obviously it’s political correctness gone mad. The fact that last week Nadiya Hussain, a homemaker from Luton who happens to wear a hijab, baked an entire fucking peacock out of chocolate biscuits had nothing to do with it.

For those of you who mysteriously have better things to do with your time than watch 12 British people prat about in a tent, let me tell you why all of this matters. The best way to explain what's so great about The Great British Bake Off is to compare it to how they do these things across the pond. In America, they have a show called Cupcake Wars, which I gamely tuned into last year whilst living abroad and missing my fix of Sue Perkins getting overexcited about Tart Week. 

Big mistake. Cupcake Wars is nothing at all like Bake Off. Cupcake Wars is a post-Fordian nightmare of overproduction and backstabbing filmed under pounding lights to a sugary version of the Jaws soundtrack. Contestants mutter and scheme over giant vats of violent orange frosting about how they're going to destroy the competition, and they all need the prize money because without it their small cupcake businesses might fold and their children will probably be fed to Donald Trump. Every week a different celebrity guest picks one winner to produce a thousand cupcakes - a thousand cupcakes! - for some fancy party or other, and it’s all just excessive and cutthroat and cruel. Cupcake Wars is Cake Or Death.

Bake Off is quite different. Bake Off is not about the money, or even really about the winning. Bake Off is a magical world of bunting and scones and dapper lesbian comedians making ridiculous puns about buns and gentle, worried people getting in a flap about pastry. There are very few hysterics. Legend has it that if anybody has a real breakdown in the middle of a signature bake, presenters Mel Giedroyc and Sue Perkins stand next to them repeating brand names and swear-words so the cameramen can’t use the footage, and don’t you dare disabuse me of that fact, because I want it to be true. The prize money, in a desperately British way, is almost never mentioned, nobody tries to sabotage anyone else’s puff pastry, and at the end whoever has to leave gives a brave little interview about how it’s a shame but they tried their best and they were just happy to be there and they’re definitely going to do some more baking almost as soon as they get home. 

Bake Off is the theatre of the humdrum, where fussy, nervous people get to be heroes, making macarons as the seas rise and the planet boils and the leaders of the world don't care that they've left the oven on. I’m always a little bit frightened by people who can bake, because I can’t even make a muffin out of a packet, although one danger of watching too much Bake Off is that you become convinced you ought to give it another try, and I apologise to my housemates for making them eat my savoury vegan chilli-chocolate cookies (don’t ask). They say that if you can bake a cake, you can make a bomb, and by that logic I should definitely be kept away from the explosives when the zombie revolution comes- but the Bake Off contestants are probably the sort of people who will be Britain’s last line of defence, quietly constructing landmines and apologising that the stitching on the flag of insurrection isn’t quite perfect. People with this specific and terrifying personality type are that are precisely the reason Britain once had an empire, as well as the reason we’re now rather embarrassed about it. 

For now, though, Bake Off is a gentle human drama about all the best bits of Britishness- and diversity is part of that. In fact, this isn’t even the first time that two out of three finalists have not been white - that was two years ago. But something seems to have changed in British society at large, such that the same scenario is now more enraging to the kind of people who get their jollies from spoiling everything lovely and gentle in this world with casual bigotry - they know who they are, and may their Victoria sponges never rise and all their flatbreads turn out disappointingly chewy.

Britain is getting harder and meaner, and even Bake Off is not immune. In the first season, it was more than enough to bake a half decent brioche. This season an affable fireman got sent home because the grass on his miniature edible Victorian tennis court was not the right shade of green, and I’m not even joking. In one of the challenges the bakers had to produce an arcane french dessert that looked like the turds of a robot angel, and most of them actually managed it. The music is getting more dramatic, the close-up shots of flaky chocolate pastry and oozing pie-lids more reminiscent of 1970s pornography. It’s all a bit much.

The human drama, though, is as perfectly baked as ever. Lovely Flora, the baby of the bunch who missed out on a spot in the final because her chocolate carousel centrepiece was slightly wonky, was actually one of my favourites because she's so deliciously millennial, with her pussy-bow collars and obsessive, Type-A attention to detail. Paul the Prison Officer was a delight, mainly because he looked so much like Paul Hollywood- cue six weeks of two enormous men called Paul having bro-offs over bread, nodding and trading gruff, dudely handshakes over the specific crunchiness of biscotti. One week, Prison Officer Paul produced a giant dough sculpture of a lion's head and Judge Paul gave him a special prize and then they probably went off into a gingerbread sweat lodge together and it was the manliest moment ever in Bake Off history.

This is what Bake Off is about, and that’s why the people who are complaining that something other than merit might have been involved in selecting the finalists have missed the point entirely. The point of Bake Off is not to determine the best amateur baker in the land. That's just the excuse for Bake Off. Even the gentlest TV show needs a vague narrative structure, and otherwise there'd be no tension when someone's blancmange collapses in a heap of eggy foam and broken dreams. But in the end, when all's said and done, it's just cake. If your ornamental biscuit windmill has a soggy bottom, well, nobody died, and you can probably still eat the pieces on your way home to have a cup of tea and a little cry. 

That's the point of Bake Off. None of it really matters, and yet it consistently made me smile during a long, weary summer of geopolitical doomwrangling when absolutely everything else on television was unremitting misery. I hope Nadiya wins, because she’s an adorable dork and I love her and she gets so worried about everything and I want nothing remotely distressing to happen to her, ever; I expect Tamal Ray, the gay doctor whose meat pie had me drooling, is the best baker overall, but I can’t be objective there, because I keep getting distracted by his lovely smile. Ian Cumming, the last white person in the tent (apart from both of the presenters and both of the judges) is a little bit dull, which is a problem, because of all the delicious treats produced on the show, Ian's are the ones I would probably eat the most. I want his tarragon cheesecake in my face immediately. I would just rather have a conversation with Nadiya while I'm doing it.

But at the end of the day, it doesn’t matter. It doesn’t matter! And that’s the utter, unremitting joy of Bake Off. It’s possibly the last show on earth where in the end, it doesn’t matter who wins, as long as everyone gave it their best shot and had a laugh over a disastrous scrambled-egg chocolate tart or two, because ultimately, it’s just cake. And that’s marvellous. Now let’s all have a nice fat slice of perspective and calm down.


Now listen to a discussion of the Bake Off on the NS pop culture podcast:

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.