Leave Me Alone and I'll Make You Rich

1. Liberalism and innovation sparked unprecedented global prosperity

Give people liberty, and by uncoerced cooperation through commerce they become adults, enriched in body and soul.

Liberalism unleashed creativity. The adoption of liberal ideas in northwestern Europe during the 18th century led to an explosion of innovation and economic growth. This "Great Enrichment" was characterized by:

• A shift from aristocratic to bourgeois values
• Increased social and economic mobility
• The celebration of commerce and entrepreneurship
• Protection of property rights and individual freedoms

Innovation became the engine of progress. The liberal environment allowed for:

• Rapid technological advancements
• New business models and organizational structures
• Increased productivity across all sectors
• A culture that rewarded creativity and risk-taking

2. The Great Enrichment: A 3,000% increase in living standards since 1800

In 1800 worldwide, the miserable average of production and consumption per person was about $3 day. Even in the newly prosperous United States, Holland, and Britain, it was a mere $6.

Unprecedented growth in wealth and well-being. The Great Enrichment led to:

• A 30-fold increase in average incomes in developed countries
• Dramatic improvements in health, education, and life expectancy
• Reduction in extreme poverty from 90% of the global population to less than 10%
• Widespread access to goods and services once reserved for elites

Quality of life improvements. Beyond income, the Great Enrichment brought:

• Better housing, sanitation, and nutrition
• Increased leisure time and opportunities for personal development
• Longer, healthier lives for billions of people
• Greater individual freedom and social mobility

3. Debunking pessimism: The world is getting better, not worse

The world has been enriched. But for whom? Cui bono? asked the Romans: "Whose benefit?" Answer: Yours, and more and more of your fellow humans, with a believable promise that the whole world will presently become rich and free.

Progress is real and measurable. Despite popular pessimism, data shows consistent improvements in:

• Global poverty rates
• Child mortality
• Access to education and healthcare
• Environmental protection and sustainability
• Political freedom and human rights

Challenges remain, but trends are positive. While problems persist, the world is better equipped to address them:

• Technological solutions to environmental challenges
• Increasing global cooperation on shared issues
• Rising education levels enabling better problem-solving
• Economic growth providing resources for social investments

4. Ethics and rhetoric, not exploitation, drove economic progress

Slavery was extraordinarily evil, we now all agree. But slavery was not extraordinarily profitable.

Debunking exploitation narratives. Contrary to popular belief:

• Imperialism and slavery did not drive economic growth
• Most historical exploitation was economically inefficient
• Trade and voluntary exchange created more wealth than conquest

The power of ideas and values. The real drivers of progress were:

• Changing social attitudes towards commerce and innovation
• The spread of liberal ideas valuing individual rights and freedoms
• A new rhetoric celebrating entrepreneurship and progress
• Ethical frameworks that balanced self-interest with social good

5. The Bourgeois Deal: "Leave me alone and I'll make you rich"

Leave me, a bourgeois businessperson, pretty much alone, subject to sober ethics learned at my mother's knee, and a few good and restrained laws, with an effective social safety net. In a word, give me and my fellow citizens liberty.

The essence of the Bourgeois Deal:

• Freedom to innovate and pursue business opportunities
• Limited government intervention in the economy
• Protection of property rights and contract enforcement
• Social acceptance of profit-seeking as a legitimate activity

Benefits of the Bourgeois Deal:

• Encourages entrepreneurship and risk-taking
• Leads to rapid innovation and economic growth
• Creates wealth that "trickles down" to all levels of society
• Provides incentives for solving social and environmental problems

6. Challenging conventional explanations for the Great Enrichment

Economizing means "choosing the better way of doing it overall—Plan A rather than Plan B." What is "better," said the economists of the 1870s, is not "using the least labor" (Smith missed the point, and it led to a sadly mistaken picture of the economy as a supply chain, a picture believed always by the man in the street and by the statist enthusiasts for industrial policy).

Debunking common myths. The Great Enrichment was not primarily caused by:

• Natural resources or geographical advantages
• Exploitation of colonies or slave labor
• Accumulation of capital or savings
• Scientific discoveries or technological breakthroughs
• Government industrial policies or central planning

The real drivers of growth:

• Liberal institutions protecting individual rights
• A culture celebrating innovation and entrepreneurship
• Decentralized decision-making and market competition
• The power of ideas and changing social attitudes

7. Ideas matter: How changing values revolutionized the economy

People gradually stopped attributing this man's riches or that woman's poverty to fate or politics or witchcraft—at any rate, enough to stop the throttling of what the Nobel-worthy economist William Baumol in 2002 called The Free Market Innovation Machine and what the Nobel-winning economist Edmund Phelps (2013) called "the imaginarium"; namely, the Bourgeois Deal and its result in betterment.

The power of shifting mindsets. Economic growth was driven by:

• A new respect for commerce and entrepreneurship
• The idea of progress and human betterment
• Valuing innovation over tradition
• Belief in individual agency rather than fate

Cultural changes enabled economic transformation:

• Redefinition of social status based on achievement rather than birth
• Acceptance of "creative destruction" as a positive force
• Celebration of middle-class values and work ethic
• Spread of literacy and education, fostering new ideas

8. The virtues of commerce: Adam Smith's ethical framework

Smith's great project in all his writing was to develop a full and temperate ethic for a commercial society—not to reduce all behavior to a selfishness suited to grass and rats.

Beyond "greed is good". Adam Smith's true vision:

• Commerce as a moral and civilizing force
• Balancing self-interest with social good
• Emphasis on virtues like prudence, justice, and benevolence
• Markets as systems of cooperation, not just competition

Smith's ethical capitalism:

• Recognizes the moral worth of ordinary people
• Promotes social cooperation through voluntary exchange
• Encourages personal responsibility and self-improvement
• Sees wealth creation as a positive-sum game benefiting society

9. Liberalism as a theory of adulthood and human dignity

If liberalism is the theory of being an adult, nationalism and socialism are nostalgic longings for the comforts of childhood.

Liberalism empowers individuals. Key aspects:

• Treating people as responsible adults capable of making decisions
• Respecting individual rights and freedoms
• Promoting equality of opportunity, not outcomes
• Encouraging self-reliance and personal growth

Contrasts with paternalistic ideologies:

• Nationalism: Seeks security through collective identity and strong leadership
• Socialism: Promises care and protection through state control
• Both limit individual agency and responsibility
• Liberalism balances freedom with social cooperation

Last updated: September 18, 2024