In the road taken many of these authors have, or will be appearing on booktv. Watch them on our website, booktv. Org. Can i get everyones attention. I am the director here at george mason university. We have Deirdre Mccloskey here with my good friend. Deirdre came out with the third quality of her book bourgeois equality that builds on the bourgeois community. I think this collection is the most ambitious work in economics done during my career, at least in economics and just an amazing achievement for what you have done and generate the conversation in economics. Hopefully we will have a great conversation today. Lets turn it over to you, tom. Thanks, pete. When clear morgan asked if i would conduct a conversation with deirdre i immediately jumped at the opportunity. Not only is it on honor, but there are few books that one reads in a scholarly light, as fundamentally change or deeply change the way you look at the world. These books have done that for me. I am honored to be here with you. Deirdre mccloskey taught at the university of illinois chicago from 20002015 and now is a mareter. I would list all of the departments she taught but that would take us through the whole hour. One was economics. Before that, she taught at the university of iowa and university of chicago and a longtime friend of the Economics Department here at the george mason. I believe you your scholarly articles number about 400. I dont dare put a number on the other poplar blog posts and magazine articles that you have written. I also believe this is your 17th authored book . As pete noted, it is the final book in a remarkable trilogy which will consume the bulk of our time today. But before we get to the actual conversation let me quote from deirdres website, which i encourage you to visit. It is great website with access to most of her work. She protests she is not a conservative economist. Here is what she is, if you dont mind me putting your words in your mouth. In deirdres words she is quote a literary, quantitative post modern free market progressive midwestern woman from boston who was once a man. Not conservative. I am a christian libertarian end quote. Indeed, she is. If were to list her achievements it would be a monologue and not a conversation. Lets get to it. Congratulation on the publication of the third volume. I remember being in the transcript seminar and that is when i read it. I havent yet gotten through the entire it changed a lot. I remember the transcript. Tell us, for those who have not read it, what are buj virtues . Guest all they are is vir e virtues as understood in the west, east, south and north of Human Society in aer commercial context. Courage is entrepreneurship. Love would be solidarity in a business, for example. There isnt anything specifically bourgeois about the virtues specifically. I am simply taking the tradition, which was the longtime way of the people talked about being good, and saying well, you can be good and be an economy, too. That comes with news to a lot of intellectuals. That is why i wrote the books; is to bring the good news to our wonderful friends on the left, and some on the right. Let me help you with what i take to be the main thing of the three volumes. Economist, since the time of adam smith, asks what causes Material Processing is certainly no question that this has been a major increase in the rate of material progress since the 30s. You call it one of the greatest events in human history, right after the invention of agricultural. You will find every other explanation that economist offered to be wanting. Your explanation is ideas change in such a way that practitioners of bourgeois virtues, innovators, they, for the first time in history, starting 200250 years ago became dignified in the eyes of most people. Not everyone but most people. That unleashed this creative energy. Guest that is the key. It is not so much psychology changed. That is what was claimed a hundred years ago but i dont think that is plausible. It is not people got, i dont know, better. It is that the society changed the evaluation of what they did. The word innovation was a scare word until the 19th century. To innovate was to change religious beliefs or to disturb the social hierarchy. They dont want that innovation. That is the main thing that changed. In the last month or so, i decided this last volume should have been entitled i should add one more word. It is called bourgeois equality, here is how i should have said it and this will shock low how liberal ideas, not capital institutions, enrich the world. Because it is the basic liberal idea, not in the modern american sense, but the older sense, that people are equal before the law, and equal in social standing. It is that equality that inspired people. They get more and more evidence of this every day. I am reading now an extremely good biography of the National Hero after whom i am named. All through it, you are seeing these poor sweds and norwegians inventing things like the stoves that made arctic exploration easier because they are being allowed to. Host matt ridly has a wonderful review of bourgeois equality. Guest wonderful review. Guest he pushes back a little bit. He wonders, and i wonder how you would respond to this question, he asks how do you know the causal direction . It is true, you document that the change in rhetoric occurred starting about 200250 years ago, bourgeois became to be spoken of with greater dignity. He wonders if that is the cause or another interchange . That is the idea of equality not what i call french equality which is the idea that equality results in equality in income. But what i call scottish equality and namely equality of human dignity, socially and before the law, those of course were raised in prestige by the success of the formula. You see it in scotland, england, holland it all began in holland and then the United States and australia and so forth. And other scandanavian elsewhere. You see the Great Success if that increases the prestige of markettested betterment as they call it. What i would say really is that you have to look at the timing. And the comparisons. But lets look at the timing. The increase in status of economic behavior and bourgeois activity and innovation happens before any substantial economic success. Way before. Around 1700, well actually i said it starts in holland so a hundred years before, around 1600, you have this flowering of dutch commercial society. About a hundred years later, e came the dutch central bank, the dutch exchange, unfortunately a Dutch National debt. I am surprised they didnt adopt the dutch language. It became so dutch my 1700 and that is way before there was stubstantial payoff. The real payoff comes not so much with the classic and Industrial Revolution of the 18th century but in what i call the great enrichment of the 19th and 20th century which innovation, betterment, just goes completely whacko. As it is said, ideas start having sex, then the baby ideas, and the grand baby ideas of sex. You get all of this amazing innovation of mechanical inventions which you can see around us but certainly organizational and social exemptions. Do you have any idea why the ideas changed . Yes. That is what i devote much of the third volume to. Coal is a big favored. Favorite. The slave trade or exploitation of the poor, doesnt work. If you think about economics they are just not big enough to explain a factor of 30 which is what we are trying to explain. And historically speaking they dont make sense because the chinese were exploiting coal for 3,000 years. All without an Industrial Revolution. I said why did this liberal idea become so powerful and all of a sudden it was. I have i am sorry to say i havent gotten a snappy answer. Here is the simple answer. It was accidents. Starting in 17, the famous year up to 1789, in that period, hierarchy began to break down. Hierarchy is what runs a civilization. I am a lord of the manner, and too bad for you, you have to give me taxes, and that started to break down. Ordinary people were made bold. English quakers were a big part of this and even women were allowed to speak at the meeting. There was no hierarchy at all. No priest. No person appointed by the congrugration. It isnt so much the document of salvation that changed but the Church Governance made people bolt. And i give some evidence for th this. Here is why it is safe. What is the point of going accidental . I dont want people to believe there is something pecular about this. It could have happened in china, with sufficient time it could have happened in guatemala. Why it didnt happen in china earlier is a puzzle of this great enrichment. It made europeanness as obvious from the successes of liberal economic policies with concerns in china and india right now. I think without those two recent examples, women had much harder to make this argument. We have been talking before we started filming about a book you and i, most good economist love, adam smith and adam smith famously, among people who know his work, didnt say many favorable things about Business People. Guest no, he didnt. Host on the surface, that is a bit of intention of your thesis. Guest but he for one thing he didnt think much of entrepreneurship. He spoke of smith and the three forces we need to be concerned with. Smith is about efficiency. About the real cause of modern Economic Growth and stability. Smith is not a smith didnt know what his radically egalitarian ideas about equality before the law. He didnt realize he was creating a document that would sustain this move of the egalitarianism. He was a great economist but no one saw it coming. Host smith talks about Business People in the context of Business People lobbying the state for privileges. Guest yes, that is what he said. He said you think it is napoleon but adam smith spoke of british as shopkeepers and said this commercial system we have, protectionism and so on, licensing of occupation and all of the horrible features that hung over from the middle ages. He said this is a system not appropriate to a nation of shopkeepers, but appropriate to a nation whose government is influenced by shopkeepers and that is right and so true. Host one of the remarkable things about you do it in all but certainly the last two volumes just to give examples. You give examples of how much better it is astonishing. Host why do most people think it isnt a big of deal as you do, or it is doomed . Guest most people like pessimistic behavior. Why do people like to say the sky is falling . Bob gordon, an old friend of mine, wrote a book called the sky is falling, the sky is falling. Bob, i dont think so. It hasnt fallen yet. I dont see pieces of it when i look around. People feel they are sophi sophisticated if they are pes pessimistic. My mother is 93 and very int intelligent and sharp. She always said things were terrible, and i say they were worse when you were a kid. She was born in 1922. She said no, we were happy then. Her mother in the Great Depression would put pieces of cardboard in her shoes so the holes wouldnt leak. A refrigerator, a color tv, psychotropic drugs well not those kinds of drugs but things like lithium and so forth which the richest people in the world didnt have to fight illness in 1950 that we have now. I dont know how to get people out of this abyssmal mode. Host neither do i. I am pessimistic about that. In the past several years, we have seen a return of inequality. You reviewed this favorable and her book in the financial times, diane coil talks about it and wonders if you have too complacent about the future. Guest we thought we took socialism out to the cross roads by the loit of the full moon and pounded a wooden stick through its hard heart and it was dead. Socialism, since the invention in the 19th century, along with nationalism, and you have like those two try national socialism, is millennial poplar. I think people like equality and social socialism because they grow up in families and families are social enterprises. But from an ethical point of view, equality is not the problem. There is a line in shakespeares sonnet that i cannot quote but he points out look, i would like to have this mans intelligence, and this mans strength. It is a hopeless project. To enrich the poor should be our purpose and that i think is an honorable, liberal, sensible, and achievable purpose for, well Public Policy if you want tuque talk about it that way. This change in rhetoric and those who pursue the bourgeois pursuits, if that was sufficient to bring about this great and enormous enrichment, i presume as the rhetoric moves back in the other direction we can be doomed. I think we see this in the economy of europe. The treaty of rome was a wonderful document and broke down trade barriers among european nation to alter the good. And in brussels, they thought well, we have to go here again, this equality. We have to what is the phrase, we have to make the Playing Field host level the Playing Field. Guest yeah, we have to level the Playing Field. Cadbury chocolate isnt real chocolate said bureaucrats and rebels. There is not enough cocoa in it. So we will declare this chocolate not chocolate. You can imagine how this played in britain. Or when you take nonpasteurized Italian Cheese and outlaw it because, after all, the other stuff is pasteurized. Our good danish cheese is pasteurized. What is wrong with these italians. The purpose of the modern society is to make everyone equal. It is a crazy problem and a pointless one. We should be doing the improvements of the worst off. And that is not done by whining about how many yachts, the ere to the lorel fortune has. Her charitable founation has investeded one half of one percent of her wealth. Compare Andrew Carnegie with a hundred percent. That doesnt make people poor. What makes people poor is a lack of equality. Equality before the law take the drug laws, for example. I have known for years but suddenly the American Public is realizing that the drug laws are not equally enforced. I am shocked. That is what makes for a vital, entrepreneural society. I dont want to suffer the pessimistic behavior you and i fight against, but i would say the rhetoric of the past few years guest it has been terrible. Host the intellectual rhetoric and the political reticle is worse than it has been at any point in my lifetime. Is it possible we are seeing the beginning of a return to the ages of hierarchy . Guest i am still optimistic. You cannot change gender without being optimist. But i think the demonstration affect is very powerful. I think what the indians called the income per capita growing at 1 a year. They saw the chinese doing it and what we used to call the red chinese in 1978 saw hong kong doing it. Roughly, i think the world will become more liberal in my sense, in the next 50 years and i expect that to result in a gigantic worldwide enrichment. For example, in subsaharan africa, i predict a great future for. Subsaharan has more genetic variability than any other part of homo sapiens. When they start misgoverning themselves, so unlike we europeans do, who only had a first world war, Second World War and communist and fascism, we were clever by comparison. This is all ironic. But when the subsaharan africans have equality before the law and dignity and when they stop having large governments control their lives, bands of robbers, they will grow and because of the genetic variability the greatest mathematicians, musicians, artist, scientist, will have all black faces and i think that will be a wonderful irony on the racism of individuals. Host i hope you are right. Guest i know i am right. Host i dont disagree. You were trained as an economist in the 1960s. Guest if you call going to harvard being train as an economist. Host what is your assessment of the state of the economic profession today compared to when you began . Guest i dont think it has improved all that much. In some ways it is worse. Economist have become more arrogant it is almost unbelievable considering how arrogant they were in the 1960s. Host arrogant in what way . Guest thinking they are the solution, that social and english professors are stupid, that they are just the cats meow politically and intellectually. There is no bases for it. I think one of the great problems in modern economics is the lack of understanding, unlike earlier economist, that to be a good economist you need a full culture. You have to be a humanist and a quantiifier. Iohave to have both. I advocate with my friend bart wilson who coined the term huma humanics. It doesnt lose the math, and we often do, and things quanatatively when that is appropriate. But thinks intelligently about categories and that is what the humanities do. That is what the humanities are; the study of categories. Theology, does god exist or not . In philosophy, what is the category . Knowledge. What is it . Justified true belief; is that enough . That is a categorical entry. That is mathematics, but applied mathematics but existing therems is categorical talk. Once you have the categories you can measure. I think a more civilized economics that takes seriously philosophy and literature is the way to the future. Economist are rushing in the other direction. And like the proverbial lemmings are aiming for the cliff. Host this is on the same topic. I remember when i first met you in april of 1986. So 30 years ago. I was 12. Guest i was younger. Host i wish i was 12. George sullivan and i, late john blend, and john voy, had dinner here in fairfax and i was struck by something you said that day. I never heard this from an economist. Carl marx had a lot to teach us. Guest sure he did. Host what is the connection . Guest my joke is carl marx, i say to my libertarian friends, i say carl marx was the greatest social scientist of the 19th century without compare. And they get mad at me. I turn to my left wing friends and i say and he was wrong about almost everything. So they get mad which is why i dont have any friends. Host you do here. Guest thank you. What marks i suppose you could say the questions marx asked are the important ones. Is there a pattern to history . Are there stages . Are ideas independent of material conditions or is this structure a mere consequence of the material base . He asked all these questions and got all of the answers wrong but he asked the questions in a serious way. I have come to admire other people, too, but as a kid i was a marxis