Contrary to economists from Adam Smith to Karl Marx to Thomas Piketty, our riches cannot be explained by the accumulation of capital, as the misleading word capitalism implies. The Great Enrichment did not come from piling brick on brick, or bachelor’s degree on bachelor’s degree, or bank balance on bank balance, but from piling idea on idea. The accumulation of capital was of course necessary. But so were a labor force and the existence of liquid water. Oxygen is necessary for a fire. Yet it would be unhelpful to explain the Chicago Fire of October 8–10, 1871, by the presence of oxygen in the earth’s atmosphere.
In other words, writes Deirdre McCloskey, the modern world can’t be explained by routine brick piling, such as the Indian Ocean trade, English banking, canals, the British savings rate, the Atlantic slave trade, the enclosure movement, the exploitation of workers in satanic mills, or the original accumulation of capital in European cities. Such routines are too common in world history and too feeble in quantitative oomph to explain the 30- to 100-fold enrichment per person unique to the past two centuries. The reality is that ideas, not capital, transformed the modern world.
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