Why Economics Cannot Explain the Modern World

July 16, 2013 Leave a comment

Why Economics Cannot Explain the Modern World

Deirdre Nansen McCloskey University of Illinois at Chicago – Department of Economics

June 2013
Economic Record, Vol. 89, pp. 8-22, 2013

Abstract: 
Why indeed? Because the Great Fact, 1800 to the present, incomes rising by a factor of a factor of 30, and higher if quality is acknowledged, cannot be explained by piling brick on brick, or BA on BA, in the absence of new ideas. As Keynes said, the marginal product of capital would be driven quickly down to zero. If the key were accumulation, which economists love, the Great Fact of modern growth would have happened earlier, or in China. Only ideas, in an environment of liberty and dignity for ordinary people, historically unique to northwestern Europe, work.

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