Putting Capital Back into Capitalism: A Rejoinder to McCloskey

At FreedomFest, I debated University of Illinois Professor Deirdre McCloskey on her book, “Bourgeois Equity: How Ideas, Not Capital or Institutions, Enrich the World” (University of Chicago Press, 2016), which is her third “Bourgeois” book defending middle-class capitalism.

We had a great time in our intellectual debate. That’s what I like about FreedomFest — it’s all about “great ideas, great books and great thinkers.”

In her book, she berates me and other friends of liberty for defending the importance of “capital” in capitalism. Having suffered through and occasionally profited from numerous private placements and high-risk investment opportunities over the decades, I argue that inventors are always in desperate search of investment capital, and if funds were more plentiful, more new ideas could be tested in the marketplace. In other words, capital is what capitalism is all about.

But Professor McCloskey demurs. She rejects my statement that “the scarcity of investment capital has kept us from advancing as fast as we could.”

All we need is more and better “how to” ideas in technology and production processes, she claims. In the “Bourgeois Equality” tome, she insists, “Our riches were made not by piling brick on brick, bank balance on bank balance, but by piling idea on idea,” specifically the theological and political revolutions in the European West that spurred on entrepreneurship, technology and innovation.

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