David Friedman puts his finger on something that has always bothered me about the "bourgeoisie virtues" argument of Deirdre McCloskey. It's a popular one and for good reason - what self-respecting economist is going to respond by minimizing the importance of attaching dignity to bourgeois values? In full disclosure I haven't read the books - this is something that's bothered me from talks she's given about it as well as discussions of it on the blogosphere.
The point is that economic growth is a hockey stick and that bourgeois values explain the rapid growth of that hockey stick. But Friedman points out that if we want to explain the hockey stick we really ought to have some sense of the equilibrium process that produces the thousands of years of (more or less) stagnant human existence that form the horizontal part of the hockey stick.
He reaches out for Malthus - an excellent choice - but then puzzles over what went wrong with Malthus. Like McCloskey he only really explains half the hockey stick.
The only growth model that I know of that explains the whole hockey stick, and the demographic transition to boot is the Galor-Weil model with endogenous fertility and a trade-off between quality and quantity of children that eventually results in a demographic transition. I'm not sure if Friedman is familiar with it, but it contains some of the features that he discusses (most notably a relationship between population density and productivity growth). It also adds human capital, which you need more of as productivity growth gets higher. This is the mechanism that causes the demographic transition to set in.
"Unified growth theory", as it's called, is one of the most exciting things I've ever studied in economics. Unfortunately I'm not sure I'm smart enough to push the frontiers of this cutting edge work, but hopefully I'll get opportunities to play around with it. And it's nice precisely because it takes insights like this from classical economics seriously. I am not sure McCloskey has the answer on growth theory - I prefer to take her thesis as an extension of her rhetoric in economics research agenda, and an important contribution to the way discourse shapes the evolution of market economies. I am not sure it's the key to understanding growth.
Debt, Diversion, Distraction
2 hours ago