God is a Capitalist

Monday, April 15, 2019

Cold Weather Did Not Create The Modern World

The birth of Christ was the most important event in human history. Second to it was the hockey stick growth in per capita GDP (standards of living) that began with the creation of the Dutch Republic in the late 16th century. Most know it as the Industrial Revolution, which socialists claim impoverished and enslaved mankind, but it was much more than that. It was a revolution in culture, including the laws, government, religion, social structure and attitudes toward business.

Economists call it hockey stick growth because a graph of per capita GDP for the world would be almost perfectly flat from pre-history until 1600 when for the first time in human history the average standard of living began to rise. It caused a continuous increase in average wealth in the Dutch Republic, England, the US, Australia, Canada and eventually all of Western Europe. It ended poverty and the Malthusian cycles of famine with mass starvation in the West and made us 30 times as wealthy as our ancestors who launched it. Since WWII similar prosperity has spread to Japan, Taiwan, Hong Kong, South Korea, Singapore and finally China. The World Bank estimates that slightly freer markets in India and China cut the worst poverty in half in just the past generation.

Historians and economists have fabricated dozens of theories as to how the hockey stick happened, most of which are very bad. Another one surfaced recently. Nature’s Mutiny: How the Little Ice Age of the Long Seventeenth Century Transformed the West and Shaped the Present by Philipp Blom claims that cold weather made us rich. Beginning in the fourteenth century and lasting several hundred years, the planet’s temperature cooled 3.6 degrees Fahrenheit. That’s the estimate, at least. Crops failed and led to mass starvation. The Thames river froze. Summers disappeared. Earthquakes and volcanoes became more common.

The reviewer of Nature’s Mutiny, summarizes Blom’s argument:
“The Little Ice Age amounted to ‘a long-term, continent-wide agricultural crisis,’ Blom wrote. Grain harvests did not return to their previous levels for a hundred and eighty years...At first, there were panics and uprisings, food riots and rebellions, and a spike in witch trials...the effects of the Little Ice Age were global in scale. In China, then as now the most populous country in the world, the Ming dynasty fell in 1644, undermined by, among other things, erratic harvests.”
“Here we see the birth of the idea that markets, and the rules of markets, have supremacy in human affairs; we also see how the new dispensation offered opportunities to a new breed of ambitious, ruthless, commercially minded man.”
Somehow, Blom thinks transporting food to starving peasants in Europe is ruthless activity. But his main point is that the cold weather heated up international trade, created capitalism and birthed the Enlightenment. It’s an ambitious goal and no worse a theory than most of those offered for the cause of the hockey stick in per capita GDP. But it suffers from the same fallacy as many of the other theories: it can’t explain why economic development started in the Dutch Republic and stayed in Western Europe, North America and Australia for centuries. For as Blom admits, the Little Ice Age was a planet-wide event. So why didn’t it cause the hockey stick in China, or the Ottoman Empire, both of which were more advanced in technology and wealtheir than the West?

The hockey stick was not born on ice and it wasn’t a random event. The Church had stumbled on its economic ideas when it baptized the philosophies of Plato and Aristotle. But it’s continual work on the theory of a just price eventually excommunicated pagan economics and led to the distillation of the principles of capitalism in the 16th century by the theologians associated with the University of Salamanca, Spain. The fundamentals are the sanctity of property, free markets, without which property can’t exist, and limited government. The Dutch first instantiated those principles, as Adam Smith reminded us.

Cold Sun by John Casey also tells the Little Ice Age history. It followed the Medieval warming period, which carbon-phobes hate and pretend didn’t exist. England and Northern Europeans grew grapes during the warm weather and made wine. They resorted to beer only when the Little Ice Age began and their grapes wouldn’t grow.

Nature’s Mutiny fits well within the mainstream economics view that major events are random occurrences and humans are all couch potatoes who merely respond to stimuli and don’t have goals or plans or learn from the past. Real economics, based on real humans, began with the Salamancan scholars and reached maturity with the Austrian school of economics led by Ludwig von Mises.

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