 The Mises Institute is proud to present the Lew Church Memorial Lecture in Religion and Economics, made possible by Lew Church Educational Foundation, Dr. Robert D. Hemholt, Chair. This annual series seeks to honor the late Lew Church, a Florida businessman and advocate of liberty, and the ideas to which he was dedicated. Starting out as a swimming pool cleaner, Mr. Church eventually established successful businesses in swimming pool construction and the restaurant and travel businesses. Through it all, he dedicated himself to the values of the free market, private property, free association, entrepreneurship and liberty, realizing that big government threatened not only the free enterprise system, but all that is good about America. Our 2013 Lew Church Memorial Lecture is Dr. Gary North, a good friend of mine and the first Austrian economist I ever saw speak in person. North received his PhD in history from the University of California at Riverside, 1972, with a dissertation topic, the concept of property in Puritan, New England, 1630 to 1720. He was senior staff at the Foundation for Economic Education from 1971 until 1973 and started remnant review in 1974, which is still published monthly. Dr. North was research assistant to Congressman Ron Paul in 1976. He is the author of thousands of articles and that's not an exaggeration and more than 50 books, including the 20 volume economic commentary on the Bible. He is recipient of the Mises Institute's Murray N. Rothbard Freedom Medal, columnist for Lule Rockwell.com and the publisher of GaryNorth.com. I welcome Gary North. I'm going to begin this presentation with a pair of predictions. And speaking as an historian, I would say this pair of predictions is unique in this sense. One of them I regard as the most remarkable prediction ever recorded and the other one is the most important prediction that did not come true. And these two predictions will stand as sort of the two ends of this presentation as to why I think the predictions are important but more to the point why one of them came true and the other one did not. The first one is virtually unknown and it was made by Ezra Styles. Styles was the president of Yale University in the latter part of the 18th century. In 1783, about six months before the Treaty of Paris was signed, which made the United States an independent nation, he gave a sermon then called an election sermon which these sermons were quite common for over a century in America. It is one of the longest sermons probably ever preached. I don't see how any of them got through it if you want the truth. The printed version is something like 51 pages and it reads like an unedited doctoral dissertation. But in the midst of this sermon, he said the following, already for ages, Europe has arrived to a plenary if not declining population of 100 millions. In two or 300 years, this second enlargement may cover America with three times that number if the present ratio of increase continues with the enterprising spirit of Americans for colonization and removing out into the wilderness and settling new countries. 200 years almost to the day, the United States population reached 300 million people. There's no prediction that I've ever seen in terms of accuracy and more to the point in terms of what would have been inconceivable at the time that the prediction was made than Ezra Stiles sermon called the United States Elevated to Glory and Honor. 15 years after this election sermon was delivered, another person made a prediction. His prediction was much longer and much more important and much more conventional, was widely received and shaped the thinking of virtually all Western scholars for the next 80 years. It was published anonymously and only later when the book in which the prediction appeared was widely accepted, did he come forward? His name was Thomas Robert Malthus and the book was on population. In that book, he made an assessment of what was going to happen throughout the West and that assessment was very straightly and succinctly stated in a phrase that we all know that food increases arithmetically but population increases geometrically. Now he took it out of later additions because it was clearly preposterous because there's no reason why food wouldn't increase geometrically just along with any other population. So he took it out but the implication was clear and that is that population pressures would always push against the prevailing supply of food in any society with any species at any time in history. This was the most important single attack on the enlightenment that was ever delivered and it shook the enlightenment and it was self-conscious to shake the enlightenment because what he was doing was reacting against the optimism of enlightenment philosophers with respect to the future that enlightenment and science would combine to create a society of endless growth and endless prosperity and upward movement. And Malthus sat down anonymously at first and wrote his book to show that this could not possibly be true because population would always expand within the environment to the limitations of resources but the main resource was food and this shook the enlightenment optimist and they began to attempt to refute this from 1798 onward that this was the great dark cloud that was brought over enlightenment philosophy and it led in economic circles to the doctrine known as the iron law of wages. And within 40 years, the idea began to percolate in the mind of a self-taught naturalist by the name of Charles Darwin. And Darwin took that doctrine and began to cogitate about it because he believed that with this understanding of population, there would now be a scientific procedure or as what we might call today a mechanism which would explain how there could be variation in terms of progeny and the survival of certain progeny and not the survival of others which would give competitive advantage within an environment that was hostile to the species as a whole because each species would rapidly progress to expand its particular niche within the environment. And I think it is accurate to say that this is the only time that a work of social science ever directly shaped natural science in Western history but it did shape it. And A.R. Wallace found the same idea and began working at the same time and it was only when he finally contacted Darwin saying, I've been thinking about this and Darwin looked at it and said in his memoirs even the chapter headings are the same as mine. And he conned Wallace into doing a joint article in a scholarly journal and that article had the effect of virtually all scholarly journals, it sank without a trace. That was in 1858 and then Darwin published, forced at this point forced by Wallace published Origin of Species which came out in late 1859 and clearly reshaped all of Western social thought and biological thought, everything was reshaped by this idea. By this idea, this prophecy I would call it but certainly prediction of Malthus' which became I believe the most important prediction of all time in terms of its influence and in terms of its error because it isn't true and none of it came true. And maybe it will come true someday, a Malthusian would say but it did not come true in the 19th century and it did not come true in the 20th century and there's not much indication today that it's going to come true in the 21st century and yet the whole world accepted it. So here you have Ezra's styles making a prediction which was utterly fantastic, 300 million Americans within two centuries that came true exactly as he said and the other prophecy which it really was a kind of prophecy prediction anyway which said that there would be an iron, an inflation, an iron law of wages in which humanity would always expand to the limits of its food and could not progress beyond that because biological population would stop the growth. He made that prediction based on the most obvious, the most incontrovertible historical fact that anyone could have worked with in 1798 for the entire history of man is one long testimony to the truth of that statement. It was the most conventional possible statement that he could start with looking to the past to say in all of the history of man always population expanded to the limits of its food and then would come the famine, then would come the war, then would come something that would reverse the apparent growth and we know these population charts and if you look at the population charts as best as we can compile them, up to 1798, Malthus was right, Malthus was right and yet something began almost as the ink on that book was drawing something fundamental change and it was the greatest, the most unpredictable, the most socially transforming historical change in the recorded history of man and we live in a completely different world from the world he lived in and wrote in, completely different, virtually unrecognizable. Economic historians debate as to when it happened, 1780, 1800, the big kahuna these days as Angus Madison, he said it was 1820 but somewhere within one generation, a 40 year period, somewhere in that 40 year period, everything changed and nobody, virtually nobody was aware of it at the time and what changed was economic growth began to compound two and a half percent, maybe three percent per annum for which there was no explanation and no one saw it coming and they were living in the midst of it in 1820, 1825, 1830, even 1840 and almost nobody observed it and yet the change was becoming manifest around them in terms of the world in which they lived. This minor, seemingly minor improvement of economic growth that was taking place in the midst of basically Northwest Europe and really more to the point within the British Isles and then almost immediately across the Atlantic in the United States and it has never stopped and it has spread, it has spread beyond borders and we're still living in the transformation, we're living in the era in which China has moved in less than 40 years from a poverty stricken gigantic nation to the most rapidly growing, rapidly improving population in terms of sheer numbers ever recorded in the history of man and India, India began the transition in terms of rapid economic growth even later, really the mid-1990s and now it's taking place there and none of it could have been predicted in 1800. I wanna read something. This is a passage from a book which is unique in historical circles. Actually it's a nine volume set which anyone who knows the field always doffs his cap saying it's a magnificent series which of course virtually no one has read but everybody doffs his cap to it because it is one of the great books, historical books ever written in terms of literary style. It could really be taught in a history department today, even more amazingly it could legitimately be taught in an English department in terms of mastery of language. It was written by Henry Adams, the grandson of John Quincy Adams and great grandson of John Adams who was a magnificent writer and this was his major work in terms of the effort that he put into it. It was called A History of the United States, 1801 and then ultimately to 1816 and this one is the first administration of Thomas Jefferson the volume but it covered the Jefferson and Madison administrations. This is one of the very few books today in which if a professional historian cited in a footnote something in Adams work it would be acceptable as a modern historiographical citation. So profound was the work and accurate was the work that it still has great respect and they still publish a shorter paperback version of about the first six or seven chapters that undergraduates and graduate students read. I read it when I was a graduate student I didn't read the nine volumes but I read the first introduction. The very first paragraph of that book which was written in 1889 gives you at least a sense of the transformation which we have gone through and I'm going to read it. Normally I don't like to read a long quote but this is beautifully written and it really does lay the picture out in a way that you have to be hammered in the head to understand it and this really helped me almost 45 years ago when I read this because it never got out of my mind. According to the census of 1800 the United States of America contained 5,308,483 persons. Now you can see the power of this statement like that it's starting off but it gets rolling pretty fast. In the same year the British islands contained upwards of 15 millions the French Republic more than 27 millions. Nearly one fifth of the American people were Negro slaves. The true political population consisted of four and a half million free whites or less than one million able-bodied males on whose shoulders fell the burden of a continent. Even after two centuries of struggle the land was still untamed. Forest covered every portion except here and there a strip of cultivated soil. The minerals lay undisturbed in their rocky beds and more than two thirds of the people clung to the seaboard within 50 miles of tide water where alone the wants of civilized life could be supplied. The center of the population rested within 18 miles of Baltimore. North and east of Washington except in political arrangement the interior was little more civilized than in 1750 and was not much easier to penetrate than Juan LaSalle and Hennepin found their way to the Mississippi more than a century before. The center of population 18 miles from Baltimore. Now he's writing in 1889 in which the world was fundamentally different. And in fact, as you push through the series I'm told by the book reviewers and you get to the end he is saying that by the end of Madison's presidency 16 years later the change was becoming visible in the United States. That politically it had radically changed. You had great expansion. Well, you had the Battle of New Orleans if nothing else in 1815. Now we're all the way to the Mississippi. You have the Louisiana purchase, gigantic expansion of the country geographically. Yet even so Jefferson believed that it would be 100 years or more before we reached the coast at the other end and maybe 200 years to settle the population. Wrong, too much Malthus, not enough styles. So the transformation had begun and he looked back 1889 looking back within the lifetime of one person to what it was in 1800 and he said it wasn't fundamentally different from 1750 and really it wasn't much different from 1650. Well, he could have gone a long way behind that. It really wasn't radically different from the time of Christ in terms of the tools and the way that people lived, the kinds of farming that was done. There had been progress. It was not zero progress, but with the exception of a few things. The book, the printed book and the very beginning of the steam engine for pumping water out of mines. 1800 would have been recognized by somebody brought from 2000 years before, really. And all of a sudden it changed and it was visible changed by the time Henry Adams wrote this, radical change. And everybody knew by that stage there had been truly radical change. In 2007, Professor Gregory Clark had a book published with a marvelous title, which he never explains in the book and it's a magnificent title. It's called A Farewell to Alms, a short history, economic history of the world. And his basic thesis is up to 1800. There had really been no change. The population was much the same. Wealth per capita was pretty much the same as it had been 2000 years before. And we were pushing as always toward the Malthusian limits. So the first 10 chapters are to go back into time and begin to support the thesis. Then he comes to the very first sentence of chapter 11 in which he said, the mystery of why the industrial revolution was delayed until around 1800 is the great and enduring puzzle of human history. And he was right. I had been working with these kinds of materials for a long time. I wrote this probably in 2010. And he called it the great and enduring mystery. And he offers a theory and it doesn't hold up very well. It's kind of a neo-Darwinian, neo-Malthusian theory. Don't wanna get into the theory, but it's a wonderful book. Let me give you an example. He said this, this one gets into your head. This is a nice simple one. He said in the time of the Roman Empire, the speed of communication was approximately one mile per hour. And in 1800, it was approximately 1.4 miles per hour. That's the speed of information. And information is crucial. You fast forward that to 1844 and the telegraph and the speed of information is 186,000 miles a second. That's a radical change. And it transformed all of modern life. It transformed war. It transformed everything. No change essentially from the Roman Empire to 1800 and within one generation moved from a mile an hour, mile and four an hour to 186,000 miles a second. This is inconceivable. And we don't know, as he said, we're not sure why. Now let me take you back to the spring of 1965. I was taking a graduate class in economic history from a man you had probably not heard of unless you were a specialist in the field. His name was Hugh Aitken. He was a wonderful teacher, inspiring teacher, and we sat in that graduate seminar and more than anything that I remember of that seminar. And it only came up peripherally. He said, why was it that approximately in 1800, modern economic growth began to compound? So we sat there, yeah, yeah, okay, okay. And the answer is, we don't really know. Now that answer impressed me at the time. But it took me from 1965 to about 2010 to drill into my mind, not simply that we don't have the answer, but that that question is the most important, single historical question that anybody can ask that may conceivably be possible to answer. Now I'm not talking about the question was, Jesus Christ, the incarnation of the second person the Trinity or whether Muhammad got his information from peculiar sources, these kinds of questions I think can't be settled by an appeal to the documents. But conceivably, we ought to be able to go to the sources, the documentary sources that were prevailing in 1800, and to get some kind of a coherent answer to the question, how did this happen? How is our world fundamentally different from that world? Now you might say, North, let's compute that, that goes from 1965 to 2010, there's a lag there. This is what I call the slow learner lag. And if you work on a project long enough, you may be able to catch up with what you should have paid attention to 45 years before. Now Aiken within two years became the editor of the Journal of Economic History which is one of the two major publications in the English language related to English history, the other being Economic History Review which is published out of Great Britain. And he was one of the founders of the Society for the History of Technology and was probably their most respected man in that field. So he was nobody's fool. And yet that was his assessment that nobody knows the answer back in 1965. Let me give you an example of what we have seen since the time approximately that Henry Adams wrote the book. I'll give you an image which is an accurate one which may help you to at least have a sense of the nature of the change. Let us go back to 1876. A young man, really a boy, six years old, he did not go to the public school system so he's a literate reader of adult newspapers. And he is sitting there reading in approximately late July or thereabouts, 1876 that George Armstrong Custer was defeated on the field of battle by a combination of Sioux Indians and other tribes and approximately 230 men lost their lives on the battlefield against these savages. And he at the age of six was impressed by this. The whole country was impressed by this. It was inconceivable. It was not believed to be possible that an American unit could be wiped out by Sioux Indians. That young man sat in front of a television set and watched Neil Armstrong walk on the moon. That same young man. That's what we're talking about in terms of historical and economic change, inconceivable. Let me give you another example. Say that you wanted to have an estimate of the nature of the change and say that you had the time machine and you went back in history and it's 1805 and you've met this young man out of Virginia. His name is John Tyler, 15 year old man. And you say, well, John, what do you think about the future? What kind of world do you think your grandson is gonna live in? And John would probably give you a few statements. 15, he knows something. At 15 in 1805, young men did know something. So he gives you a little bit about what it might be in terms of society and what kinds of things. There had been this just a very recent, if he were really on top of things, he would know about this thing called a cotton gin. It had been around a couple of years. There had been a thing, they had no name on it, but it was a steam engine that was hooked up to a large mechanical device that moved up and down tracks. Well, the thing had made three trips and had been shut down. So probably he wouldn't have heard about that. You'd think, well, what about the steam ship? Well, steam ship first one didn't come into existence until two years later in 1807. We call it the Clermont. I mean, he probably knew about steam engines if he had any kind of understanding at least of mining that they use steam to get water out of mines. Okay, so that's 1805. And you say, well, John, what kind of world do you think your grandson's gonna live in? And he'd give you an outline and you could take this outline. Now let's say that you used your time machine to sit down with his grandson and ask him about his grandfather's prediction about the world that he lived in, looking over what had taken place. And then you ask the grandson when he goes over the changes, you say, well, what kind of world do you think your grandson is gonna live in? Can you make a prediction better than your grandfather? And he would have probably given you something completely different from what you would have expected. And he wouldn't have had any better insight into his grandson's life than you would have. In fact, I can tell you exactly what he would say. He'd say something like this. The biggest change I know is that Negroes have been freed and they're free men. They're free men who can vote and one of them was just elected president of the United States. And I know he would say that because I asked him. And that's what he said. My daughter gave me the greatest birthday present of my life, Christmas present. In December of 2010, I sat down with John Tyler's grandson. And the first question I asked was, what's the big difference that would have amazed your grandfather? And he said, the complete change of the social order with respect to slavery. One grandfather to grandson and he is still alive. And all this has taken place from one grandfather to one grandson. This has all taken place. This is inconceivable. By the way, his kid brother, who's in his mid 80s, has the greatest single unstoppable one liner that I think anyone has ever come up with. And you can't beat it. You cannot beat it. You know what he says? He starts the conversation as follows. As my grandfather once said to Thomas Jefferson, and it was true, it was true. Grandson, looking back over the course of history. And you know what? I think he's right. I think that is what would have astounded Tyler, not the gadgets. Because Americans are used to gadgets, even in those days. I mean, we understood gadgets, new tools, a few, they maybe weren't as radical as we've seen now. He would have not understood how Barack Obama had been elected president of the United States. That would have been inconceivable, not the gadgets. If you look at the pace of change, it created a world which literally was inconceivable in 1790. Even by 1890, there were a lot of changes. But in 1890, probably nobody had heard about the car, because that had only been around for about three years. Marconi had not yet implemented through the air telegraph, which he actually stole from Tesla. But he had not gotten transmission through the air yet. There was, of course, no radio. By 1950, there was radio, there was television. There was atomic power in terms of generating electricity. There were airplanes, there were jets. Look, in 1950, they had put up, they had had the very early flights by that time of the B-52, and by the way, we're still flying those same planes. They've been revamped and upgraded, but all those planes are about the age of the grandfathers of the men who fly them. Radical transformation of society from 1890 to about 1950. Now, in terms of what we perceive, the change from 50 to, say, 1990, not so radical, socially radical, collapse of the Soviet Union, rise of China as being an economic powerhouse was beginning. The internet was invented, but the worldwide web had not been, or at least was unavailable to most of us. Change, but 1950, is not that radically different from 1990, and with respect to microcomputers and communication, yes, we're living in a much better world. But in terms of fundamental things like automobiles jet planes and the kinds of gadgets we have, they're a lot cheaper and they're out to far more people. But we live in a world which at least is emotionally and conceptually very similar to 1950, but 1950 was not recognizable in terms of 1890. Electricity, movies, the air conditioning, all of this came after 1890, this pace of change, which extended to about 1950 or 60, and then has slowed in terms of the radical nature of it, but has not slowed in terms of the extension of it to hundreds of millions and now literally billions of people. That is a change. We heard as of this week that YouTube now has regular visitors of one billion people a month. Now that's a change in terms of the transmission of information and ideas. That's a change and that will have profound effects on the way we live, but the radical nature of it from 1890 to 1950 was much greater than the change from 1950 until today. In any case, you had something which was inconceivable to John Tyler in 1805 compared to what his grandson now lives in, both of his grandsons live in. Now he married the second wife late and had a lot of kids with the second wife and the youngest of them married late, and that's why the two grandsons exist, but it's still within three generations that we've seen this total transformation of the world. What is the estimate? Can we make any kind of plausible estimates of the difference between 1800 and today? In a profound book, Deidre McCloskey has written a book called Bourgeois Dignity, that the change is in terms of per capita wealth, at least 16 to one. But she says that doesn't refer just to kind of brute change, but if you look at the minor improvements, then you have a situation that William Nordhaus has described as a hundred to one increase of wealth in this period. Now, as Austrians, we have certain skepticism about the rigors of those kinds of numbers, but we should not have skepticism in terms of the nature of the difference between the worlds. Unpredictable inherently, and yet, Ezra Styles saw it coming. Population expanded just as he said what tripped up Malthus was he did not understand the extraordinary effect of two and a half to 3% economic growth compounded per annum. That he could not see, that had never happened before in human history. There was no way to predict that. It was inconceivable. Yes, population expanded the way Malthus expected. Sure didn't expand to the extent that Ezra Styles had predicted, but it expanded, but so did economic output. That was the change, and this was inconceivable. So how did it happen? And there are a lot of theories about how it happened and economists struggle with developing these theories of how it happened. McCloskey's book is a hand grenade tossed into the midst of the profession in which in bourgeois dignity, there is a chapter devoted to every major explanation. And at the end of each chapter, you say, well, that couldn't be right. Well, that one couldn't be right. Well, that one couldn't be right. And when you're done, none of them holds up. It's a tour de force. Now, McCloskey is very good at rhetoric. McCloskey's good at a lot of stuff. Distinguished professor in these fields, history department, English department, economics department, communications department goes into each of those fields as a senior professor, unique set of circumstances and abilities. When Deidre McCloskey was known as Donald McCloskey, he was the editor of the Journal of Economic History, he's co-editor in the mid 1980s. Nobody's fool in the field. And the book is a tour de force. The first two volumes are just extraordinary, but the second volume is the main one. McCloskey's also very good at book promotion. And so you can go to the DeidreMcLoskey.com site and you get a summary of the book, which is the way to do it because book reviewers sure don't actually review them. And so if you're gonna go on any kind of a TV or radio show, you wanna have a few pages where the interviewer can actually read it, won't have to read the 500 page book. And there's a page on what doesn't work, a summary of all the ideas that don't work. I'm not gonna read all of them, but here are things, there are actual chapters on each of this. There was scientific flowering. No, respect for learning, universities. No, education of the elite. That didn't do it, printing and paper. Nope, then around 500 years, or anyway, 300 years. Compass, nope. Clocks, peace and bourgeois prosperity, urbanization, investment capability, temperate climate, thrift, rise of rationality, rise of greed, Spanish and Portuguese imperialism, price revolution, Dutch, British and French trade, Dutch, British and French imperialism, slave trade, rises in the rate of saving. All of these have a chapter, all of them. And when you're done, you say, it couldn't have been that because the figures are there. And that wasn't what did it, so what did it? McCloskey offers a theory, but has not offered the proof. The proof is to come in volume three of the six volumes set. But the answer that McCloskey gives is this, change of rhetoric, change of rhetoric. What did McCloskey mean by change of rhetoric? McCloskey is phenomenal at rhetoric. Of any economist I believe ever who has written, McCloskey is really the best at rhetoric. And what is phenomenal are the zingers. I put a little mark in the margin of the book when there's a zinger. It's an extraordinary ratio, I call it ZPP, zingers per page. And every, not mean, not mean spirited, but just a turn of a phrase or a word. And when you're done, I mean whoever he, she was after, I don't know what to say, it's difficult for me. Whatever Deidre McCloskey was after or whomever was the target, bleeding, bleeding from a thousand cuts. Extraordinary master, I've never seen a university press book that is as rhetorically powerful as that book. It's just amazing, I've read it twice, I'll probably read it two or three more times. It's just great to read. But the point is none of the answers works. And the subtitle of the book is, why economics can't explain the modern world? What's the answer? If it's rhetoric, that's not enough. I would push beyond this. The theory, not yet proven, is that it began in the Netherlands in the early 17th century. And what changed was a change of attitude regarding entrepreneurship and a change of attitude regarding innovation and personal wealth derived from innovation and entrepreneurship. The argument is people's attitude for the first time radically changed on the question of the legitimacy of personal wealth through entrepreneurial activity. That's the thesis. Now it's not yet proven and it's gonna be tough to prove. McCloskey is fluent in Dutch and it is the place to start looking. There's no question. You look at the Netherlands in the 17th century because that was the first inkling, the first sign of this transformation in the middle of a war. I mean, the Dutch war against the Spanish Empire began in 1572. It didn't end until 1647. This was a long war, intermittent war, but devastating. And in the midst of this, the Netherlands in the midst of a wartime economy moved to what we would call modern economic growth, at least the first sign of it. Then McCloskey said it began to be picked up in the British Isles, specifically Scotland and England. In the 17th century, McCloskey says it's rhetoric. I say rhetoric is a nice phrase, not good enough. Not good enough to change people's minds because you gotta have reasons to change people's minds. I offer two and I have communicated with McCloskey on these matters. And I like to think the reason the book is late is that my suggestions have forced reconsideration, but probably not. But here's what I think it was. First is ethics. That is a transformation of what constitutes good and evil and that for the first time within the preaching of the Protestants and especially the Calvinists, there was a shift of view. And that view was personal wealth is legitimate. Okay, that's the first step. The book better deal with that because who else could you say would be the source of widespread ideas in the midst of what is basically a civil war because it was a civil war, the revolt against the Spanish empire. And the second thing, and this I believe is the key, but I can't prove it, but I hope McCloskey can prove it, a shift of the view of the future. And that is a new optimism about what the kingdom of God can do in the midst of history. That in other words, there can be compound expansion, not simply of economics, but compound growth of liberty, compound growth of power, compound growth of influence in a society that is faithful to the ethics preached by the preachers. Now the question, and it's gonna be ticklish, does that apply to the Armenians because the great battle of the 17th century, not widely known to economists was the battle in Northern Europe between the Armenians and the Calvinists. And it was the battle in Scotland, it was the battle in Great Britain. A civil war was fought in Great Britain over this question. The Marxists wanna make it economic, it wasn't economic. The issue was Arminianism versus Calvinism. That was the civil war of the 1640s, began around 1642, ended in 1649 with the execution of the king. And then the Interregnum period, and then in 1660 back comes the son of the king and this became the era really of rationalism and enlightenment thought, the era of Newton, the era of the Bank of England. Total transformation, which was not particularly Arminian, but was unquestionably what we would call modern and secular. Now a very similar process took place in Scotland and I recommend the book by Arthur Herman on how the Scots gave us the modern world. He starts with a trial for blasphemy in the 1690s showing what was a major interest of the Scots which was theology. And yet within 30 years you had the beginning of what is known as the Scottish Enlightenment, the transformation of legal theory which led to the transformation of social theory which led to the famous phrase which we Austrians like that Adam Ferguson gave us that society is the product of human action but not of human design. And that whole idea came out of the Scottish Enlightenment which was a kind of secularized version of Presbyterianism just as in the late 17th century that system which came out of the glorious revolution was more and more secular in its orientation and it led to the opposition of what we would call libertarian leaders, Cato's letters, the whole resistance to the established church and the control over the society by the established church. All of that came out of a kind of secularized version of Cromwell's Calvinism. The secularization took place about 1700. Now you think, well, wait a minute, what about the view of the future? That was called post-millennialism and it never had widespread acceptance until about the early decades of the 17th century. The idea that Jesus Christ does not return in final judgment until after the kingdom of God extends throughout the world. Radical view, very radical view. In fact, it was so radical that a century before it had actually been forbidden to teach this if you were a minister in the Lutheran church. Very different eschatology between Lutheranism and Calvinism. This is rarely talked about in the great debate is was Max Weber right? Nobody ever goes to the issue of eschatology. What's your view of the future? Eschatology matters because post-millennialism is radically optimistic about the future. Now how does that relate to Austrian school economics? Mises' concept of time preference is a secular version of how eschatologies, both personal and corporate, are worked out in history. And there was a shift of eschatology. There was a shift of ethics and a shift of eschatology. Now what's the missing link? Here's what I think is the missing link. And I'm saying I don't know if I can prove it. I don't know if McCloskey can prove it, but you better answer it. The shift was how do you relate improvements of personal wealth, personal ethics, personal success to social and corporate success? Now the great book we all know on this is Adam Smith's Wealth of Nations, in which he says that the pursuit of self-interest, rational self-interest, moral self-interest, that that pursuit of individual self-interest leads to the wealth of nations, that the pursuit of individual self-interest leads to rapid economic growth and complete transformation. That idea was a revolutionary idea when it was first offered, and it was offered in that famous poem known as The Fable of the Bees, but originally was called The Grumbling Hive. And it, as Hayek said, created a sensation in Europe among ethicists. I wanna read only this. This was the famous Grumbling Hive, The Fable of the Bees was private vice's public virtue. Thus, viced, nursed ingenuity, which joined with time and industry, had carried life's conveniences, its real pleasures, comforts, ease. To such a height, the very poor lived better than the rich before, and nothing could be added more. That's the origin of Keynesianism. That's demand-side economics. And Keynes quotes this poem in the general theory. And the reaction to it is Smith taking the same idea that individual pursuit of self-interest transforms society. Only Smith is a demand-side economist, but it's the same idea. Radical in the 18th century, and becomes really the great organizing, guiding principle of modern capitalism. That if you pursue your own self-interest by serving the consumer, or at least the customer, you can become highly successful. You can find the hint of this idea, but really nobody ever developed itself consciously until the early 18th century. It's this idea, if you're talking about ideas, that has to be considered. So, ethics on the legitimacy of wealth and entrepreneurship individually. Secondly, post-millennial eschatology. That is, the kingdom of God expands across the earth before Jesus comes back in final judgment. And the link to get those two together is the idea of the pursuit of self-interest leading to widespread economic growth and social transformation. Is this anywhere in the Bible? Sort of Deuteronomy 8, verses 17 and 18. You may say to yourself, my power and the strength of my hands have produced this wealth for me, but remember the Lord your God, for it is he who gives you the ability to produce wealth and so confirms his covenant, which he swore to your ancestors as it is today. It took from that document until basically around 1600 in the Netherlands to convince people that wealth and prosperity were confirmations of the covenant for ethical behavior. This is how I think we got to where we are. This is why I think we got rich. A combination of ethics, a combination of the vision of the future with respect to the society of man as linked to the kingdom of God, Calvinist doctrine, but picked up by Armenians too. And finally, the link getting them together, the pursuit of individual self-interest as the means of transforming the social order. That's how I would explain it. I can't prove it. I'd like to think McCloskey can prove it. If McCloskey can't prove it, maybe one of you can prove it or maybe one of your students can do it. But you go back not to statistics about capital and thrift, but you go back to fundamental world in life view, deeply religious, which was the basis of the world which has taken place from the birth of John Tyler to his grandson who I interviewed in 2010. Thank you very much.