Reason Magazine - Contributors

Creative Destruction vs. the New Industrial State

deirdre2@uic.edu (Deirdre McCloskey) — Tue, 18 Sep 2007 06:33:00 EDT

Prophet of Innovation: Joseph Schumpeter and Creative Destruction, by Thomas K. McCraw, Cambridge: Harvard University Press, 719 pages, $35

The New Industrial State, by John K. Galbraith, Princeton: Princeton University Press, 518 pages, $24.95

Most of us get our politics in our early 20s and then never change. Saul Bellow said of his youthful Trotskyism, “Like everyone else who invests in doctrines at a young age, I couldn’t give them up.” A young adult hates the bourgeoisie or loves capitalism or believes passionately in the welfare state. Her politics becomes a cherished identity, a faith. Here I stand. I can no other.

The vintage matters. Someone who invested in doctrines when world capitalism seemed to be working just fine—on the eve of World War I, say—had a good chance of keeping for life an optimistic opinion of markets and entrepreneurs. So it was with one of the best-known economists of the last century, Joseph Alois Schumpeter (1883–1950) of Vienna, Bonn, and Harvard.

But someone who invested in his human capital when things were dismal and chaotic—early in the Great Depression, say—was likely to take a less cheerful view. So it was with another of the century’s best-known economists, Schumpeter’s younger colleague John Kenneth Galbraith (1908–2006) of Ontario, Berkeley, Fortune magazine, and then, at the very end of Schumpeter’s two decades there, Harvard.

Both tried political power early, Schumpeter as a pro-market minister of finance in Austria’s brief socialist government after World War I and Galbraith as a New Dealish deputy director of the U.S. Office of Price Administration during World War II. Experience in government had opposite effects on the two. Schumpeter became permanently suspicious of state power. Galbraith became permanently delighted with it.

These two men of clever words, both master rhetoricians, laid out the case for and the case against unregulated markets. Half a century on, you can review their efforts in a new biography of Schumpeter and a new reissue of Galbraith’s most famous book, The New Industrial State. Schumpeter’s pro-capitalist and conservative case looks better, Galbraith’s anti-market and regulatory case looks worse.

Regulated or not, as Schumpeter almost understood, capitalism hangs on words. In the end that’s what both men missed, Schumpeter only narrowly. Case-making with sweet words is how business decisions are made. It’s how regulatory agencies do their jobs. It’s how you shop for furniture. It’s how economic scientists persuade. It’s how managers in a free society manage. Rhetoric rules.

As Thomas McCraw, a professor of business history at Harvard Business School, explains in Prophet of Innovation, a charming new life of the man in full, Joseph Schumpeter from first to last defended the entrepreneur with his own talk, talk, talk. A free economy, Schumpeter claimed from his earliest important book, The Theory of Economic Development (1911), runs on innovation, not routine. “Schumpeter turned Karl Marx on his head,” McCraw writes. “Hateful gangs of parasitic capitalists become, in Schumpeter’s hands, innovative and beneficent entrepreneurs.”

Emotionally speaking, Schumpeter had always been attracted to the aristocratic side of the bourgeoisie. “The innovating entrepreneur,” noted one of Schumpeter’s colleagues at Harvard, “did have glamour”—which Schumpeter sought—“and was not dominated by middle-class values,” which Schumpeter viewed as stuffy conventionality without heroism. The aristocratic bourgeois: There’s your Schumpeterian entrepreneur.

In public Schumpeter liked “to play the part of an aristocrat,” McCraw writes, “even though his origins were middle-class and his eminence self-made.” At his first academic job in 1909 he fought a literal duel with swords against, of all people, the librarian, because he wouldn’t make books available to his students. The librarian got an honorable scar out of it, and the two became the best of friends.

Schumpeter “liked to disrupt faculty meetings by turning up late, still clad in jodhpurs and helmet from his daily horseback ride.” He would say in later years that his ambition was to become the world’s greatest economist, the world’s greatest lover, and the world’s greatest horseman. “Things are not going so well,” he would add, smiling, “with the horses.”

Schumpeter’s best-known book is his hastily written but glittering Capitalism, Socialism, and Democracy, which received scant notice when it first appeared in 1942. It contained his usual praise for the businessperson, but it also predicted that capitalism would not survive, and that democracy might not either. The book “admits, and rather cheerfully, that the patient is dying,” the economist Paul Samuelson wrote in a 1970 Newsweek column, “but of a psychosomatic ailment. No cancer, but neurosis is [the capitalist’s] complaint. Filled with self-hate, he has lost his will to live.”

Most intellectuals in the 1930s and early ’40s had the same neurosis, and the same pessimism. Schumpeter believed that capitalism was raising up its own grave diggers—not in the proletariat, as Marx had expected, but in the sons and daughters of the bourgeoisie itself. Lenin’s father, after all, was a high-ranking education official, Lenin himself a lawyer. It wasn’t the children of autoworkers who pulled up the paving stones on the Left Bank in 1968. The most radical anti-globalists today are socialist children of capitalist parents.

Schumpeter’s cultural pessimism about capitalism has proven wrong. The American economy has continued to show startling entrepreneurial vigor, though both Schumpeter and Galbraith thought that committees would kill it. The capitalist idea has flourished worldwide.

By 1967, when Galbraith published The New Industrial State, his most considered book (he revised it three times down to 1985), he was already famous among general readers for The Affluent Society (1958). In that book he pointed out that we Americans have grown affluent in private goods, loaded down with refrigerators and finned automobiles. Splendid. But we have neglected the public goods of education and public parks and decent provision for the poor. In Sweden, he averred, they do things better.

Ten years later The New Industrial State offered additional Sweden boosting. It has now been reissued with an introduction by the author’s son James, also a notable economist on the Democratic left. The elder Galbraith argued that the great scale of modern industry has created a “technocracy,” which runs the world with committees. Anyone who has worked in a large corporation or a large university knows the feeling. Galbraith argued that advertising manipulates demand in order to fit with technical necessities. Anyone who has lusted for an iPhone knows that feeling too. A new model of your father’s Oldsmobile was so very expensive to plan and took so very long to bring to market—ask Airbus today about all this—that the demand had to be guaranteed with elaborate provision years in advance for advertising and distribution.

So let us adopt democratic socialism, said Galbraith. Let us concede that the new industrial state is one of massive corporations facing massive unions, under the benevolent and skillful regulation of massive governments. “The small competitive firm cannot afford the outlays that [modern, big-time] innovation demands,” he wrote. If modernity needs big corporate bureaucracies to do such big stuff, surely we need big governments to coordinate everything; the so-called free price system won’t do. “If the market is uncontrolled,” Galbraith wrote, “it will not know” when the new car will roll off the line or when a new drug will pass FDA approval.

Rereading Galbraith long after his heyday, you’ll find that his zingers are still funny, his arch sneers at the conventional wisdom still amusing—until you realize that the zinging and the sneering are there to cover his tracks. “For a public official to be called an economic planner was less serious than to be charged with Communism or imaginative sexual proclivities,” he wrote, “but it reflected adversely nonetheless.” Or consider his summary of the conventional wisdom regarding work: “Leisure is something to be regarded with misgivings, especially in the lower income brackets.” Zing, zing.

The problem is that the tracks Galbraith is covering over are light. His works, essentially updatings of the great economic sociologist Thorstein Veblen, never really faced intellectual opponents with evidence. Galbraith in 1967, like Veblen in 1915, merely ran ahead laughing. While Schumpeter always acknowledged the very best academic and political cases made by his socialist opponents, Galbraith confined himself to making merry of pamphlets from the National Association of Manufacturers.

McCraw’s book on Schumpeter is an absorbing read, with short chapters, lots of personal detail and historical scene setting, and an important anti-Galbraithian economic theme. McCraw argues that Schumpeter’s search for “exact economics”—the ruling passion of modern economics, though not a passion that Galbraith indulged—was inconsistent with Schumpeter’s profound discovery about the marketplace, namely, that it depends on invention, innovation, and entrepreneurship, all things counter, original, spare, strange. In Schumpeter’s famous phrase from Capitalism, Socialism, and Democracy, borrowed from the German economist and sociologist Werner Sombart, capitalism depends on “perennial gales of creative destruction.”

Beyond the insights into Schumpeter the economist and precursor of “strategy” courses in business schools, McCraw has dug out illuminating gossip. Schumpeter’s diaries, available in full, get us into the head of a work-obsessed man—work-obsessed, at any rate, after a terrible summer in Bonn in 1926 at age 43, when the beloved mother of this beloved only child died suddenly of a stroke and his adored second wife with her newborn son died in her only childbirth. He wrote to a fellow economist, “Everything now hangs on my ability to work. If so, the engine will keep running, even if my personal life is over.”

Schumpeter’s personal life was not quite over. In 1937 he married for a third time, to Elizabeth Boody, herself a brilliant scholar, who sustained this peculiar working machine until his death in 1950. The chapter detailing the FBI’s Keystone Cops pursuit of Joe and Elizabeth during World War II is alone worth the price of the book. Elizabeth Boody Schumpeter had correctly predicted that Japan would be no military pushover. That sufficed in the heat of wartime paranoia to draw the attention of the federal police. The agent reporting to J. Edgar Hoover about a volume on the Japanese economy edited by Elizabeth (the agent styled her maiden name and first-marriage name “aliases”) could, unhappily, find no information “which shows clearly any intention either to aid or to oppose the Japanese.”

Hoover shot back that on the contrary, “this case presents fairly good possibilities for eventually reaching prosecution.” After all, husband Joseph himself was suspect, as an Austrian native who had doubts that unconditional surrender was a wise policy to impose on Germany a second time, or that killing many hundreds of thousands of Axis civilians with bombs was worthy of British or American values. (It was Galbraith, by the way, who headed the inquiry after the war showing how ineffective the strategic bombing of Germany had been.) FBI agents swarmed over Cambridge, McCraw notes, and “inevitably, many of [the Schumpeters’] acquaintances began to view them in a different light,
and they suffered some cold shoulders.”

Galbraith thought of Schumpeter as “the most sophisticated conservative of this century.” The two got along well, trading wittily expressed opinions about capitalism. Both men had good senses of humor, whatever their disagreements. Schumpeter always thought of himself as a conservative, and planned a book on the matter, though he once said to Galbraith that “I am pretty sure that no conservative would recognize himself in the picture.” In fact he was a conservative libertarian, well before the word libertarian got much respect. That is, he was not radically libertarian, willing to turn the society upside down, abolishing the government into the margins in the style of Ludwig von Mises, his classmate in a little economics seminar with the great Eugen von Böhm-Bawerk at the University of Vienna in 1905.

“I am not in the habit of crowning our bourgeoisie with laurel wreaths,” wrote Schumpeter in his 1918 essay “The Crisis of the Tax State.” Notice the sneeringly aristocratic imagery, conventional by then in European rhetoric and prominent in all of Galbraith’s writings. As Schumpeter remarked a quarter of a century later, “The public mind has by now so thoroughly grown out of humor with [capitalism and the bourgeois life] as to make condemnation of capitalism and all its works almost a requirement of the etiquette of discussion.”

But Schumpeter was bowing in 1918 to anti-bourgeois etiquette in order to set up the opposite point, that in fact the bourgeoisie “can do exactly what is needed now” and should be given its head. The irony, McCraw points out, is characteristic of the man, and of his theory of political economy: Capitalism was wholly successful economically but doomed sociologically.

Galbraith, like many other economists of his generation, worried about private monopoly, though embracing public monopolies. Schumpeter never had such worries. Creative destruction, he argued, would take care of the trusts and pools and over-big corporations. In truth the list of companies that Galbraith held in awe as great forces in 1967 looks quaint now. U.S. Steel, AT&T, and General Motors belie his assertion “of great stability in [a great corporation’s] position in the planning system.” Eight years after the first publication of The New Industrial State, Bill Gates founded Microsoft. Let creative destruction rip.

McCraw himself italicizes a very unripping assertion of his own that “the two pillars that support all successful business systems [are] a modern concept of private property and a framework for the rule of law.” That’s nothing like Schumpeter’s idea. Laws are necessary, of course, but so are road mending and brick making. Private property and a framework for the rule of law have existed in written form since ancient Mesopotamia, and in every substantial civilization from third-century B.C. China to 12th-century A.D. Timbuktu. Roman law, with its detailed concept of private property, was worshipped in Europe for two millennia. Yet those civilizations, Schumpeter emphasized, never reached the standard of economic production and progress the modern West has. Not even close.

What was missing was the thing Schumpeter emphasized and Galbraith attacked, a thing unique about Europe since the Netherlands in 1600 and England in 1715: a business-dominated civilization. “Capitalism does not merely mean that the housewife may influence production by her choice between peas and beans,” Schumpeter wrote in his swan song, a 1950 essay grimly entitled “The March Into Socialism.” Capitalism also “means a scheme of values, an attitude toward life, a civilization—the civilization of inequality and of the family fortune.” The last touch, incidentally, is pure Schumpeter: “The civilization of inequality” makes the socialists’ case by adopting their words, yet Schumpeter politely disagrees on how we should judge the outcome.

The American “scheme of values” in the 19th century, Schumpeter said, “drew nearly all the brains into business”—witness, say, Mark Twain’s failed entrepreneurial projects—“and impressed the businessman’s attitudes upon the soul of the nation.” Schumpeter remembered wistfully the pre-1914 civilization of Europe itself as following “the beliefs and attitudes of the business class,” “essentially rationalist and utilitarian. It was not favorable to cults of national glory, victory, and so on” (though favorable enough, Professor Schumpeter, to start and sustain the Great European Civil War of 1914–1989).

“Capitalism stands its trial before judges who have the death sentence in their pockets,” wrote Schumpeter. “The only success a victorious defense can possibly produce is a change in the indictment.” Thus the major indictment of capitalism by the socialists of the 1850s was for immiserating the working people. When this proved scientifically wrong, the socialists of the 1890s indicted it for imperialism. When that too proved wrong, at any rate by the lights of the best economic scientists who troubled to look into the matter (among them Joseph Schumpeter), the socialists of the 1950s indicted it for alienation. When this accusation seemed less fresh, the socialists of the 1990s indicted it for environmental decay. Schumpeter wrote that “such refutation,” rationally proving the latest indictment wrong, “may tear the rational garb of attack [on capitalism and all its work] but can never reach the extra-rational driving power that always lurks behind it.”

Schumpeter stressed the robustness of capitalism in the economy, the vigor with which new entrants dissolve the monopoly profits of the first mover, and the enormous dividend it leaves for the poor. Robust, yes, but in a certain important respect still fragile: “The emotional attachment to the social order,” wrote this conservative in an almost Burkean way, was “the very thing capitalism is constitutionally unable to produce.” No one loves a Rockefeller. Everyone loves a Virgin Queen.

But there’s still something missing. What both Schumpeter and Galbraith got right, and most modern economists have gotten wrong, is what the sociologists call capitalism’s “embeddedness” in a society.

The economy is nothing without the words supporting it, whether conventional wisdom or creative entrepreneurial projects. Schumpeter was mistaken about the future of self-doubt among the bourgeoisie. The bourgeoisie claimed back its self-confidence after Reagan and Thatcher, and, more to the point, after Hayek and Friedman—though there’s still work to be done in praising bourgeois virtues. Galbraith was mistaken in expecting the reduction of entrepreneurship to committees and the permanence of companies like General Motors. Entrepreneurship, even within a great organization, still matters. And as for the arrogant corporations, “nor is favor to men of skill; but time and chance happeneth to them all.”

What’s finally missing in both Schumpeter and Galbraith’s grim prognoses is a theory of language. Human beings swim in words. We’re just realizing this, after a long, long enchantment with Marxist or Freudian or behaviorist claims that secret or not-so-secret material interests rule everything, that the makers of the U.S. Constitution were driven by their property values, or that slavery was abolished to strengthen manufacturing. One quarter of national income is earned from sweet talk—that is, the persuasion a manager or teacher or salesperson or foreman exercises on the job.

“About the end of the seventeenth century,” Schumpeter wrote in his great 1939 tome Business Cycles, the English political world “dropped all systematic hostility to invention. So did public opinion and the scribes.” That’s exactly right. And it’s what is wrong with the materialist conviction since Marx that ideas are froth on deeper currents. Ideas, words, rhetoric, “reason”: the world is governed, another economist said, by little else.

McCraw argues that Schumpeter invented what business schools now call “strategy,” “an attempt by firms to keep on their feet,” as Schumpeter put it, “on ground that is slipping away under them.” It’s practical business stuff. And of what is the “attempt” constituted? Plans, words, sweet talk. An economics that doesn’t acknowledge talk and its creativity may be in some pointless sense “exact,” but it doesn’t illuminate the world we have, the world admired by Schumpeter and zinged by Galbraith, of entrepreneurs—in the market, the corporation, the government, the laboratory, the street. Capitalism, like democracy, is talk, talk, talk all the way down.

Deirdre McCloskey teaches economics, history, English, and communication at the University of Illinois at Chicago. Her latest books are The Bourgeois Virtues: Ethics for an Age of Commerce (University of Chicago Press) and, with Stephen Ziliak, The Cult of Statistical Significance: How the Standard Error is Costing Jobs, Justice, and Lives (University of Michigan Press).

Queer Science

deirdre2@uic.edu (Deirdre McCloskey) — Sat, 01 Nov 2003 00:00:00 EST

Persuade and Be Free

deirdre2@uic.edu (Deirdre McCloskey) — Mon, 01 Oct 2001 00:00:00 EDT

From Donald to Deirdre

deirdre2@uic.edu (Deirdre McCloskey) — Wed, 01 Dec 1999 00:00:00 EST

In the mid-1990s renowned economic historian--and longtime REASON contributing editor--Donald N. McCloskey transformed himself into Deirdre N. McCloskey. In her new memoir about the experience, Crossing (University of Chicago Press), she recounts both her trials--in a bid to stop the process, McCloskey's sister, a psychologist, had her committed involuntarily to mental institutions and otherwise tried to stop the gender change--and her triumphs. "As Donald aged 13 or 14 waited for sleep in his bed," she writes, referring to her selves in the third person, "he would fantasize about two things. Please, God, please. ...Tomorrow when I wake up: I won't stutter....And I'll be a girl. A girl....Deirdre later used the memory to introduce talks, to put people at ease about both her stuttering and her crossing in one story. She would joke, `I f-f-f-finally got one of m-m-my two wishes!'"

As the following selections suggest, Crossing tells more than McCloskey's personal tale of her odyssey from Donald to "Dee" (a name she called herself midway through the process) to Deirdre. On the eve of the "Biological Century"--an era in which individuals will be increasingly free to choose how to live their lives and on what terms--McCloskey's experience speaks eloquently to the larger social, political, and moral implications raised by such possibilities.

I want to tell you the story of a crossing from 52-year-old man to 55-year-old woman, Donald to Deirdre.

"A strange story," you say.

Yes, it's strange statistically. All the instruments agree that what's usually called "transsexuality," crossing the gender boundary, is rare. (The Latin in "transsexuality" makes it sound sexual, which is mistaken; or medical, which is misleading; or scientific, which is silly. I'll use plain English--"crossing.") Only three in 10,000 want to cross the boundary of gender, a few of them in your own city neighborhood or small town. Gender crossing is no threat to male-female sex ratios or the role of women or the stability of the dollar. Most people are content with their birth gender.

But people do, after all, cross various boundaries. I've been a foreigner a little, in England and Holland, and on smaller visits elsewhere. If you've been a foreigner you can understand somewhat, because gender crossing is a good deal like foreign travel. Most people would like to go to Venice on vacation. The Venice visitors as a group can be thought of as all the "cross-gendered," from stone-butch dykes to postoperative male-to-female gender crossers, all the traversers, permanent or temporary, somber or ironic. A few people go to Venice regularly, and you can think of them as the cross-dressers among these, wearing the clothing of the opposite gender once in a while. But only a tiny fraction of the cross-gendered are permanent gender crossers, wanting to become Venetians. Most people are content to stay mainly at home. A tiny minority are not. They want to cross and stay.

On a trip to New York to see a friend after my own crossing I stood in the hall of photographs at Ellis Island and wept at the courage. Crossing cultures from male to female is big; it highlights some of the differences between men and women and some of the similarities too. That's interesting. My crossing was costly and opposed, which is too bad. But my crossing has been dull, easy, and comfortable compared with Suyuan's or Giuseppi's outer migrations.

It's strange to have been a man and now to be a woman. But it's no stranger perhaps than having been a West African and now being an American, or once a priest and now a businessman. Free people keep deciding to make strange crossings, from storekeeper to monk or from civilian to soldier or from man to woman. Crossing boundaries is a minority interest, but human.

Who I Was, Am, Will Be

My crossing--change, migration, growing up, self-discovery--took place from 1994 to 1997, beginning in my home in Iowa, then during a year in Holland, then back in Iowa, with travels in between. As Donald and then as Deirdre I was and am a professor of economics and of history at the University of Iowa. From age 11 I had been a secret cross-dresser, a few times a week. Otherwise I was normal, just a guy. My wife had known about the cross-dressing since the first year of our marriage, when we were 22. No big deal, we decided. Lots of men have this or that sexual peculiarity. Relax, we said. By 1994, age 52, I had been married three decades, had two grown children, and thought I might cross-dress a little more. Visit Venice more too.

I visited womanhood and stayed. It was not for the pleasures, though I discovered many I had not imagined, and many pains too. But calculating pleasures and pains was not the point. The point was who I am. Here the analogy with migration breaks down. One moves permanently from Sicily to New York because one imagines the streets of New York are paved with gold, or at least better paved than the streets at home, not mainly because back in Catania since age 11 one dreamed of being an American. Migration can be modeled as a matter of cost and benefit, and it has been by economic historians. But I did not change gender because I liked colorful clothing (Donald did not) or womanly grace (Donald viewed it as sentimentality). The "decision" was not utilitarian. In our culture the rhetoric of the very word decision entails cost and benefit. My gender crossing was motivated by identity, not by a balance sheet of utility.

Of course you can ask what psychological reasons explain my desire to cross, and reply with, say, a version of Freud. Some researchers think there is a biological explanation for gender crossing, because parts of the brains of formerly male gender crossers in postmortems are notably female. But a demand for an answer to why carries with it in our medicalized culture an agenda of treatment. If a gender crosser is "just" a guy who gets pleasure from it, that's one thing (laugh at him, jail him, murder him). If it's brain chemistry, that's another (commit him to a madhouse and try to "cure" him).

I say in response to your question of why?, "Can't I just be?" You, dear reader, are. No one gets indignant if you have no answer to why you are an optimist or why you like peach ice cream. These days most people will grant you an exemption from the why question if you are gay. In 1960 they would not and were therefore eager to do things to you, many of them nasty. I want the courtesy and the safety of a whyless treatment extended to gender crossers. I want the medical models of gender crossing (and of 20 other things) to fall. That's the politics.

And incidentally, why do you think you are the gender you were officially assigned to at birth? Prove it. How odd.

Ah. I think you need some treatment.

After a year of hesitation, two years from beginning, I found to my delight that I had crossed. Look by look, smile by smile, I was accepted. That doesn't make me a 100 percent, essential woman--I'll never have XX chromosomes, never have had the life of a girl and woman up to age 52. But the world does not demand 100 percents and essences, thank God. An agnostic since adolescence, in my second year of crossing I came tentatively to religion and then could thank God in person, who made me inside in my comfort a woman.

You become a woman by being treated as one of the tribe. Nothing else is essential. Being Dutch is being treated as Dutch. You can be a masculine woman, as by some stereotypes many women are, yet still be treated as one of the tribe. No piece of conventionally feminine behavior is essential if the overall effect makes you accepted in the tribe. Biology is not decisive. Big hips, small frame, high voice, hairless face, sexual interest in men, more-than-male amounts of sympathy and readiness to cry: We all know women almost anywhere who vary on these dimensions, in this direction or that, but who are still part of the tribe.

And you treat yourself as one of the tribe too. Being Dutch is being homesick for Holland, inside your head. The dialogue with other members of society about whether Deirdre was part of the women's tribe has a personal side. Does Deirdre treat herself as a member of the women's tribe? Am I a woman? Yes.

Why, then, did Deirdre join the women's tribe? The question does not make sense, because it asks for a prudential answer when the matter is identity. Asking why a person changes gender is like asking why a person is a Midwesterner or thoughtful or great-souled: She just is. An identity is both made and not made. It is a romantic idea, which is strangely paired in the modern world with the antiromantic ideas of positivism in social science, that we all have an internal identity, fixed and ready made, and the only task is to express it. Will the real Deirdre please stand up? The "realness" is not right. We make ourselves, which is our freedom as human beings.

The romantic view does have something in it. You make yourself Dutch or American, a nurse or an accountant, a recluse or a social butterfly, piece by piece. But you have tendencies, which can be traced back to childhood. Anyone who has watched a child grow is impressed by the thrust of character. The dismal, fretful infant in arms will in 80 years be a dismal, fretful old lady. The cheerful infant will always be an optimist. No wonder people devised a word for it, the soul.

Operative Traumas

There Dee finally was in Dr. Ousterhout's waiting room in San Francisco the day before the cheek and jaw operation, having been photographed and relieved of gigantic checks, $10,000 here, $15,000 there. All her treatment from now to the end of her transition, she reflected as she sat there happily, was going to be paid out of her own pocket and was not tax deductible. Blue Cross and the IRS take a dim view of gender reassignment surgery. They take an equally dim view of cosmetic surgery to make one passable; also of voice surgery for the same; also of fixing the glitches from all of these.

Donald had complained to Blue Cross: "The DSM-IV [Diagnostic and Statistical Manual of Mental Disorders] you rely on calls transsexuality a `disorder,' and, unusually among such `disorders,' this one has a cure--surgical, including facial surgery. But then you won't pay for it. You can't have it both ways. Either it's a personal choice, in which case the psychiatrists should butt out, or it's a disorder, in which case medical insurance should pay for the cure." Donald was always engaging in little campaigns for justice. Dee was more realistic: Blue Cross will never pay for this, not in America--except in Minnesota, if you turn yourself over to an ignorant and self-important psychiatrist for two years of "certification" as "genuine." We Americans like telling people what to do, as in Prohibition or the war on drugs. It's not even Blue Cross' money: Over the years I've paid 10, 20 times more in medical insurance than has been paid back to me in expenses. From an actuarial point of view, there's no moral hazard. It's not as if millions of men will step forward to take advantage if gender reassignment and jaw pointing are paid for. The policy is sheer, stupid crossphobia. Sweet land of liberty and of stubborn, self-justifying hatreds.

Dr. Ousterhout's office manager, Mira, came into the waiting room and interrupted Dee's reflections on American character.

"Dee, I have some bad news."

Uh oh.

"Your sister has been calling and writing the hospital and threatens to sue if we go ahead."

"Oh, no, no, NO!" Dee wailed and raged through the waiting room. "A third time. She's tried four times to stop me and succeeded three. When, when, is she going to leave me alone?"

Ousterhout came out to comfort her. "It's a setback. But I'm going to do everything I can."

"She claims I'll go crazy when I wake up and realize what I've done."

Ousterhout laughed. "That's silly. I've done thousands of plastic surgeries. People like what we do. I've never heard of anyone waking up and being anything but thankful. What's her evidence?"

"She doesn't have any. But the psychiatrists will believe anything about this, they are so frightened."

"That's their normal state."

Dr. Ousterhout called the psychiatrist in Chicago who had examined Donald for a competency hearing instigated by his sister. His letter about Dee had been ambiguous in its last paragraph; for the operation to happen, Dee needed clarity. It sounded to Dee like more of the self-protection that seemed to be the main object of psychiatric practice. Ousterhout later told Dee roughly what he had said to the doctor on the phone to Chicago:

"Do you think Dee is competent to sign the consent form and be operated on?"

"Yes." He had said the same to Dee a couple of weeks earlier.

"That's wonderful! Could you write that down in the same words? You can send it to California by fax."

"Uh...My typist isn't here."

"You can write it on a sheet of paper and fax it. You know how to write, don't you?"

"Umm. I don't know how to operate the fax"

"I'll tell you how over the phone."

Nothing worked. The psychiatrist wouldn't do it, wouldn't put in writing what he had said twice and what he believed. He's afraid, thought Dee. He half believes my sister's theories about my waking up and regretting it all and going crazy. He doesn't want to be responsible. Psychiatrists don't. Cowards. Unlike surgeons, who must decide now, they can always waft. "Let's see how she looks after a month in a madhouse. A year."

But Ousterhout kept working, and told Dee to check into the Davies Medical Center as though the operation was going to happen at dawn the next day as scheduled. Ousterhout then arranged for still another psychiatrist to examine her that very evening in the hospital. Dee moaned to her friend Esther, who had canceled her appointments as pastor in Berkeley and driven across the bay to the Davies to comfort her during the evening of terror, "Another psychiatrist! I am so sick of being treated as crazy because I dislike my gender. Would I be thought crazy if I disliked a cleft palate, or a congenital heart defect?" The psychiatrist came in late, brought away in the dark from a dinner party, but he seemed sympathetic. Esther stayed outside in the hall, speaking soothingly to Dee before and after: "It will be all right. He seems sensible."

"Unlike most of them," said Dee. "I am so frightened."

About 11 p.m. the psychiatrist passed her. "You are competent to sign the consent forms to have the operations," he said. Dee slept.

But next morning the operation was still held up. Ousterhout still needed the examining psychiatrist in Chicago to yield. That would make two psychiatrists, enough to calm the hospital's lawyers, frightened by his sister's letters on Harvard stationery. Again it was up to this man who seemed so ignorant and frightened about gender crossing. All morning Ousterhout worked on him. It was an expensive employment for a surgeon, negotiating on the phone for a plain statement. Eventually the psychiatrist did yield, as he had yielded to the lawyer's expensive pressure in Chicago, and the fax came to California. This time Ousterhout did not tell Dee what he had said.

The operation started six hours late--another, separate surgery would have to be scheduled because of the lost time that day, making it three days of operations--face, breasts, and tummy tuck--instead of two, with three distinct setups, the first morning wasted. The additional bill mounted toward $25,000: legal costs, extra travel, extra days of surgery.

Let it go, said Dee to herself. The surgery was going to happen.

When she woke up: Am I crazy? No, just covered in bandages. Her friends Richard and Susan visited, Richard reporting that "she looks like road kill." Ken and Alan, editors on a book project that Dee was supposed to be working on, visited, and Alan's wife, Gail, brought a meal with dishes and all. The following day Esther came and took her home to El Cerrito across the bay, and Dee waited in the empty house for the craziness to come.

The next operation was all right. And the next, the third. The order of operations was unclear to Dee afterward, since some were combined: nose job, bones under the eyebrows ground down, hairline moved forward, jaw pointed, lip scar fixed, eyebrows lifted, breasts augmented, tummy tucked. Her recovery was quick, though she looked puffed and bruised for a while each time. You can't have your face taken off and put back on three times without looking odd for a while. More than the wounds, she was worried about the repeated general anesthetic, because some people have reactions to it months afterward. But it didn't happen. None of the surgery then or later hurt; the pain in recovery was masked by drugs. The recovery was inconvenient and embarrassing, because you needed to nurse yourself and you looked a mess. But not painful.

Between surgeries she stayed home at Esther and her friend Marty's and went to church a lot. The First Baptist Church of Berkeley--American, not Southern, Baptist--said on its coffee mugs, "FBCB--Not your typical Baptists!" Theologically, Baptist churches of any sort are libertarian, though your typical Baptist doesn't act as though he believes it. Every Sunday for the six weeks she stayed with Esther, she would go to the music-filled service and listen to Esther's elegant sermons and for the first time experience a church-centered life. The congregation was "welcoming and affirming," which meant it had a varied membership. A gender crosser with a face horribly bruised seemed not to give them pause. At the coffee hour after the service Dee would move among the ladies of the church watching her manners and observing theirs, welcomed and affirmed.

Vocal Discord

The damned voice. Dee called the office of the speech surgeon in San Francisco to check on the voice operation she had scheduled there for early December.

"Oh," said the secretary, "That's been canceled."

"Canceled? What do you mean?"

"The doctor decided not to do it."

"Why didn't you tell me? Did he say why?"

"I'm not at liberty to say"

"Oh. So my sister got to him." The coward, thought Dee. "Why didn't you call?"

"I'm not at liberty to say."

"So you canceled a surgery because the patient's sister threatened you and then didn't tell the patient? May I speak to the doctor?"

"I'm sorry, but the doctor's not in. I have to go."

"Good-bye. Have a nice day."

Great, Dee thought, I've found a surgeon who's a coward. All psychiatrists and at least one surgeon. Can't go to Holland to teach with this male voice.

Dee made an appointment with another voice surgeon, one in Philadelphia. After the operation the voice didn't seem to work, but Dee hoped. She would have to go back to Philadelphia to have the operation assessed. She would stop off in Philadelphia again on the way out to Holland.

A few weeks after Dee arrived in Holland to teach at Amsterdam's Erasmus University, a full-page article with a flattering photo of her appeared in the leading Dutch newspaper, NRC Handelsblad, the New York Times of Holland. It focused on her views about economics and love, treating her gender crossing as an interesting sidelight. That's how the Dutch press reported on her. A Dutch-language business magazine did a long article on the revival of Adam Smith, noting that "Deirdre McCloskey is een Chicago girl," a free-market feminist, and quoting her at length on an economics that might make sense to women. A sidebar noted that "Donald is Deirdre" and reported her opinion that "tolerant Nederland is de goede plaats om te transiteren van het mannelijke naar het vronwelijke bestaan": that tolerant Holland is a good place for the transition from a masculine to a feminine way of life. Yes.

The world's largest program on gender crossing is at the hospital of the Free University of Amsterdam. The program is well-known among gender crossers. Dutch people are amazed at where the program is, because the hospital is part of a university founded in the late 19th century by religious conservatives (thus "Free": free to be reactionary), and the university still tends a little that way. It would be like Oral Roberts University developing in its second century a program for the support of gay marriage. The Free University program has helped many thousands of gender crossers on the model of "illness," with diagnosis and treatment. Dee needed to visit it to get hormones, since American prescriptions are not honored outside America.

They wanted a psychiatrist to interview her, though to Dee it seemed pointless. She was not officially in the Free University program, which for political reasons has to extend the transition to two years of agony between the genders, following the Benjamin Standards, the accepted medical protocols for gender-change operations. But the program would prescribe hormones, so she couldn't offend its personnel by standing up for patient rights. Anyway, she liked the Free University program. It's good, she said to herself, a lot better than the hospital programs in the United States dominated by the example of Johns Hopkins. The big university hospitals at home, run by psychiatrists, try to cure gender crossing, and fail. The Free University Hospital, run by an endocrinologist, tries to help, and succeeds. Though on the silly model of illness.

The young woman psychiatrist asked Dee the usual questions, mentally running down a checklist of the gender crossing illness. "When did you first want to be female?" "Were you effeminate as a child?" Dee could see the psychiatrist's eyebrows rise when she got an answer that did not fit the conventional "diagnostic" list thrown together for the Diagnostic and Statistical Manual of Mental Disorders out of junk science. Dee thought, She does not realize how silly the list is.

So what? Does it matter? Can she hurt me? Can she stop my prescription for estrogen or tell my potential surgeon in Australia that I'm not "really" a gender crosser?

Damned right she can.

Time for action.

Dee started lying. They all do it. A psychiatrist proposes to withhold a desired and harmless life from a free, sane adult based on no scientific evidence and no intelligent empathy for the patient and no understanding that the DSM's list of symptoms rewrites the society's myths about gender. We need to examine you. For two years. Wait, wait. We might not ever approve you. Chances are we won't. Dee knew a gender crosser from Galesburg, Illinois, an otherwise normal working-class person, who after two years and $2,500 of "therapy" from a local psychologist was still being delayed: You have more issues to work on. You will always have "more issues to work on," dear. It's therapy for the therapist, Dee thought indignantly.

Of course the gender crossers lie. They can read the DSM just a well as the psychiatrists can. Pat Califia, who wrote Sex Changes: The Politics of Trans-genderism (1997), notes, "None of the gender scientists seem to realize that they, themselves, are responsible for creating a situation where transsexual people must describe a fixed set of symptoms and recite a history that has been edited in clearly prescribed ways in order to get a doctor's approval for what should be their inalienable right."

"Oh, yes," Dee said to the Free University psychiatrist, "I've always had these desires. Oh, yes, Doctor, ever since I can remember. Oh, yes it's just like being a woman in a man's body. Oh, yes, I hate my penis."

Oh, yes, Doctor, whatever your dopey list says. The psychiatrist's eyebrows returned to normal.

Sleep of the Just

There's no case, Deirdre would argue, for letting psychiatrists get at a gender crosser. People say, "Wait a minute. It's an irreversible step. Better check it out." But the psychiatrists don't know how to check it out. They know nothing about it and are not interested in learning. To make them assess gender crossers is like making a brain surgeon do open-heart surgery. It's not in their competence. The excitement these days in psychiatry is about drug treatment of psychoses. It's wonderful that some clinical depression and even schizophrenia can be helped with drugs. But gender crossing is not a psychosis, and there is no medical evidence that it is associated with psychosis in any form. We might as well have psychiatrists check out people with brown hair or people with cheerful dispositions or people who like to visit Venice as often as they can. Just to make sure.

And The Step is not irreversible. When Deirdre made this point people would get indignant. They at least know that much. "What are you talking about? Someone cuts off his penis and you say it's reversible?" Please, listen. Operations--not that the operation is the essence of it all--can be reversed, sometimes. For example you can take out cheek or breast implants. True, with current techniques reconstructing a penis is very expensive. That's the only advantage that males-to-females have over females-to-males in cost and effectiveness: Because it's easier to remove than to make, their male-to-female operation is a fifth the cost of the female-to-male one, a compact, low-end car instead of a Mercedes. But so what? Forget about reconstructing the penis. Many men do not have penises, on account of war or accident or disease. This does not for most purposes make them less men. A man is a man because of his look and behavior, not because of what is secretly in his pants. And beyond the contents of pants, one's behavior and dress can be changed back. The hormones, too, have partly reversible effects. Deirdre would smile and say, "If I stopped female hormones and started testosterone, in five or six months I'd be acting like a jerk again!" The joke worked best if there were lots of other women present.

Anyway, Deirdre continued, we need to ask whether we want to invite psychiatrists to have power over all the comparably important business of life. Having a baby is well and truly irreversible, more so than gender reassignment. A new human being is brought into the world. Well, shouldn't everyone have many years of psychological counseling before having a child? And getting married, though reversible at some cost, like cheek implants, is pretty serious too. So likewise is choosing a career, or buying a house, or taking up golf. If these were treated the way gender crossing is treated we would need for each a certification from psychiatrists achieved through hours and hours of expensive conversation; maybe some drugs; or, if nothing else works, hooking 'em up to the house current. Such certification and treatment would be absurd for the reasons it is absurd for gender crossing. The psychiatrists don't know anything worthwhile about having a child or buying a house or being a gender crosser, as most psychiatrists admit. And even if they did know, in matters not affecting other people's rights we regard ourselves as free individuals. The freedom question is, why not? There's no case for a special enslavement of gender crossers to the psychiatrist except that there are so few crossers that no one troubles to care.

Gender crossing is also called "gender dysphoria," Greek for being uncomfortable with your birth gender. Being uncomfortable with, say, poverty or brown hair or lack of fluency in French is not labeled a disorder. A threat to order, the order that gender is irrevocable. Deirdre was surprised that psychiatrists allowed themselves to be cast as gender police. Nowhere in the literature has a cure been reported for the "disorder," except the cure of letting people be who they wish to be, which has done its work for tens of thousands.

A resolution was passed in August 1997 at the annual meeting of the American Psychological Association in Chicago, a quarter of a century after homosexuality was removed from the Diagnostic and Statistical Manual. Homosexuality "is not a mental disorder and the American Psychological Association opposes all portrayals of lesbian, gay and bisexual people as mentally ill and in need of treatment due to their sexual orientation." A year later the American Psychiatric Association said the same. Most American gender crossers want the same liberation from psychological/psychiatric torture. They want gender identity "disorder" removed from the list of madnesses and another sentence added to the resolution of 1997: "The same is true for gender crossing and cross-gendered identification." The Canadian gender crossers object, because under their national health service they get money for the operation as long as the "disorder" is in the DSM. Consistent Canada. Merci bien.

Dee would sometimes wake up at night and be unable to sleep, though it was rare. The sleep of the just, she said to herself. But she watched for signs of doubt. She worried that at 3 a.m., stripped of the day's masks, doubt would surface. It never did, and she slept better as Deirdre than as Donald.

She could recognize doubt. Donald couldn't sleep for doubt when he was chair of economics at Iowa. He knew from the experience that he should not go into administration. Just or unjust, you have to be able to sleep. The new president of Harvard in the 1990s had a similar problem and took a year's leave. When Donald left a permanent job at the University of Chicago in 1980, he knew doubt at 3 a.m. His wife would become angry if he talked of his Chicago doubt, for it was tedious after a while to listen to the whining. My ex-wife would like Deirdre better if she knew her, she reflected. No angst.

Squash Match

deirdre2@uic.edu (Deirdre McCloskey) — Sat, 01 Aug 1998 00:00:00 EDT

The Wealth and Poverty of Nations: Why Some Are So Rich and Some Are So Poor, by David Landes, New York: W.W. Norton, 650 pages, $30.00

It's nice to know someone willing to attack every politically correct opinion in history. David Landes, a retired Harvard professor of history and of economics, has come to play, and if Edward Said or anyone else wants to play rough, he stands ready to give it back double.

Landes plays squash on the Harvard courts and in his younger days was said to have beaten regularly the members of Harvard's squash team. He writes well, too, and has read broadly, beating in this sense quite a few other Harvard types. There are few historians with as much argumentative verve as Landes, and few living economists with his breadth of learning. He has combined these talents in his big, rambling, readable book about why the West (and now the East) has grown rich.

On page after page, intense intellectual squash matches develop, a hundred or more of them, a season's play: a deceptive serve, a full-strength volley, a passing shot whipped just out of his opponent's reach. Now that he is in his 70s, Landes's game must be slowing down, and one can picture him these days using an old man's guile, and winning with it. You see a lot of that in the book, too. It's tremendous fun, delivered with folksy sophistication.

Landes's theme will outrage the politically correct: "Over the thousand and more of years...that most people look upon as progress, the key factor--the driving force--has been Western civilization and its dissemination." There. We Europeans did it. You late-comers want to argue with success? Wham!

And the way to wealth? As Adam Smith said in 1776, so Landes in 1998: Leave people alone, enforce the laws justly, provide a few public goods, and in 50 years Scotland can be as wealthy as Holland, or Korea as wealthy as France. Do as we Europeans did. Slam! Point and game.

It's the kind of book I want to write someday, a what-happened-in-history book that counters Karl Polanyi's wrong-headed 1944 classic, The Great Transformation. Polanyi's work remains a catechism of historical dogma for the left's faithful; the Marxists (who have all the best songs) have too many of the best historical books.

Landes's book is one of a number of anti-marxoid attempts to usurp the position of Polanyi as the typical New York Times reader's guide to What Happened. It's not an easy task, since economic history can be made b-o-r-i-n-g. Yet there are a number of lively contenders: William McNeill's The Pursuit of Power (1982), Nathan Rosenberg and L.E. Birdzell's How the West Grew Rich (1986), Eric Jones's Growth Recurring (1988), Joel Mokyr's The Lever of Riches (1990), and others more or less distinguished: a crowded field.

It should be crowded. We need to get beyond the understanding of the economic past that was plausible in 1848, before the development of professional history: sweet peasants, wicked mill owners, alienated workers. The Marxist view of economic history has poisoned our political lives for a century and a half. If we're going to have a future, it's urgent that we know what really happened. Landes takes us from the Stone Age to the Asian financial crisis, but his main interest is the past 1,000 years. In the year 1000 no one would have thought Europe a likely place for world leadership. By 1492, says Landes, it was a sure thing.

Landes--whose elusive politics seem to resemble Lester Thurow's or Robert Reich's--spends almost a quarter of his book attacking the notion that the Europeans did it by being empire builders. It was not by stealing from the Third World that the West grew rich, says Landes, noting at length how Portugal and then Spain threw away their advantage in a frenzy of Catholic orthodoxy.

Success came through ingenuity, which arose, he argues, from the special freedoms of Protestant Europe. Like the Northwestern School of Joel Mokyr and Eric Jones, Landes admires the Middle Ages. Far from the period of stagnation the men of the Renaissance claimed it to be, the Middle Ages, according to Landes, was the time when Europe surged ahead of the rest of the world, applying the ox plow, eye-glasses, the mechanical clock, the water mill, the printing press, and gunpowder with an enthusiasm bordering on insanity. These were all possibilities elsewhere--China or Japan or India or the Middle East--but the other places, he says, with their despotisms trying to keep society fixed the better to control and tax it, entirely muffed it. (Well, almost entirely. Landes admires Japan, which he reckons was on the way to its own industrial revolution.)

The book is comparative, as any story of Why We Got Rich has to be. As Adam Smith realized, you can't know why Britain succeeded if you have no account of why Madras or Satsuma failed. Landes's answer, like Smith's, is an optimistic--and Europe-admiring--story of Greek city- states and Germanic law leading to free institutions, contrasted with oriental despotism and God-kings. As history, it has a musty odor, because Europeans have been making the claim for two centuries. In China, said Adam Smith, "the poor or the owners of small capitals...are liable, under the pretense of justice, to be pillaged and plundered by the inferior mandarines." Concludes Landes: "All this made Europe very different from civilizations around." The rich are different from you and me: They're smarter.

And freer. The differences among European countries are to be explained the same way as the differences between Europe and China. Landes scorns "the thought control that proved a curse in Islam" and attributes to it the Muslim lack of invention--including forgetting the wheel. So too within Europe. After the age of Henry the Navigator, little Portugal stopped asking questions and stopped allowing free answers: "[T]hose immeasurable qualities of curiosity and dissent that are the leaven of thought" were simply dropped. An English diplomat in 1670 declared of Portugal that "the people are so little curious that no man knows more than what is merely necessary for him." Literacy especially, marketed from the relatively if not absolutely free presses of Northern Protestantism, makes for a lively economy. By 1900, when illiteracy in Britain was down to 3 percent (though one wonders at such a figure), in Portugal it was 78 percent.

The "Whig" story (the term comes from British history) of liberty leading to wealth is as attractive now--in view of Indonesia's troubles--as it was two centuries ago to Tom Paine. Landes argues, as did Mary Wollstonecraft, that (northern) European freedom for women, at least relative to purdah and footbinding, made for economic growth. I was stunned to find Landes, that macho squash player, expressing--in italics--my own belief that "violence is the quintessential testosteronic expression of male entitlement." Good for him. As Aristotle said, those numerous societies that enslave their women are throwing away half of their creativity.

Landes's book is wonderful bedside reading, and if read by as many people as it deserves to be it will make us all rich. Him, too. It's lively, intelligent, a wonderful piece of economic popularization, of which we need more.

But, but, but. It is popularization, and--little wonder--on many subjects it looks weak from a specialist's point of view. When Landes speaks on the subjects of his other three books--19th-century Egyptian finance, technical change in the past 200 years, clocks in history--you believe him. His forte is the clinching anecdote. He gets less believable when he ventures into the two areas in which he doesn't claim expertise--numbers and theory.

I've known Landes and his work for over 30 years--my dissertation at Harvard was an attack on his views of British economic "failure" in the late 19th century (views he repeats without revision in the present book). What's wrong with Landes's method now is what has always been wrong with it: Like the aristocrat buying up art by the roomful, he doesn't ask "how much?" Historians can't raise the question unless they are trained in some quantitative discipline, such as demography or economics. Although Landes has taught quantitative methods, he has never troubled to learn them. So he gives lists of "factors" in the classic historiographic style, and you never know how to weigh them.

A minor instance among hundreds is his repetition of the usual calumnies against "Sicily's persistent backwardness." Backward by what standard? Where on the scale of economic success does Sicily now fall? Landes waxes eloquent: "[I]n spite of huge subsidies...the landscape is dotted with idle factories, unfinished housing developments, roads that go nowhere." Unlike what? Massachusetts? "This slough of failure and despond testifies to deep failings: ignorance, bias, want of community, organized criminality." One wonders if Landes has thought economically about what he saw in Sicily. Sicily by the standard of most of the world is a fantastic economic success. If Sicily were a country it would have an income comfortably within the top decile of the world's population. Failure?

Head-shaking disbelief is not a counter-argument, but Landes is always doing it. About A.G. Frank's notion that Europe did not break away materially until around 1800 his only reply--in a footnote--is, "Bad history." No, bad shot selection, quantitatively speaking. Recent findings in China and India have persuaded most economic historians who have troubled to examine them that in 1800 some parts of those countries were as wealthy as Western Europe. "European exceptionalism" may have its roots in the Middle Ages, but in the 18th century the plant was not much different from Chinese or Japanese or Indian varieties. Which is just what the Blessed Smith said in 1776.

As to theory, Landes's book is full of sage evocations of "theoretical" reasoning, but that sort of thinking is not his strong point. A small example among scores: He attacks throughout the book the economist's notion of comparative advantage. But of course he does not understand it. His obduracy is bound to annoy an economist. For God's sake, you can get comparative advantage right once and for all, and never again misapply it (as Landes does in about half the instances), by reading the chapter on it in any economics text. I have to agree with Paul Krugman, who is quoted by Landes as saying that nationalist economics is "based on a failure to understand even the simplest economic facts and concepts." Comments Landes: "Peremptory and dismissive." But how much patience are we economists supposed to have? When Landes says that "[c]omparative advantage is not fixed, and it can move for and against," he is combining a truism with nonsense.

Even so, we agree on an awful lot. He says, "[C]ulture does not stand alone. Economic analysis cherishes the illusion that one good reason should be enough, but the determinants of complex processes are invariably plural and interrelated." The first big paper I wrote in college about economics was an attack on the social psychologist David McClelland's notion of "need for achievement." I was a sophomore, a very wise fool, and did not agree with McClelland. Landes does agree. Of the Asian Tigers, he writes, "this achievement reflects in my opinion the culture of these societies."

I wish I knew as much now as I did as a sophomore, but I now think my younger self was wrong. You can't just drop the Sacred and Sociology (the S variables) in favor of an exclusive focus on the Profane and Profit and Price (P variables). That's what economics has tried to do since Jeremy Bentham--with some successes and a lot of silliness. To do the science right you have to control for all the variables, not just pray that the S variables won't interfere. That said, Landes and I would now get back to quarreling about numbers. He would say that S variables are not measurable. Fiddlesticks. (A drop shot: Handle it if you can.)

The trouble is that culture is startling, ironically unpredictable. "Culture makes all the difference," Landes says frequently, adding, "Here Max Weber was right on."

Fine. Let's perform a mental experiment to test how culture can "make all the difference." No fair using hindsight. Suppose in a very backward country named R---- the established church decides to clean up the liturgy by eliminating some old corruptions. A group of believers, themselves stupidly conservative in every way, rejects the new liturgy. Which of the following occurs?

1) The establishment is hostile to these Old Believers.

2) The Old Believers retreat into self-imposed isolation.

3) The Old Believers sink into poverty and obscurity, on account of 1) and 2).

4) The Old Believers go on to become the dominant force in the country's economy for the next two centuries, on account of 1) and 2).

This bizarre scenario played out in 17th-century Russia, and the correct answer to our quiz is 1), 2), and 4), as Alexander Gerschenkron noted in Russia in the European Mirror (1970). The example does not refute Landes; but it shows as difficult what he thinks is easy: to tell who will win. The Old Believers in Russia were the only successfully bourgeois portion of Russian society in the 17th through 19th centuries, except for an occasional Jew and lot of what Landes calls "metics" (noncitizen workers).

There was nothing easy or inevitable about this: Some minorities do well when the establishment tries to crush them and they shrink back into their own ghettoes--witness the Old Believers, but also the overseas Chinese. But some badly treated minorities just do badly. It can go either way. One is reminded of Arnold Toynbee and his famous--and empty--theory of "challenge and response." Too much challenge, as in Greenland, or too little, as in 18th-century China, and you get stagnation. It's difficult--even impossible--to say which will apply.

Landes takes a too simple view of the inevitability of what happened. It's the historian's vice: What happened happened, so it must have been. His main intellectual tool is hindsight. He claims, for example, that "one could have foreseen the postwar economic success of Japan and Germany by taking account of culture. The same with South Korea vs. Turkey, Indonesia vs. Nigeria."

I don't think so. If things that always eventually happen (from hindsight) are foreseeable and therefore useful for policy or journalism or politics, why wasn't Germany's success foreseen? Most economists and historians in 1945 thought Germany would take 50 years to recover. It took 15. The reason Germany's recovery after the war was called a "miracle" is because people very willing to take culture as "predictive" made wrong predictions. The error is well known in social psychology: the tendency to attribute to character what is in fact a result of conditions. Landes and I have been quarreling about character vs. conditions since 1966, historian vs. economist, S variables vs. P variables. You'd think we'd learn that it's both.

But these are learned quibbles. I can't fault Landes for not writing the book on What Happened in History that I would like to write. How can you not like a man so willing to play the game, and so willing to take on the politically correct?

To Landes, the Palestinian activist and Columbia professor of literature Edward Said is the Great Satan of Political Correctness. Of Said's charge of Orientalism, the West's misperception of the East, Landes writes, "Insofar as the critique holds that only insiders can know the truth about their societies, it is wrong. Insofar as one uses this claim to discredit the work of intellectual adversaries, it is polemical and unscientific." Landes concludes that "[t]he effort...has become an assault on knowledge." Zowie.

Landes never lets up. No region or body of scholarship is exempted. Wittfogel's "hydraulic thesis has been roundly criticized by a generation of Western sinologists zealous in their political correctness (Maoism and its later avatars are good). ...The facts gainsay them." The Aztec diet "embarrasses politically correct ethnologists, who see in such descriptions of cannibalism a justification for foreign contempt and oppression." He explains British success in India not by their violence: "[N]othing other than a reputation for unconditional honesty could have enabled Britain to maintain its empire in India at so little expense." So much for blaming an imperialism that ended 50 years ago for India's present problems.

On the still-poor Balkans: In the "absence of metics [those outsider workers], they war on one another and blame their misery on exploitation by richer economies in Western Europe. It feels better that way." Tsarist Russia: "Communist spokesmen and their foreign adulators rewrote history so as to blacken the reputation of the tsarist regime, while throwing favorable testimonies down the memory hole." Native Americans: "Many Americans are sorry now, while Europeans invite Indian chiefs to Paris and Zurich to recount the litany of white wrong-doing."

On American migration: "Some portray the great flood as a kind of huge kidnapping operation. (Europeans, especially, have trouble dealing with the repudiation implicit in this `massive exodus.') Nonsense." Latin America: "For many Latin American historians and ideologues, it has been vital to emphasize the wickedness of the gringos who came to dominate the Americas." Landes writes, "The failure of Latin American development...has been attributed by local scholars and outsider sympathizers to the misdeeds of stronger, richer nations. Of these ideas, he concludes in italics, "Even if they were true, it would be better to stow them." About the P.C. doubt that there is anything at all to Western progress: "This line of anti-Eurocentric thought is simply anti-intellectual; also contrary to fact."

You gotta love him, squash playing, Eurocentrism, quantophobia, anti-economism, and all. Read the book.