A Revolution in Wealth

How the Enlightenment Created Capitalism

Benjamin Franklin’s life embodied all of the essentials of the Enlightenment. Franklin, his biographer Walter Isaacson notes, “was the first great American exemplar . . . of the Enlightenment and its Age of Reason.” (Isaacson, Benjamin Franklin: An American Life, 93) Born a Puritan, he became a Deist. Unschooled, he became a scientific pioneer. Born a subject, he became a revolutionary.

But long before Franklin became a scientist and or statesman, he was an entrepreneur. Setting out on his own at seventeen with little more than a few years of training as a printer, he soon started his own print shop and grew it into a media empire. The foundation of his success was a savage work ethic. A Philadelphia merchant noted that, “The industry of that Franklin is superior to anything I ever saw of the kind; I see him still at work when I go home from club, and he is at work again before his neighbors are out of bed.” (Isaacson, Benjamin Franklin: An American Life, 54)

Franklin would use his platform to champion commercial virtues such as industry, frugality, and honesty. His ubiquitous Poor Richard’s Almanac was a “vehicle for conveying instruction among the common folk,” and he filled its pages with aphorisms that have been in circulation ever since: “Diligence is the mother of good luck.” “A Penny saved is Twopence clear.” “Haste makes waste.” “No gains without pains.” “God helps them that help themselves.” (Isaacson, Benjamin Franklin: An American Life, 96-99)

Franklin retired at 42 seeking “leisure to read, study, make experiments, and converse at large with such ingenious and worthy men as are pleased to honor me with their friendship.” (Isaacson, Benjamin Franklin: An American Life, 127) But if he seemed headed for the life of an unproductive man of leisure, his commitment to creativity did not falter. A relentless tinkerer, he was always inventing something—from a new catheter to a new stove to a new musical instrument. And as quickly as he proved that lightning was an electrical spark, he put that knowledge to practical use.

Before Franklin, lightning had been viewed as a supernatural force. Churches rang their bells in order to “repel the demon and avert storm and lightning,” as Thomas Aquinas had put it. The results were underwhelming: churches were one of the more popular victims of lightning strikes and no shortage of bell ringers were killed while attending to their duties. As Franklin wryly observed, “The lightning seems to strike steeples of choice and at the very time the bells are ringing; yet still they continue to bless the new bells and jangle the old ones whenever it thunders. One would think it was now time to try some other trick.” (Isaacson, Benjamin Franklin: An American Life, 137-138)

Franklin offered the world a new trick, introducing the lightning rod in 1753. Some religious figures objected to the invention for daring to interfere with God’s will, but Franklin retorted, “Surely the thunder of Heaven is no more supernatural than the rain, hail or sunshine of Heaven, against the inconvenience of which we guard by roofs and shades without scruple.” (Isaacson, Benjamin Franklin: An American Life, 143) Soon, lightning rods adorned major buildings throughout the colonies.

A New View of Work

In transforming knowledge through the Scientific Revolution and government through the American Revolution, the Enlightenment laid the groundwork for its most conspicuous achievement: a transformation in wealth. By empowering men to understand the world and liberating them to pursue happiness in the world, the Enlightenment unleashed unprecedented material progress. It gave birth to the Industrial Revolution and what has been called the Great Enrichment—the prosperous, progressive, technologically advanced societies that define the modern world.

The Renaissance had started to break the chains of feudalism and articulated a new view of work that imbued it with dignity. But at the dawn of the Enlightenment, there still remained a widespread view that society was defined by hierarchy—each man was born into his station and was to remain in his station. (Simonton and Montenach, A Cultural History of Work in the Age of Enlightenment, 132) At the top of this social hierarchy were the rulers, the clerics, and an aristocracy whose ideal was one, not of work, but of leisure. Buffon, despite being the greatest naturalist of his age, scoffed at being labeled a naturalist: Naturalists, like dentists, were “people who live by their work; a thing ill suited to a gentleman.” (Wood, The Radicalism of the American Revolution, 36-37)

Aristocrats as much as Puritan moralists did preach the virtue of industriousness, but their aim was not to encourage men to rise through their productive achievements. Poverty was a status to be accepted, not escaped. Only poverty, indeed, could motivate the lower classes to work. No, the virtue of industry was that it alleviated idleness, kept order in society, and compelled men to obey God’s commands rather than pursue the temptations of this world. (Wood, The Radicalism of the American Revolution, 33-34; Rodgers, The Work Ethic in Industrial America, 4) One of the greatest temptations was luxury, the desire of the common folk to enjoy the pleasures of consumption. “The evil of luxury,” notes historian Gordon Wood, “was the evil of ordinary people violating the social hierarchy and living beyond their allotted social rank.” (Wood, The Radicalism of the American Revolution, 35)

All of this would change with the Enlightenment. The ideal of political equality threw the hierarchical view of society into question and with it the notion that some men exist to labor for others. In a society of equality, men should rise on the basis, not of birth, but of ability. (Simonton and Montenach, A Cultural History of Work in the Age of Enlightenment, 18) And that meant celebrating the exercise of ability through productive work. While Buffon balked at being labeled a naturalist, Lavoisier would have Jacques-Louis David paint him surrounded by his scientific instruments, and Diderot’s most famous portrait shows him at work writing. (Simonton and Montenach, A Cultural History of Work in the Age of Enlightenment, 55) Work was noble for the nobility and the poor alike. Every individual should apply his efforts to productive quests, rise as high as his ambition and ability would take him, and enjoy the fruits of his labor. (Wood, The Radicalism of the American Revolution, 136-139)

Following Francis Bacon, Enlightenment thinkers believed that man, armed with knowledge, could transform nature to spur human progress. He could clear forests, build roads, drain marshes, dig canals, and erect dykes. (Commager, The Empire of Reason, 8) To achieve such mastery required the pursuit of what Enlightenment thinkers called “useful knowledge.” While many scientists were motivated by curiosity, the endeavor of science was no longer seen as aimed at pure contemplation, but practical application. “[W]e see the human understanding to its greatest advantage,” said Joseph Priestley, “increasing its own powers by acquiring to itself the powers of nature . . . whereby the security and happiness of mankind are daily improved.” (Mokyr, The Enlightened Economy, 41) Scientists collaborated with producers, producers studied science, and scientists became producers.

Recognizing the value of production to human flourishing, Enlightenment thinkers strove to elevate the social standing of the productive arts. No one contributed more in this regard than Diderot. Diderot despised the fact that the mechanical arts, as he called them, were held in lower esteem than the liberal arts. “If we put the real benefits derived from the highest science and most widely honoured arts on the one side of the scales, and on the other side those derived from the mechanical arts, we shall find that the relative esteem in which the two sides are held will in no way correspond with their true usefulness, and that far more praise is given to those who spend their time in making us think that we are happy than to those who exert themselves in seeing that we are so in fact.” (Applebaum, The Concept of Work, 378-379)

To remedy this injustice, Diderot devoted much of his Encyclopédie to the mechanical arts—above all, through the nearly three thousand images that filled its volumes, highlighting everything from boot making to ship construction to the operations of a pin factory (this last would inspire Adam Smith’s famous example of the power of the division of labor to increase productivity). (Curran, Diderot and the Art of Thinking Freely, 125-126; Robertson, The Enlightenment: The Pursuit of Happiness, 417) To craft these images, Diderot explained, “We took pains to go into their workshops, to ask them questions, to take down what they said and develop their thoughts, to use the terms specific to their professions, to lay out the tables and diagrams . . . and to clarify, through long and frequent interviews, what others had imperfectly, obscurely, and sometimes unreliably explained.” (Curran, Diderot and the Art of Thinking Freely, 126) The Encyclopédie did not simply describe work, it glorified it.

In the Enlightenment view, work’s central role in promoting human flourishing meant that it was at the center of a moral life. The virtue of work, consequently, was drummed into children at school, at church, at home. William Hogwarth, for example, published a popular series of engravings that demonstrated how two young men who start out as apprentices in a weaving shop were led to radically different fates owing to their work ethic. The boy of industry rises to the top of society—the indolent boy ends up as a criminal who is executed for his misdeeds. (Simonton and Montenach, A Cultural History of Work in the Age of Enlightenment, 44)

This glorification of work during the eighteenth century would, in the nineteenth century, grow into a cultural consensus that to be virtuous was to be productive. “Labor, gentlemen,” one Northern politician declared in 1856, “we of the free States acknowledge to be the source of all our wealth, of all our progress, of all our dignity and value.” (Rodgers, The Work Ethic in Industrial America, 6) Work was so central to people’s concept of the good life that many Protestants worried that heaven would be filled with little more than mind-numbing singing. “Surely there must be work to do in heaven, Since work is the best thing on earth we know,” poet Lucy Larcom fretted. (Rodgers, The Work Ethic in Industrial America, 7)

Though the work ethic originated in Europe, it was America which came to epitomize the new moral ideal. Franklin warned potential immigrants that America had nothing to offer a man “who has no other quality to recommend him but his birth.” Americans don’t want to know who you are, but what you can do. It is better to be one of the “useful members of society” such as “ploughmen, smiths, carpenters, turners, weavers, tanners, or even shoemakers” rather than a “gentlemen, doing nothing of value, but living idly on the labour of others.” America, Franklin concluded, “is the land of labor.” (Franklin, “Information to Those Who Would Remove to America”)

It was also, more specifically, the land of commerce. People left their farms and took up business in a quest to make money. In 1800, Columbia professor Samuel Mitchill complained of his fellow Americans: “Their inclination and habits are adapted to trade and traffic. From one end of the continent to the other, the universal roar is Commerce! Commerce! at all events, Commerce!” (Wood, The Radicalism of the American Revolution, 325-326) Francis Grund, an immigrant from Vienna, expressed a similar sentiment:

There is, probably, no people on earth with whom business constitutes pleasure, and industry amusement, in an equal degree with the inhabitants of the United States of America. Active occupation is not only the principal source of their happiness, and the foundation of their national greatness, but they are absolutely wretched without it, and . . . know but the horrors of idleness. Business is the very soul of an American: he pursues it, not as a means of procuring for himself and his family the necessary comforts of life, but as the fountain of all human felicity . . . it is as if all America were but one gigantic workshop, over the entrance of which there is the blazing inscription, “No admission here, except on business.” (Rodgers, The Work Ethic in Industrial America, 5)

“I cannot express my thought better,” concluded Tocqueville, “than by saying that the Americans put a kind of heroism in their way of doing commerce.” (Tocqueville, Democracy in America) The American hero was no longer the idle gentleman but the self-made man. Inspired by his reading of Benjamin Franklin’s autobiography, former slave and abolitionist leader Frederick Douglass praised the self-made man as the man who rose from nothing to achieve prosperity, social standing, and a worthy character. He is the man who does not blame misfortune for his challenges but makes his own luck through the only activity that can create to success: “WORK! WORK!! WORK!!! WORK!!!!” The self-made men simply are “men of work.” This was an ideal proper for a land of equality since a land of work was one where success was “open to all.” (Douglass, “Self-Made Men”)

A New View of Economics

The culture of work and commerce was both a cause and an effect of the political transformation that took place during the Enlightenment. The ideal of natural rights was based, in part, on a vision of men as equal and free producers—and by safeguarding production, nations that protected men’s rights protected and encouraged producers.

But what did it mean to safeguard production? The dominant answer entering the Enlightenment was to assign special privileges to favored producers. This was the theory of mercantilism.

Mercantilism was an economic doctrine based on a zero-sum view of the world. One nation could grow powerful and rich only at the expense of its neighbors, and so economic policy should seek to enhance a nation’s position through restrictions on trade, limitations on high-skill emigration, and other regulations of commercial activity. “By such maxims as these,” Adam Smith would write in his merciless critique of mercantilism, “nations have been taught that their interest consisted in beggaring all their neighbours. Each nation has been made to look with an invidious eye upon the prosperity of all nations with which it trades and to consider their gain as its own loss.” The result, he went on, is that “[c]ommerce, which ought naturally to be, among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity.” (Smith, The Wealth of Nations, Book IV, Chapter III) Or, as the British mercantilist Josiah Child put it approvingly, “All trade is a kind of warfare.” (Gay, The Enlightenment: The Science of Freedom, 345-347)

Mercantilism amounted to warfare waged in the name of politically connected merchants. This was mistakenly seen by some as placing the interests of producers above consumers. In reality, it amounted to a war on the genuinely productive, who sought to prosper through merit rather than political spoils.

Uprooting mercantilism and bringing economic policy into alignment with natural rights began with the work of political economists. Political economy was a new subject, forged by the Enlightenment—above all, by the Physiocrats and Adam Smith. The aim of the new science was to understand economic systems and so guide policymakers in promoting the wealth of nations.

All of these thinkers rejected the zero-sum view underlying mercantilism. Following Locke, they held that wealth was the product of human labor: given the right policies, human beings could produce widespread abundance. Trade could benefit all participants: it was not a war, but could be an act of mutually beneficial cooperation.

But what were the right policies? To answer that question required understanding, as Smith would put it in the title of his magnum opus, “the Nature and Causes of the Wealth of Nations.” These were new questions. Early and medieval Christians had been interested in promoting man’s eternal salvation, not his standard of living. It was only during the Enlightenment, with its commitment to earthly happiness, that thinkers sought to formulate a “science of man” that would identify the policies that nourished economic flourishing.

It was the Physiocrats who made the first great attempt at an answer to the economic question. François Quesnay and his followers came to see the economy as a lawful system—a “natural order”—in which each individual pursuing his own interests was led by economic forces such as prices and profits to work for the benefit of others. There is thus a harmony of interests among individuals—so long as they are free to produce and trade. As result, the Physiocrats championed a policy which they termed “laissez faire”—hands off. The government should not interfere with with prices or protect favored producers.

Adam Smith, while rejecting many of the Physiocrats’ specific doctrines—particularly their view that agriculture was the only productive industry—would build on their foundation with the publication of The Wealth of Nations in 1776.

Breathtaking in scope, eloquently written, powerfully argued, The Wealth of Nations takes as its aim, not the power and prestige of the state, but the prosperity and happiness of individuals—a "universal opulence which extends itself to the lowest ranks of the people.” (Smith, The Wealth Of Nations, Book I, Chapter I) Such opulence is made possible by specialization and trade.

When producers specialize—when they divide their labor so that each can focus on a narrow range of tasks that they can perform with knowledge and efficiency—and are free to exchange the results, they create dramatically more wealth than any individual could alone. Image a single worker trying to make pins if he was responsible for mining the metal, transporting it to his workshop, then straightening, cutting it, sharpening it, attaching the pin head, then wrapping it, advertising it, and selling it. It would take a lifetime to make and sell a handful. And what a brief lifetime it would be, since he would starve in the meantime. But in a division of labor economy, where different individuals specialize in each of these steps, each becomes dramatically more productive. Pin factory workers, Smith observes, are able in this manner to turn out thousands of pins a day.

This is how a nation creates universal opulence. It promotes the division of labor by tearing down political barriers to trade and political restrictions on competition. Should governments shed themselves of the mercantilist policies limiting exchange and unleash the “simple system of natural liberty” that leaves the individual “free to pursue his own interest his own way,” then “[l]ittle else is requisite to carry a state to the highest degree of opulence.” Government can foster wealth, not by supporting or restraining productive enterprise, but by ensuring “peace, easy taxes, and a tolerable administration of justice.” (Smith, The Wealth of Nations, Book IV, Chapter IX)

Smith’s doctrine of natural liberty and a free market became the foundation for an utterly new social system—what would come to be called in the nineteenth century “capitalism.” It was a social system based on the recognition of individual rights, including private property rights, where human interaction took place on a voluntary basis. The government’s function was not to control, manage, or restrain men’s economic choices, but to provide the freedom necessary for individuals to conduct their own economic affairs, seek their own fortunes, and pursue their own happiness. The government would define and protect property rights, secure freedom of contract, ward off criminal and foreign threats, but otherwise be hands off.

Neither Smith nor the Physiocrats before him supported capitalism in this fully consistent form. Though he thought that free trade promoted the interests of society, he worried that powerful merchants and manufacturers saw their interests in limiting competition, restraining trade, and ganging up to suppress the wages of workers. “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,” he warned. And he arguably saw a limited role for government protecting workers through regulating wages and working conditions, and in undertaking minor public works projects to support transportation and education, which he thought private enterprise would be unable to supply. (For two perspectives on Smith’s support for capitalism, see here and here)

But on the whole, Smith advocated for a radical curtailment in government interference with free economic activity—and his ideas found an eager audience. The Wealth of Nations became a bestseller, and, notes economic historian Joel Mokyr, its counsels were particular influential “on many outstanding British statesmen in the post-1780 years.” (Mokyr, The Enlightened Economy, 69)

Britain, already one of if not the freest economies in the world, became more so. Over the course of the first half of the nineteenth century, it scrapped restrictive laws such as the Statute of Artificers, the Navigation Acts, the Bubble Act, and the Corn Laws. As technological progress threatened old industries, the British government refused to protect them from fresh competition. Although plenty of government intervention remained in the economy, much had abated. Judged by the ideal, Britain fell short of full capitalism; judged by anything that had come before, British citizens enjoyed unprecedented economic freedom. “By the time of Queen Victoria’s ascent to the throne,” writes Mokyr, “it had become as much of a laissez-faire economy as can be expected on this earth.” (Mokyr, The Enlightened Economy, 8, 67-73)

If Britain was focused on stripping away old protectionist laws, on the other side of the Atlantic, the United States was busy building a new government on free market principles. All of the leading founders championed economic freedom. The “sum of good government,” said Jefferson, was “a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.” (Jefferson, First Inaugural Address) Madison concurred, announcing that he was a “friend to a very free system of commerce, and hold it as a truth, that commercial shackles are generally unjust, oppressive, and impolitic.” By contrast, “if industry and labour are left to take their own course, they will generally be directed to those objects which are the most productive, and this in a more certain and direct manner than the wisdom of the most enlightened legislature could point out.” (Madison, Import Duties)

In specific terms, the Founders set out to create a government that defined and secured property rights, and generally left people otherwise free to pursue their economic goals.

Although Jefferson had not included the right to property in the Declaration, the Revolutionaries universally embraced the right to property as a vital component of man’s natural rights. Human beings live and act in the material world and have material needs. To rob men of the right to property is to rob them of life, liberty, and the pursuit of happiness. “[W]e cannot be happy, without being free,” wrote John Dickinson, and “we cannot be free, without being secure in our property.” (Dickinson, Letters from a Farmer in Pennsylvania)

Both the national and state constitutions were deeply concerned with establishing governments that defined property rights and that prevented infringement of those rights by others and by the government. There were exceptions to the right to property. The most visible exception was eminent domain, the power of government to seize private property for public uses. Even more insidious in the long-run was a carve out for what became known as the government’s “police powers,” which allowed for limiting property rights in the name of “the peace, good order, morals, and health of the community.” (West, The Political Theory of the American Founding, 329-332) Nevertheless, these exceptions were treated as exceptions, and nothing like a modern regulatory state would emerge in America until the twentieth century. The general trend was to treat private property as sacrosanct.

With private property rights secure, Americans were to be able to produce and trade with one another freely. They could buy and sell what they chose at whatever price could be agreed upon. Free trade was more than a government policy: it was, as Jefferson had said, a “natural right.” (Jefferson, “A Summary View of the Rights of British America”) “[T]he less . . . exchange is cramped by government,” said Madison, “the greater are the proportions of benefit to each” party in an economic transaction. In America, Franklin concluded, “there [are] no restraints preventing strangers from exercising any art they understand, nor any permission necessary.” (Franklin, “Information to Those Who Would Remove to America”)

A major goal of the Constitution was to liberate trade by tearing down barriers between the states. This was the aim of the Commerce Clause. The Commerce Clause gave the new national government the power “to regulate commerce with foreign nations, among states, and with the Indian tribes.” Later this would be treated as a license for the government to place limitless controls of economic activity. But as Madison suggests in Federalist 42, the purpose of this clause was to stop states from interfering in interstate commerce. “An unrestrained intercourse between the States,” observes Hamilton in Federalist 11, “themselves will advance the trade of each by an interchange of their respective productions.” To regulate, for the Founders, meant to liberate—not to restrict free trade. As Associate Justice William Johnson would put it in an 1824 Supreme Court case upholding this understanding of the Commerce Clause, Gibbons v. Ogden, “If there was any one object riding over every other in the adoption of the Constitution, it was to keep the commercial intercourse among the States free from all invidious and partial restraints.” (Gibbons v. Ogden)

But as with the right to property, so with free exchange: here, too, the Founders recognized limits in the name of public health, safety, or morals. Laws banning prostitution or establishing occupational safety standards could be and were justified within the more general commitment to free markets. (West, The Political Theory of the American Founding, 348)

The net result, however, was that the Founders established a government that—with the glaring exception of slavery—generally left individuals free to produce, trade, make money, and seek happiness without interference. In time, Gordon Wood observes, “the delivery of the mail was the only way most citizens would know that such a government even existed.” (Wood, The Radicalism of the American Revolution, 328)

A World of Progress

Culturally, then, the Enlightenment gave birth to a new work ethic that lionized productive achievement and commercial activity. Politically, it established governments that generally secured the freedom to produce and trade. What were the economic results? A new era of progress that utterly transformed human life.

To appreciate the nature of this transformation, we must remember where the West was at the dawn of the Enlightenment.

Compared to its neighbors, pre-industrial Britain was shockingly prosperous. Whereas upwards of eighty percent of the population in other countries were devoted to food production, in England farmers made up a mere thirty percent of workers. (Mokyr, The Enlightened Economy, 14) And yet, though food was always a source of anxiety, Britain had essentially defeated famine by 1700. (Laslett, The World We Have Lost, 132-160) There was by that time a thriving Middle Class that drank tea, ate flavorful food on ceramic plates, and dressed in clothes fashioned from imported fabrics. The homes of the “the middling sort” were filled with luxuries unimaginable to their grandparents: clocks, books, rugs, toys, paintings. Increasingly, these goods could be found even in working class homes. The net result was that Adam Smith could write, in 1776, “the annual produce of the land and labour of England . . . is certainly much greater than it was a little more than a century ago at the restoration of Charles II (1660) . . . and [it] was certainly much greater at the restoration than we can suppose it to have been a hundred years before.” (Mokyr, The Enlightened Economy, 13-16)

The total misery of the Dark Ages was a distant memory. And yet by today’s standards, Europe remained thoroughly primitive. Life expectancy at birth was a mere 37 years, driven mostly by infant mortality, which amounted to an appalling (by our standards) 190 per thousand (today it is 4 per thousand). (Mokyr, The Enlightened Economy, 16) People lived without anesthesia and antibiotics, without running water and electricity, without land transportation faster than a horse. The summers were blistering, the winters were frightfully cold.

What is most foreign to us, however, is that no one expected any of this to change. Before the Enlightenment, people looked forward to living as their fathers and grandfathers and great-grandfathers had before them. The idea that life would be better at the end of their lives than at the dawn was unfathomable. There had been economic progress, but the pace had been glacial—most scholars estimate pre-1750 growth at 0.2 to 0.3 percent per year. “At that rate income per capita doubled every two and a half to three centuries,” notes Mokyr. (Mokyr, The Enlightened Economy, 6) Economic progress was not something an individual could see unfold before his eyes. During the Enlightenment, that changed.

We can think of this change as unfolding in two stages. The first period, the Industrial Enlightenment, running from about 1750-1850, had a relatively minor impact on most people’s day-to-day lives. What changed was not so much people’s standard of living as the way that they worked. But it was during this period that mankind learned how to innovate. Entrepreneurs and inventors pioneered new forms of energy, new technologies, and new productive methods that laid the groundwork for a total transformation, beginning in the second half of the nineteenth century, of how we live.

The most conspicuous achievement was the steam engine, which allowed us to turn ancient dead plants into motive power.

Here was the problem. Britain suffered from a dearth of wood and depended on coal for warmth. But the coal mines were subject to flooding, and there was no easy way to remove the water. The Royal Society thought deeply about the problem and realized in principle they could harness recent insights about vacuums and air pressure to create a pump powered by steam that would clear the mines. But they saw no practical way to implement this insight.

The problem was solved in 1712 by an unknown inventor, Thomas Newcomen. His steam engine looked similar to a modern oil derrick, only instead of pumping oil it was designed to pump water. Steam was introduced into a cylinder, and then cooled by injecting cold water, causing the steam to condense and create a vacuum. The atmospheric pressure outside the cylinder then pushed a piston downward. This motion was transferred to a pump through a beam, effectively lifting water out of coal mines. “The steam engine was an Enlightenment machine par excellence,” writes Mokyr. “It demonstrated the power that could be harnessed thanks to the control that people could exercise over nature, and it stimulated the popular imagination by its force, its noise, and the sheer novelty it represented.” (Mokyr, The Industrial Enlightenment, 124)

The problem was that Newcomen’s invention had a voracious appetite for fuel. At the mouth of a coal mine, that fuel was cheap. But decades went by before steam power could be put to use anywhere else. The breakthrough insight came from James Watt in 1765. Working with a Newcomen engine at Glasgow University, he realized that the reason the engine needed so much fuel was because the cylinder was constantly being heated and cooled—it was inefficient for the same reason that it takes more gas to drive in stop and go traffic. Then, as Watt’s friend would later put it, a “capital improvement flashed upon his mind at once, and filled him with rapture.” (Freese, Coal, 61-62) He could create a separate condenser to cool the steam. Instead of cooling the entire cylinder after each stroke, Watt’s design condensed the steam in a separate chamber, allowing the cylinder to remain hot.

To turn his idea into a reality, Watt struck up a partnership with business visionary Matthew Boulton, a friend of Enlightenment luminaries like Joseph Priestley, Erasmus Darwin, and Benjamin Franklin. Their improved steam engine was four times more efficient than Newcomen’s, making it economical far away from the mines. Just as important, Watt pioneered new mechanisms—the “sun and planet” cog system and later the fly wheel—that transformed the vertical motion of the pumping engine into rotary motion that could turn a wheel. This allowed the steam engine to power spinning frames, looms, and, eventually, steamboats and locomotives. (Weightman, The Industrial Revolutionaries, 57) In 1785, Boulton gave a demonstration of their new engine to King George III. When the king asked what business Boulton was engaged in, he answered, “‘I am engaged, your Majesty, in the production of a commodity which is the desire of kings. . . . Power.” (Freese, Coal, 64)

No longer were human beings bound by the limits of human and animal power, the fickleness of wind power, or the paucity of water power. With efficient coal-fueled engines that transformed heat into motion, mankind could fashion mechanized servants to do their work for them.

The impact could be seen first in the factories. Textile factories combined steam power with new innovations like the spinning jenny and power loom to produce fabrics so cheaply that traditional cottage workers could not compete. For the displaced workers, the transition could be disruptive and painful, but consumers were suddenly able to enjoy undreamed of bargains for textiles—cotton fabrics were no longer a luxury of the rich, and even the poor could now afford to own more than one or two outfits.

But practically and symbolically, it was the rise of the railroads that most clearly separated the pre- and post-industrial era.

Transportation has always been one of the greatest economic challenges human beings face. Adam Smith had argued that a larger market allows for greater specialization leading to more prosperity. But aside from government barriers to trade, the most challenging obstacle human beings faced in moving goods quickly and easily across the globe came down to the limits of transportation.

In Britain, the main problem was the roads. Many roads were so worn down by centuries of use that they were essentially just ditches. “In the 1700s, the roads leading to Birmingham were from twelve to fourteen feet deep in places; it was said that a wagon-load of hay could pass along one road unseen from the sides.” (Freese, Coal, 87) The bigger problem was mud. As late as the 1600s, royalty preferred to travel on horseback rather than risk their carriages becoming mired in muck. And when the rain abated long enough dry the roads, the deep ruts and gaping holes turned travel into a dangerous ordeal: deadly accidents involving horses and coaches were not uncommon.

The major challenge in the United States was space—simply put, there was too much of it, and its expanses were largely untamed. Huge forests, countless rivers and streams, and imposing mountain ranges frustrated efforts to transport goods long distances. Entering the nineteenth century, it was as costly to transport goods across the Atlantic ocean as it was to move them thirty miles inland. “To travel from Cincinnati to New York,” notes one historian, “took a minimum of three weeks; the only feasible way to ship freight between the same two cities was down the Ohio and Mississippi rivers to New Orleans and then by salt water along the Gulf and Atlantic coasts—a trip of at least seven weeks.” (McPherson, Battle Cry of Freedom, 11)

The solution, in both cases, was the iron horse. The first steam locomotive was built by Richard Trevithick in 1804 and though he produced a working prototype—which burned after its first run when Trevithick forgot to put out the boiler—the rails of his day were not strong enough to make the invention practical. (Weightman, The Industrial Revolutionaries, 58) It was left to George Stephenson to pioneer the first successful locomotive. In 1825, he oversaw the opening of a twenty-six mile line between Darlington and Stockton. Thousands gathered to see the thirty-four wagons race along at the pace of a walking horse. (Freese, Coal, 91) But the real start of the railroad age came a few years later with the opening of the Liverpool and Manchester Railway.

It was not an auspicious start. Hundreds of thousands of people turned out to watch the new invention on its maiden voyage, but a freak accident led to a member of Parliament, William Huskisson, getting his leg run over by a train. Stephenson took charge, setting a new land speed record of thirty-six miles per hour as he single-handedly raced the politician by train to the nearest vicarage. “Unfortunately, later that night,” reports Barbara Freese in her book Coal: A Human History, “Huskisson would become the first person to die from a train accident.” (Freese, Coal, 93-94)

Nevertheless, the years that followed saw the rapid growth of railroads in Britain and in America. Within a decade and a half, thousands of miles of track covered Britain. (Freese, Coal, 95) In America, 3,000 miles of track in 1840 became 30,000 miles a decade later. Railroads cut the travel distance between Pittsburgh and St. Louis from 1,164 miles by river to 612. The costs of shipping freight were slashed in some cases by upwards of 96 percent. (Greenspan and Wooldridge, Capitalism in America, 54-55)

But such statistics don’t capture the full magnitude of the impact of railroads on men and women who had seen nothing remotely like them. A world with few machines was now being transformed by large, loud, swift beasts that crisscrossed the landscape. In Britain, a clergyman reported the effect on his clerk who witnessed a locomotive for the first time: he “fell prostrate on the bank-side as if he had been smitten by a thunderbolt! When he had recovered his feet, his brain still reeled, his tongue clove to the roof of his mouth, and he stood aghast, utterable amazement stamped upon his face.” Later, when he could speak, the clerk asked: “How much longer shall knowledge be allowed to go on increasing?” (Freese, Coal, 92)

For most, however, the proliferation of mighty coal-powered steam engines was a sign of triumph, the cashing-in of Bacon’s promissory note about the power of knowledge to nourish human flourishing. Emerson wrote of the glory of coal:

Every basket is power and civilization. For coal is a portable climate. It carries the heat of the tropics to Labrador and the polar circle; and it is the means of transporting itself whithersoever it is wanted. Watt and Stephenson whispered in the ear of mankind their secret, that a half-ounce of coal will draw two tons a mile, and coal carries coal, by rail and by boat, to make Canada as warm as Calcutta; and with its comfort brings its industrial power. (Emerson, The Works of Ralph Waldo Emerson, vol. 6)

The result, said another writer, is that “With Coal, we have light, strength, power, wealth, and civilization; without Coal we have darkness, weakness, poverty, and barbarism.” (Freese, Coal, 10)

By the mid-nineteenth century, British historian Thomas Babington Macaulay could already look back with proud distance on “times when noblemen were destitute of comforts the want of which would be intolerable to a modern footman, when farmers and shop-keepers breakfasted on loaves the very sight of which would raise a riot in a modern workhouse,” and “when men died faster in the purest country air than they now die in the most pestilential lanes of our towns.” (Friedman, Religion and the Rise of Capitalism, 52) But the reality was that the very real progress of the Industrial Enlightenment had only started to transform the day-to-day lives of ordinary people.

In his magisterial study of American economic progress, The Rise and Fall of American Growth, economist Robert J. Gordon catalogues how Americans lived in the immediate aftermath of the Civil War. Though by contemporary standards, Americans were incredibly prosperous, by modern standards they remained remarkably primitive. In 1870, life expectancy at birth was 45 years for whites and even lower for recently liberated blacks. (Gordon, The Rise and fall of American Growth, 34) The typical family lived on less than $1,000 a year in 2010 prices, with the overwhelming majority of that spending going towards “the three necessities of food, clothing, and shelter.” (Gordon, The Rise and fall of American Growth, 36-37) And the quality and diversity of these basics was shockingly limited.

Lacking modern food preservation technology, it did not make sense for farmers to grow much of the food you would find at today’s bustling farmers markets. Leafy greens and virtually all fruits spoiled too easily, and so Americans dined mostly on salted and smoked pork, corn, turnips, and beans. In the cities, beef had to be brought in “on the hoof” prior to the invention of refrigerator railway cars. “The starved cattle were virtually dead on arrival.” (Gordon, The Rise and Fall of American Growth, 39-41)

It was a similar story for clothing and shelter. Most people owned only a few sets of clothing, and washed them at irregular intervals. Even wealthy women made most of their clothes at home. (Gordon, The Rise and Fall of American Growth, 43) The quality of homes varied. Three-quarters of the population lived on farm houses, which tended to be large, well-made, and well lit. In the cities, some workers huddled in crowded tenements, but this was the exception. “Urban workers were much more likely to live in simple single-family cottages.” None of these dwellings, however, had electricity, and virtually none enjoyed central heating or indoor plumbing. (Gordon, The Rise and Fall of American Growth, 43-45) To meet a family’s water demands, one report concluded “a typical North Carolina housewife had to carry water 8 to 10 times each day. Washing, boiling, and rinsing a single load of laundry used about 50 gallons of water. Over the course of the year she walked 148 miles toting water and carried more than thirty-six tons of water.” The men, meanwhile, were tasked with moving the 50 pounds of coal or wood it took each day to maintain the hearth. (Gordon, The Rise and Fall of American Growth, 57)

This is the standard of living that capitalism had inherited from the pre-Enlightenment world, and had only started to overcome. What is astonishing is how quickly capitalism overcome it. If the world of 1870 reminds us more of the medieval era than our own, the world of 1970 appears remarkably familiar to twenty-first century Americans. In the space of four generations, refrigeration dramatically expanded the variety and quality of our diets. The internal combustion engine gave us, not only cars and eventually airplanes, but modern agriculture which liberated the bulk of humanity from the farm. Anesthetics, antibiotics, X-rays and other breakthroughs helped give rise to modern medicine. Electricity illuminated homes and freed women from toil and drudgery. Central heat, central air, and running water made life safer, easier, cleaner, and more comfortable. To the telegraph was added the phonograph, the radio, motion pictures, and eventually television, hastening the spread of information and expanding the options for rewarding leisure time. And there was far more of that time. Six-day workweeks were reduced to five. Twelve-hour shifts declined to eight. Decades of life were added to the human lifespan, along with the unprecedented phenomenon of retirement. All the while, the typical person was earning more: by 1970 the average American lived, not on $1,000 a year, but closer to $60,000 in 2010 dollars.

The Exploitation Myth

The triumph of human progress represents the Enlightenment’s most enduring legacy. Though economists continue to debate the precise causes of the Great Enrichment, the basic cause is clear: the Enlightenment liberated the human mind and turned its efforts toward earthly flourishing.

To say it’s clear is not to say it’s non-controversial. One school finds the source of the West’s prosperity in imperialism, slavery, and exploitation. Their goal, of course, is not to encourage us to revive empire and servitude in order to prosper, but to taint the birth of capitalism with a new Original Sin. Capitalism and its riches, they argue, are not the result of individual rights and human ingenuity, but the cannon, the whip, and shackles.

Karl Marx was the original source of this narrative, claiming that “The treasures captured outside Europe by undisguised looting, enslavement, and murder, floated back to the mother-country and were there turned into capital.” (Marx, Capital) That capital, in turn, fueled the rest of the West’s economic growth. More recently, scholars such as Sven Beckert and Edward Baptist stress the role of the cotton industry in the West’s rise—and the role of slavery in producing cotton.

There can be no question that imperialism and slavery were genuine evils inherited by the Enlightenment. And there can be no question that some individuals grew rich from these institutions. But no one has ever offered a credible case that empire and slavery can explain the 70-fold increase in living standards ushered in by the Great Enrichment. As economists Mark Koyama and Jared Rubin point out:

Empire is as old as history. When the Assyrians captured Israel in the 8th century BCE, and the Babylonians conquered Judah a century later, loot and slaves enriched the cities of Nineveh and Babylon. The city of Rome grew large and Roman elites grew wealthy on the back of an empire established across the Mediterranean and Western Europe. The Mongol conquests of the 13th century saw the populations of China and the Middle East collapse. The Ottomans enslaved Europeans and Africans on a large scale in the 15th and 16th centuries. But none of these empires saw sustained economic growth. Looted wealth was simply a transfer from one place to another. (Koyama and Rubin, How the World Became Rich, 105)

Such counter-examples could be multiplied ad nauseam. Especially notable is that Spain and Portugal, the European countries that pioneered colonialism in the Americas, did not enjoy the sustained, unprecedented prosperity of the Great Enrichment: instead, they stagnated. (Koyama and Rubin, How the World Became Rich, 106) “The monopoly of the colony trade,” Adam Smith warned, “like all the other mean and malignant expedients of the mercantile system”—colonialism, he recognized, was mercantile, not capitalist—“depresses the industry of all other countries, but chiefly that of the colonies, without in the least increasing, but on the contrary diminishing, that of the country in whose favor it is established.” (Smith, Wealth of Nations, Book IV, Chapter VII)

As for slavery, the disturbing implication of those who would taint capitalism by tying its abundance to oppression is that we would have been worse off had the world been more free. The truth is the opposite: slavery robbed mankind of the talents and potential of enslaved individuals. Smith was adamant that “the work done by slaves, though it appears to cost only their maintenance is in the end the dearest of any.” That’s because “[a] person who can acquire no property can have no other interest but to eat as much and to labor as little as possible.” Anything beyond that “can be squeezed out of him by violence only.” And, Smith might have added, whatever violence can achieve, it cannot make a man think and innovate. (Smith, Wealth of Nations, Book III, Chapter II)

Nor is there any case to be made that was an indirect boon. Whatever profits it produced did not by and large find their way into the pockets of the inventors and industrialists who revolutionized the world. (Koyama and Rubin, How the World Became Rich, 159) And while it’s true that cotton was one of the first products to thrive under the growth of industrialization, the Great Enrichment would have happened with or without cotton, and cotton would have flourished with or without slavery. Other fabrics, after all, were transformed by early industrialization, including wool and linen, and other industries were fostered by ingenuity, including iron and ceramics. Even cotton itself was not, in the final analysis, dependent on slavery: during the American Civil War, Britain turned to Egypt to meet its needs, and could have ultimately turned to India, China, and Jamaica. It was technology that made cotton cheap, not slavery, which was not only evil but expensive. (McCloskey and Carden, Leave Me Alone and I’ll Make You Rich, 125-127)

Perhaps most revealing is that it was not the American South that was the commercial center of America, but the industrial North. On the contrary, the dependence of the South on slavery had ruinous effects, economically as well as morally. Lured by the “easy profits” of cotton, the South failed to produce the institutions and skills that nourished Northern growth. As William Grayson lamented in his description of Beaufort, South Carolina:

The cultivation of a great staple like cotton or tobacco starves everything else. The farmer curtails and neglects all crops. He buys from distant places not only the simplest manufactured article like his brooms and buckets, but farm productions, grain, meat, hay, butter, all of which he could make at home. . . . Under this system the country that might be the most abundant in the world is the least plentiful. The beef is lean, the poultry poor, the hogs a peculiar breed with long snouts and gaunt bodies. (Appleby, Inheriting the Revolution, 69)

The net result was that the South produced only 7 percent of patented inventions in the decades leading up to the Civil War. The North produced 70 percent of the nation’s wealth, building its prosperity with mills, factories, and railroads, while the South remained a backward economy. (Greenspan and Woolridge, Capitalism in America, 70, 80) It was precisely because the North was not oriented around slavery that its triumph in the Civil War was virtually guaranteed. As General William Tecumseh Sherman cautioned the South in 1860:

The North can make a steam engine, locomotive or railway car; hardly a yard of cloth, or a pair of shoes you can make. You are rushing into war with one of the most powerful, ingeniously mechanical and determined people on earth—right at your doors. You are bound to fail. Only in your spirit and determination are you prepared for war. In all else you are totally unprepared. (Greenspan and Woolridge, Capitalism in America, 80)

In short, imperialism and slavery were not created by the Enlightenment but ultimately ended by the Enlightenment—and they were not the source of the West’s prosperity, but barriers to it. The Enlightenment’s revolution in wealth was the result, not of enslavement, but liberation. The great tragedy was that so many were not liberated, and that no one was liberated fully.

The Religion Myth

If one school tries to discredit capitalism by ascribing its achievements to coercion and exploitation, another school tries to appropriate capitalism’s achievements by ascribing them to religion. Some credit Christianity—or, at least, its Protestant strain, or, at least, Protestantism’s Calvinist strain—with unleashing progress. Ayaan Hirsi Ali, for instance, assures us that “all sorts of apparently secular freedoms” including free “of the market . . . find their roots in Christianity.” (Hirsi Ali, “Why I Am Now a Christian”)

On its face, this is wildly implausible. Christianity from its inception and through the Reformation was deeply opposed to the individual’s pursuit of prosperity and the desire for earthly riches. Railing against the burgeoning individualist and capitalist ethic of his day, Calvin thundered: “We are not ours: therefore let neither our reason nor our will rule over our intentions and actions. We are not ours: therefore let us not fix as a goal for ourselves the pursuit of what is advantageous for us according to the flesh. We are not ours: therefore as far as is allowed, let us forget ourselves and everything that is ours.” (Gregory, The Unintended Reformation, 267) This was hardly fertile soil in which pioneering entrepreneurs seeking fortunes could be expected to grow. “[A]ny suggestion,” writes Mokyr, “that Christianity as such created a civil society and enhanced economic performance as such is sheer nonsense.” (Mokyr, A Culture of Growth, 132)

But there are two basic arguments offered that lend support to the religious narrative. The first we can dismiss quickly because it's true. In Religion and the Rise of Capitalism, Harvard economist Benjamin Friedman argues that “our ideas about economics and economic policy have long-standing roots in religious thinking.” (Friedman, Religion and the Rise of Capitalism, ix)

Friedman is well aware that most of the key economic figures who forged capitalism—above all Adam Smith—were not particularly religious, were certainly not orthodox Christians, and that their arguments were essentially secular. They were, he concedes, products of the Enlightenment. But, Friedman adds, “Religion was a central element of their worldview too: not because the most important thinkers at that time and in that place were religious men—to repeat, they were not—but because religion then played a more central, more pervasive, and more integrated role in society than anything comparable in the Western world today.” (Friedman, Religion and the Rise of Capitalism, 16)

Friedman is particularly impressed with a major shift in Calvinist doctrine that occurred during this period. A significant current in Reformed Christian thinking replaced the traditional Calvinist doctrine of man’s depravity with a new idea of man’s innate goodness—it replaced the doctrine of predestination with a new celebration of human agency—and it jettisoned the view that man’s sole purpose is to glorify God in favor of the view that God created man for the achievement of human happiness. (Friedman, Religion and the Rise of Capitalism, 196) These new ideas, he maintains, were influential on thinkers like Smith who argued that human beings could forge a better life on earth through production, cooperation, and market competition in free societies.

Well, yes. But this is just another way of saying that the Enlightenment reformed Christianity, rendering it more tame, more toothless, more earthly. Christians internalized Enlightenment values and so created a new channel through which those values could propagate to the culture. Given Christianity’s cultural monopoly—often protected by force—any set of influential ideas had to be propagated through religion. (Mokyr, A Culture of Growth, 133)

The second argument focuses, not on Christianity’s influence on economic doctrine, but economic behavior. Smith had famously described “a certain propensity in human nature . . . to truck, barter, and exchange one thing for another.” (Smith, Wealth of Nations, Book I, Chapter II) But this was ahistorical. The commercial way of life was an achievement, and Max Weber, in his influential work, The Protestant Ethic and the “Spirit” of Capitalism, set out to explain that achievement. Famously, Weber credited Calvinist Christianity—especially its Puritan variant—with inculcating the entrepreneurial ethos that fueled capitalism.

Weber saw the capitalist “spirit” embodied in Benjamin Franklin. It is an ethic where work and wealth accumulation are pursued as ends in themselves, not for personal enjoyment. (Weber, The Protestant Ethic and the “Spirit” of Capitalism, 11-13) The entrepreneur, in his view, is essentially an ascetic. Where did this entrepreneurial asceticism come from? Why would people work maniacally if not to enjoy the fruits of their labor? For Weber, the answer is the Calvinist doctrine of predestination. Calvin taught that you could not earn your way into heaven: an elect few were chosen by God for entry into paradise. But, his followers concluded, their productive success could stand as a sign that they were among the elect. Though they in no way meant to lay the groundwork for capitalism, that is what they did, influencing the ethos, not only of Calvinists, but ultimately of the entire capitalist West.

It was an ingenious argument—and totally false. Scholars who have delved into the history of Calvinism have not found people striving for riches in order to prove they were destined for heaven. Instead, they find constant refrains that to seek riches is to mark yourself as unworthy of heaven. As one Puritan expressed the common attitude: “I detest vile gain and petty savings.” (Pellicani, The Genesis of Capitalism and the Origins of Modernity, 46) A calling, for Calvinists, was not a calling to pursue profits, but a purely other-worldly conception of a vocation. What Weber thinks of as a calling originated, not with the Reformation, but with the Renaissance, where thinkers concluded that “by his own activity, man could accomplish anything; through work man became creator.” (Pellicani, The Genesis of Capitalism and the Origins of Modernity, 39)

It’s revealing that the New England Puritans did not construct anything like a capitalist society when they arrived in the New World, but a theocracy that tried to rein in profit-seeking by regulating prices, limiting interest rates, and controlling wages. (Pellicani, The Genesis of Capitalism and the Origins of Modernity, 51-52) In 1639, Robert Keayne, a successful Puritan merchant, was accused of “oppression” for making a 20 percent profit off the sale of nails. In the immediate aftermath of his trial—he was convicted—the city’s leading theologian, John Cotton, railed against the “false principles” of commerce Keayne represented, including “That a man might sell as dear as he can, and buy as cheap as he can.” (Rollert, “When Making a Profit Was Immoral”)

The deeper point is that the spirit of capitalism is not one of asceticism, but of worldly self-interest, where individuals seek to prosper through production and trade. Enlightenment thinkers championed the capitalist way of life—in important respects, Protestants did not and could not. Richard Baxter, taken by Weber as representative of the Protestant Ethic, declared that “The public welfare or the good of many is to be valued above our own.” In Baxter’s view, “heaven is the only treasure and happiness,” whereas “exaggerated concern for worldly affairs and for work is a thief who wastes no time.” As for money, it’s no sign of being on the path to salvation, but “increases the slavery in which sin holds you” and “renders your salvation much more difficult.” (Pellicani, The Genesis of Capitalism and the Origins of Modernity, 57-59) Capitalism was the achievement, not of Protestantism or religion of any kind, but of the growing influence of the Enlightenment’s secular values—increasingly embraced by the religious and non-religious alike. (Gregory, The Unintended Reformation, 240-272)

What We Owe the Enlightenment

The Enlightenment, then, was a transformative force for good. It is the source of everything we value about the modern world: widespread learning, modern science, advanced medicine, rapidly improving technology, unprecedented prosperity, and the individual freedom that makes all the rest possible.