The debate on the hypothesis raised in A Farewell to Alms is portrayed well in Free exchange. As I understand it, the author’s hypothesis is that the discontinuity in economic growth that occurred around 1800 was due to the fact that people who made good economic decisions simply outlived and outbred people who made poor decisions. Could this be? I tend to favor an alternative view. It seems plausible that in that time frame thousands and thousands of people suddenly “got it” and grasped the advantage of capitalism. Why? Some people had understood rudimentary economics for a long time, but it was the publication of Adam Smith’s The Wealth of Nations that spread insight widely and quickly. Suddenly there were people willing to finance new schemes and inventions, once they understood that there was money to be made. The insight, and wealth, came first to the English speaking world because Smith wrote in English. Maybe all it took was one man, one inspiration, and one printing press. If Smith had been Italian or German, history would have taken a very different turn!
