What can we learn about applied price theory from the Bourgeois Era? In their latest paper, NOUS members Rosolino Candela and Peter Boettke contend there are three important lessons that can be extracted from McCloskey’s work on the Great Enrichment. First, transaction costs are not constraints, but objects of choice. Second, property rights are not merely a “bundle of sticks,” in that private property rights make exchange possible, but a culture of liberal ideas makes exchange viable. Third, ideas conducive to liberalism give rise to generalized increasing returns to the scope, rather than scale, of market exchange, which generated the Great Enrichment.
The full paper is available here.