Basically, Adam Smith was an econ-rock star

We knooow the direct causes and conventional reasons why the I.R. began
-> business class, innovation, entrepreneurs, inventors blah blah. But why did it all happen in the first place?

How Did We Get Rich?
new machines--> each worker becomes more productive
                       --> wages rise! (able to sell more goods)
                       --> more working, more training, = instigates new technology
So we are NOT replaced by machines.

What Made IR Possible (Indirect Reasons)
Recall, ancient Greece had steam power, Romans could flood the colosseum, Chinese invented practically everything else.,and England? Not much. Not many resources besides coal either...
SO that means there was no single massive cause. No single event, law or personality that caused the IR
Here's what happened:
1) Gradual incre. of national political units
  -->uniformity of laws, standards
2) Slow decay of religious mysticism
   --> Italian Renaissance; life during the day became as important as the after life
3) Material changes made market systems possible
   --> power away from nobility and shift to the merchant class
4) Pure science actually not important
   --> top down sci. played small part, we should be thanking the tinkerers
      - IR not from sci. innovation, improvements made on existing technology
     -trial / error. vague understanding (ex. one person not responsible for cell phone)
    -smart people stole ideas from each other (enlightenment helped too)

Farewell to Arms: technology of defense outweigh tech. of predation
  -build state to protect markets, court systems
  - fear of too much power (gov't self imploded)
  --> Eng. political institutions reflect this

Adam Smith: institutions -->determine wealth
  -stuff we do socially to improve living standards (w/out $) cultural values count
  - when men are free able to...do great things
  Ex: gay acceptance, dress strangely: worthy of respect, accept human aspect

Eng: freedom/opportunity led to change; also had a solid foundation
Why 17th cent?
  -Magna Carta --> individ. have some rights; nobles consulted king
  - gov't created as response to revolution (think bronze, agrarian, IR)

 commerical activity --> honesty is key; capitalism is a virtue.
-incentives matter, culture matters
-but guess what? brainpower wise, they were just as smart as us! (wait, didn't we hear in class that we're better at computing today? hm)

Mercantilism: system that reigned w/ feudal system until mid 18th cent; "progressive corporatism"
1) restrain on indiv...9 am on Monday this sometimes happens
2) protectionism
3) craft guilds created
4) licensing; gov't granted monopoly
5) dutch, eng, spain, fran grated...
6) limits on production
  -->king cut off
7) extensive price control
  old days: if you violated the rules, to the stockade!
  King furthered own self interests

--> French Physiocrats & Scottish Moral Philosophers
Physiocrats= laws that govern phys. law but be laws that govern social behavior
(Francis) Quesnay: economy = indpep. relationships; life is a tapestry;

income = expenditures
factor market / goods market "circular flow"
individuals & firms ==> constant flow of stuff btwn the two
- pay money, spend money; "circular flow" of goods & services