The Rise of the United States: How Liberal Ideas Rooted in English Traditions Propelled Economic Supremacy

Heng-Fu Zou ()

No 723, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: By the 1880s, the United States had surpassed Britain as the world's largest economy, and by the 1920s, New York City had overtaken London as the world's leading financial center. This remarkable ascent cannot be adequately explained by models of economic growth focused on human capital accumulation, R&D, or technological innovation as championed by Paul Romer (1986, 1991), Robert Lucas (1988), and Aghion and Howitt (1992). These theories, while offering insights into the mechanics of innovation, fail to capture the true drivers of the U.S. economic miracle: liberal ideas of liberty, equality, dignity, and individualism. As Deirdre McCloskey has argued, and Edmund Phelps has elaborated in Mass Flourishing, it was these ideas—rooted in England's traditions yet unfettered by aristocratic constraints in America—that enabled ordinary people to act as entrepreneurs and grassroots innovators, fueling the dynamism of the U.S. economy.

Pages: 13 pages
Date: 2025-01-06
New Economics Papers: this item is included in nep-gro, nep-his, nep-hpe, nep-ino and nep-pke
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