From our modern perspective, it might seem unusual to view society’s well-being through any lens other than a financial one, but this focus on money as a measure of American prosperity is a relatively recent phenomenon.
Prior to the mid-nineteenth century, American society judged how well it was doing on a set of “moral statistics” instead of on its financial bottom line. An uptick in certain problematic moral indicators, like prostitution, crime, insanity, and disease revealed a downturn in relative prosperity. On the flip side, increases in literacy, life expectancy, and education levels indicated a prosperous and flourishing society.
These indicators of well-being focused on the individual. If most members of a community could be judged as healthy, educated, and morally upstanding, then the community as a whole was moving forward in a positive direction.
And this had been the norm for most of human history. So, what changed? Rory Brown, Managing Partner of Nicklaus Brown & Co., reveals how capitalism drove money to be a replacement for health and moral integrity as the metric of prosperity in America.
As America Capitalized, Money Became The Measure of Success
Before the early part of the nineteenth century, the U.S. economy, and those around the globe and throughout history were self-sufficient and agrarian. There were certainly markets for products, but true capitalism, where everything from natural resources, buildings, land, ideas, and people were converted into income-generating assets, hadn’t been born yet.
It was the industrial revolution and the building of the railroads that set the spark to drive the fires of capitalism. The railroads required large capital investments on a scale previously unseen. Excess cash was converted into investments, and these investments generated profits which could be further invested, creating capital feedback loops.
In some ways, the shift was a subtle one. Farmland had always been measured by the amount of food it could produce or the number of mouths it could feed. With capitalism, the value of the land was abstracted away from what it actually produced — the food. It was replaced with a dollar amount that could be had for the food.
That shift changed the way Americans thought about everything. Farms didn’t exist to feed people anymore. They existed to produce food that could be sold for profit. Farming became a business instead of a livelihood, and people that classically weren’t involved in farming began making capital investments into land, labor, and supplies, not to raise crops, but to make money.
By the middle of the nineteenth century, this transformation was nearly complete. No longer was human well-being measured by the prevalence of vices or the levels of moral virtue. These things were now measured in dollar terms.
Progressive reformers of the day placed dollar values on babies and their expected returns throughout their lives. Social ills were framed as costs, not turpitude, and illnesses were discussed in terms of how much they cost employers per worker.
Today, for better or worse, much of the world has adopted the American capitalized idea of monetary success. This certainly drives progress. What’s lost in the process is less clear.
About: Mr. Rory Brown is a Managing Partner of Nicklaus Brown & Co., the Chairman of Goods & Services, Nearshore Technology Company, and a member of the board of directors of Desano. He is passionate about delving into the history of money and how our modern currency has evolved into what it is today. In his spare time, he writes about the history of the Lydians - the first civilization to use gold and silver coinage.