This article originally appeared at McAlvany Intelligence Advisor


Hidden inside an obscure study just released by Barclays is a nugget of huge importance that reflects a sea change in the of entrepreneurial capitalism. The results of this development could equal if not exceed those of the Industrial Revolution.

Too strong? Too optimistic? Too “over the top”? Here is this from the Introduction to Barclay’s study, Origins and Legacy: The Changing Order of Wealth Creation:

When the U.K.’s Sunday Times Rich List was first published in 1989, only 43 of the country’s richest 200 people, or 21%, had made their fortunes themselves. The list was a “who’s who” of inherited wealth and aristocracy, led by figures such as the Duke of Westminster and the Queen, but also encompassing 11 of the U.K.’s 25 dukes, six marquesses, 14 earls, and nine viscounts.

A quarter of a century later, this picture in the U.K. and many other countries is very different. Wealth is now more international, more diverse, and more driven by entrepreneurship rather than inheritance.

On the 2013 Sunday Times Rich List, almost 80% of the entrants are self-made…. (emphasis added)

Just when many were about to give up hope of saving true capitalism, here comes data that shows a massive paradigm shift from inherited to earned capital. Barclays says:

But perhaps the biggest shift of all is taking place in emerging markets. In the space of a little more than two decades, deregulation, globalization and technology have, for the first time, created a new generation of wealthy individuals who owe their fortunes to entrepreneurship and business opportunities.

Following interviews of 2,000 millionaires around the world (defined as those having investable assets of at least $1.5 million) Barclays learned that in the Asia-Pacific region, 57 percent of them said their source of wealth was from their businesses, while in South Africa it was even higher, at 68 percent.

In his members-only subscription newsletter, republished a map from the Barclays study, and exclaimed:

I am most amazed about South Africa. I would not have expected this. It indicates that the white flight that the country has experienced over the past 25 years has not drained the country of creative people. It means that, despite the leftist impulses of the African National Congress, the tax structure and regulatory structure have not suppressed black entrepreneurship. The ANC was closely associated for decades with the Party. This map indicates that the rhetoric of the ANC has not taken deep root in the society.

It also hasn’t taken root in Latin America, either, according to Barclays, where 58% of those respondents indicated their primary source of wealth is from their businesses.

In America, by contrast, just 21% indicated business interests as their source of wealth.

This huge shift in favor of capitalism (true, entrepreneurial capitalism, not the statist, mercantilist, crony-capitalism that is overwhelming America’s economy) bodes well for at least the next two generations. It represents the worldwide shift in attitude towards private capitalism that drove the Industrial Revolution, as explained by University of Chicago economist Deirdre McCloskey in her monumental Bourgeois Dignity: Why Economics Can’t Explain the Modern World. In that study, McCloskey shows that the of wealth starting in England and moving to America beginning at about 1800 was the result of a confluence of changing attitudes toward private property, the role of government, the profit motive, and the innate desire of humans to better themselves if they’re given the opportunity. She writes of the acceptance of the “dignity of entrepreneurial activity,” which became not only acceptable but enthusiastic.

That same enthusiasm is now resonating around the world, even in places least likely to expect it. As North notes:

The attitudes which undergirded this change have now infiltrated the cultures of the Third World. These attitudes are favorable towards entrepreneurship, profitability, and the accumulation of personal wealth. Whenever these attitudes become widespread, entire societies change for the better in terms of the abolition of poverty….

The future looks good. The positive attitudes towards entrepreneurship that made possible the coming of long-term economic to the West two centuries ago will now work its magic in the rest of the world.



Barclays report: Origins and Legacy: The Changing Order of Wealth Creation

Bio on Deirdre McCloskey

McCloskey’s Bourgeois Dignity: Why Economics Can’t Explain the Modern World

From Gary North: The Most Optimistic Map I Have Ever Seen

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