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Thursday, November 01, 2007

Those Darn Beliefs

In the poor inheritance post I presented material from Doug North which described the role of beliefs, attitudes and behaviors and the institutions to which they give rise as being significant in determining what kind of progress a society could achieve. While being generally positive about the role of globalization in lifting more people out of poverty, we should not be surprised by uneven results. In a column by Robert Samuelson, The Global Poverty Trap he explains why this is so:
One of the big debates of our time involves the causes of economic growth. Why is North America richer than South America? Why is Africa poor and Europe wealthy? Is it possible to eliminate global poverty?


Comes now Gregory Clark, an economist who interestingly takes the side of culture. In an important new book, " A Farewell to Alms: A Brief Economic History of the World," Clark suggests that much of the world's remaining poverty is semi-permanent. Modern technology and management are widely available, but many societies can't take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can't overcome this bedrock resistance.

"There is no simple economic medicine that will guarantee growth, and even complicated economic surgery offers no clear prospect of relief for societies afflicted with poverty," he writes. Various forms of foreign assistance "may disappear into the pockets of Western consultants and the corrupt rulers of these societies." Because some societies encourage growth and some don't, the gap between the richest nations and the poorest is actually greater today (50 to 1) than in 1800 (4 to 1), Clark estimates.

What distinguished England, he says, was the widespread emergence of middle-class values of "patience, hard work, ingenuity, innovativeness, education" that favored economic growth. After examining birth and death records, he concludes that in England -- unlike many other societies -- the most successful men had more surviving children than the less fortunate. Slowly, the attributes of success that children learned from parents became part of the common culture. Biology drove economics. He rejects the well-known theory of German sociologist Max Weber (1864-1920) that Protestantism fostered these values.

Clark's theory is controversial and, at best, needs to be qualified. Scholars do not universally accept his explanation of the Industrial Revolution. More important, China's recent, astonishing expansion (a fact that he barely mentions) demonstrates that economic policies and institutions matter. Bad policies and institutions can suppress growth in a willing population; better policies can release it. All poverty is not preordained. Still, Clark's broader point seems incontestable: Culture counts.

Capitalism in its many variants has been shown, he notes, to be a prodigious generator of wealth. But it will not spring forth magically from a few big industrial projects or cookie-cutter policies imposed by outside experts. It's culture that nourishes productive policies and behavior.

By and large, nations have either lifted themselves or have stayed down. Societies dominated by tribal, religious, ideological or political values that disparage the qualities needed for broad-based growth will not get growth. Economic success requires a tolerance for change and inequality, some minimum level of trust -- an essential for much commerce -- and risk-taking. There are many plausible combinations of government and market power; but without the proper cultural catalysts, all face long odds.


It's hard to make progress if the culture is averse to wealth creation and the supporting beliefs, habits and institutions. Even mimicking the incremental steps of another society provides no guarantees.

9 comments:

erp said...

“What distinguished England, he says, was the widespread emergence of middle-class values of "patience, hard work, ingenuity, innovativeness, education" that favored economic growth.” Aren’t those the very values commonly known as the Protestant work ethic and if he rejects Protestantism as the cause, then what did cause it?

This statement makes even less sense, “... he concludes England -- unlike many other societies -- the most successful men had more surviving children than the less fortunate.“ In what alternate universe do the less fortunate have more surviving children?

Poverty, disease and famine are time honored tools of despots. Cheap laptops, the internet and ubiquitous camera phones will educate the younger generation and venerable culture of the ancestors be d*mned, they’ll demand to be part of the 21st century culture of their peers.

I’d gladly pay my share to provide these tools to third world kids.

Bret said...

erp wrote: "Aren’t those the very values commonly known as the Protestant work ethic and if he rejects Protestantism as the cause, then what did cause it?"

Samuelson seems to me to be saying that Clark believed that those values are innate traits, were biologically selected, and that biological selection led to the Protestant work ethic and economic success. Perhaps I'm interpreting it incorrectly though, since that interpretation would make it an outrageously controversial claim (to say the least).

erp also wrote: "This statement makes even less sense, “... he concludes England -- unlike many other societies -- the most successful men had more surviving children than the less fortunate.“ In what alternate universe do the less fortunate have more surviving children?"

I think that in many developed countries, poorer groups have higher birth rates. I suppose it depends on the definition of successful and fortunate.

erp said...

I think the operative word is "surviving" children and if the Protestant work ethic values are innate, why do they only show up in the Anglosphere?

Bret said...

I think he's saying that those traits are (more or less) only innate in the Anglosphere because of breeding ("biology drove economics" and "England -- unlike many other societies -- the most successful men had more surviving children") and the slow "adoption of a common culture" with the implication being that breeding created the foundation for the ability to adopt the common culture required for success.

It's a horribly pessimistic view. We can only hope he's wrong.

Peter Burnet said...

This is very confusing. How can someone who says biology drives economics be said to be coming down on the side of culture? Nature vs nurture? Hmm, let's see, presto, they are the same thing!! Look Ma, no hands!

Talk about genetic mutation at supersonic speed! Clark's economic Darwinism is just silly and I'm surprised it is being given any respect at all. The fact that the formative cultural ethos in the entire Anglosphere except England is the pioneer/immigrant experience originating from many lands should be enough to dismiss it out of hand. Besides, is it not a common observation that the children and especially grandchildren of the wealthy don't (on average) work as hard and that it is usual for family wealth to dissipate within three generations unless great care and no-nonsense professional financial management ties it up?

Erp, you sound like Bill Gates. If modern gadgets inevitably had the effect you imagine, our native peoples would have pulled themselves out of their pathologies a long time ago. Instead, far too many just give up the old ways, take to playing video games, get into drugs and commit suicide. I don't think Africa is suffering from a lack of computers or cell phones.

This intellectual search for the key to wealth creation is like The Quest for the Holy Grail. You need peace, a lack of corruption and a coherent, efficient legal system, but beyond that every rule has it's exception. Religion can both help and hinder. Hard work, yes, but lots of poor nations have or had a very hard-working population. Family? Given American and Irish history over the past twenty years, obviously not necessarily directly or in the short term. Resource wealth? Works for Canada, but tell that to Singapore.

However, in the end, doesn't the very idea that there are biological, religious, cultural, political or socio-economic underpinnings to wealth creation ultimately undermine the notion that the key is individual initiative and a belief that we each have significant control over our destinies? For example, that latter thought is inspiring me to run off to the office and create some of that there new-fangled wealth, while the former is telling me wealth creation is governed by forces beyond my control and it would be a lot more fun to just sit here and blog about it all day.

erp said...

Bill Gates isn't a monster to me, so I don't mind being compared to him. I think electronic "gadgets" are tools no less than the wheel or the printing press.

Yes, wealth goes through a declining process, but that isn't the topic here. Third world countries are so far behind because of leftwing politics supporting dictators, not because of natural (acts of God) conditions or lack of aid coming from the taxpayers in the Anglosphere.

Key to wealth isn't what I’m talking about either. It's the key to knowledge which then can be used in many different ways. Peter certainly can choose to stay home and blog instead of working, but then he also knows the consequences.

Our native populations were encouraged toward alcoholism and all its ramifications to keep them quiescent. Now that they’ve figured out how to exploit their sovereign status, they’ve certainly perked up, so they weren’t so dumb after all.

BTW - If you haven’t ever driven through the vastness and the emptiness of Indian reservations, you can’t begin to imagine how hopeless they are. Coming back from the Canadian Rockies we drove for what seemed like days through utter desolation speculating the whole time about what Israelis or Japanese would have done with the land. Lack of knowledge and information along with just enough support to keep them at bare subsistence is what made the reservations the moonscapes they are.

Bret said...

peter,

I'm very nearly in complete agreement with you except for some minor nits...

"Talk about genetic mutation at supersonic speed!"

Not necessarily mutation, just the selection of already existing genetic information.

"Clark's economic Darwinism is just silly and I'm surprised it is being given any respect at all."

Yeah, I'm surprised too.

"The fact that the formative cultural ethos in the entire Anglosphere except England is the pioneer/immigrant experience originating from many lands should be enough to dismiss it out of hand."

I was going to point out exactly that, though the immigrants may have self-selected to match the culture seeded by English immigrants, so I don't think we can dismiss it for sure.

"Besides, is it not a common observation that the children and especially grandchildren of the wealthy don't (on average) work as hard and that it is usual for family wealth to dissipate within three generations unless great care and no-nonsense professional financial management ties it up?"

But the wealth of society more resides in the middle classes where that's not the case.

"This intellectual search for the key to wealth creation is like The Quest for the Holy Grail."

Yes, but the better we can understand how wealth comes to be created, the more likely we are that we can duplicated the necessary conditions.

Again, hopefully Clark is just way overly pessimistic.

Peter Burnet said...

Not necessarily mutation, just the selection of already existing genetic information.

Really? Then I guess while biology was selecting for wealth creation in England and the Anglosphere, she was selecting for collectivism, autocracy and privelege everywhere else. She's still at it. Somebody should straighten her out

And that is the problem with these faux-Darwinist expanations for everything from wealth to symphonies to Chartres to the ghettos. They explain everything in rote and facile ways, and therefore nothing at all. It all collapses in one huge tautology. Whatever is was selected to be. Heavy, man. We're all Marxists now--looking to find great determinist forces that will tell us why we are what we are and how we can make everybody else like us, once we convince them that is what they really want.

Yes, but the better we can understand how wealth comes to be created, the more likely we are that we can duplicated the necessary conditions.

I doubt that very much and, frankly, worry mightily about the implications. It is one thing to use historical insight to help with specific concrete policies, like, say, monetary policy or contract law, quite another to try and reduce overall peace and prosperity to a technical formula clever politians and bureaucrats can implement. That is the story of the Soviet Union. Long live freedom! Down with nation-building!

But, ok, let's play anyway. What lessons from the wealth created in other lands do you think Americans should look to as a model for increasing their own wealth? Should they send advisors to help out?

Howard said...

Peter,

As Samuelson states, Clark's ideas are very controversial, I would think the biological aspect most of all. The author of Before The Dawn treads on some of the same ground in suggesting a rate of selection and genetic change never spoken of before. Surprising if that holds up under more scrutiny. Controversy aside, I still think culture matters quite a bit but that fairly bright and adaptable individuals from a less evolved culture could cope with a more modern one in short order.

You need peace, a lack of corruption and a coherent, efficient legal system, but beyond that every rule has it's exception.

Yes, I'd agree but beliefs have a big impact in shaping the legal system.

Bret,

I'm more optimistic than Clark, but tiny incremental progress over long periods of time may be the limit in some cases...

erp,

Regarding ideas about the role of the protestant ethic and other factors vital to the path of the Anglosphere, you might find these passages by Doug North and Deepak Lal of some interest.