Response to Clark, Boettke, and Robinson

To Gregory Clark

I would never have written my essay had I known that it could be lethal for you. For I value our economic historians, prominently among them David Landes, who had this to say about The Centtral Liberal Truth: “Nothing is so important and tenacious as culture…in shaping economic performance…I can think of no better entrance to the topic…A gateway study.”

At least according to Ronald Inglehart, coordinator of the World Values Survey, German Catholics got their work ethic from Germany’s Protestant value mainstream,[1] much as the American Catholic work ethic reflects the Anglo-Protestant cultural mainstream, as Samuel Huntington argued in his last book, Who Are We? [2] Both the German and American Catholic value systems diverge sharply from the Ibero-Catholic value system, which still hasn’t made its peace with capitalism.

I’d still be very proud, were I a Scot. Arthur Herman makes a good case that the Scots “invented the modern world,”[3] starting with John Knox’s campaign in the sixteenth century for universal literacy. One could argue that in the 1960s Ireland accepted the Presbyterian/Weberian values, opened economic policy, and, with heavy foreign investment and aid from the European Union, triggered an economic miracle. A part of the Irish formula, as in the case of Quebec’s Silent Revolution of the 1960s, was a significant reduction of the Catholic Church’s influence, above all in education, to the point where one today hears the term “post-Catholic” applied to both Ireland and Quebec.

As The Central Liberal Truth emphasizes, cultural values are far from the only factor influencing economic performance. Even more telling than the Bihar example is the case of North and South Korea, where it is clear that ideology and economic policy trump a common culture with astonishingly discrepant results.

Since James Robinson emphasizes the Confucian examples in his comments, please refer to my comments on his comments below.

It’s certainly true that all religions have currents and countercurrents, including Islam. (I’m a little doubtful about how “relaxed and liberal” the Ottoman Empire really was. The first Turkish printing press didn’t appear until 1729, and Ottoman history in the eighteenth and nineteenth centuries is one of fairly steady decline culminating in the collapse of the Empire in 1918.) But an analysis of 117 countries grouped by predominant religion, presented in Chapter Four of The Central Liberal Truth, makes a quantified case, based on ten indicators, that Protestant countries outperform Catholic countries not only in terms of economic but also political and social development.

Having dedicated the past 25 years to research and writing about the importance of culture, and the twenty preceding years in the field learning first-hand the power of culture, you can imagine how I feel on learning that “the agenda of introducing culture into analysis of growth has not advanced one step from the state of the art of the 1950s.” Now that’s what I call lethal.

I hope that you will read The Centtral Liberal Truth and the companion volumes Developing Culture: Essays on Cultural Change[4] and Developing Cultures: Case Studies[5] Their goal, and indeed my almost half-century-old mission, was to produce the guidelines for progressive cultural change contained in the final chapter of The Centtral Liberal Truth. And who knows? Maybe you’ll find more light than undergrowth.

To Peter Boettke

Alvin Rabushka’s punch line is “…the main causal factor in determining differences in economic performance among nations is the rules of the game that govern the way that people interact with one another (within and beyond national borders) and with nature’s resources.” The implication is that all you have to do is to get the rules of the game right, and the players will play according to them. But as you subsequently explain, there is a cultural reason why those rules are not in place, and therein lies the fallacy of Hernando DeSoto’s Mystery of Capital magic wand. The absence of rules of the game that work reflects a culture that is indisposed to such rules. And if you try to impose them on that culture, the rules will not be respected.

Politics offers a helpful analogy, one highly consistent with the views of Montesquieu and Tocqueville. After the success of the American constitution, a number of newly-independent Latin American countries tried to adopt it. In all cases, it failed, as Tocqueville predicted in Democracy in America.

I was struck by your statement, “Whatever advantages a culture may have, they will not be realized under bad institutions.” Tocqueville said just the opposite: “I am convinced that the luckiest of geographic circumstances and the best of laws cannot maintain a constitution in despite of mores, whereas the latter can turn even the most unfavorable circumstances and the worst laws to advantage.”[6]

To James Robinson

Would that the Nkrumah explanation could be generalized to sub-Saharan Africa as a whole! Then we would have a magic wand that would promise rapid economic development through an indigenous entrepreneurial tsunami: stop preaching socialism and preach capitalism instead! Unfortunately, this has been tried throughout the region without significant results. Africa remains a region largely dominated by tyranny, poverty, ignorance, and corruption. And the cultural analyses of Cameroonian economist Daniel Etounga Manguellé [7] and former World Bank official Robert Calderisi [8] appear a good deal more relevant–and helpful. By the way, Botswana can surely be considered a political miracle/anomaly (largely because of enlightened leadership), but with 75 percent of its foreign exchange earnings coming from diamonds, the case for an economic miracle is a good deal less compelling.

The Chinese were doing well in Indonesia before Suharto. Anti-Chinese riots in which large numbers of Chinese were killed occurred in 1966, driven in part by resentment of Chinese prosperity. But it’s not just Indonesia where Chinese minorities have prospered. Wherever the Chinese have migrated, they have exceeded the wealth-creation of indigenous majorities–in Malaysia, where the Malay majority has enjoyed affirmative action benefits for year, Thailand, the Philippines, Mauritius, Costa Rica, or the United States. The same is true of other “Confucian” immigrants: Korean immigrants in the United States, Japanese immigrants in Peru, Brazil, and the United States.

“Confucianism” (shorthand also for Taoism, ancestor worship, and other influences on Chinese culture) offers 100% predictability with respect to high levels of economic achievement if governments are supportive of economic development. China may have been ahead of the rest of the world in the16th and 17th centuries but fell behind, reflecting in part the Mandarin bureaucrats’ disdain of economic activity, which occupied the lowest rung on the prestige ladder, below even the peasants. But when economic development receives a high priority, starting with Japan n 1868 and including more recently post-Mao China and Vietnam, the results are uniformly eye-opening, mirroring the achievements of the Confucian diasporas.

With respect to your comments about Ireland, Spain, and India, please see my relevant responses to Gregory Clark’s comments.

I passed your comments about Chile to David Homan, a professor of economics at the University of Liverpool and an expert on Chile. His response is being posted separately. It starts, “Of course, Robinson is wrong…” I would only add two comments: (1) the London-based Hospital for Tropic Diseases says, in its guidelines on Chile, “The Chilean Carabineros (the national police) are known for their honesty and refusal to accept bribes.” And (2) Chile stands at number 20 on the 2006 Transparency International Corruption Perceptions Index, tied with the United States and Belgium. For comparison purposes, Brazil and Mexico are tied at number 70, Argentina is number 93, and Venezuela is number 138.

A British person like you can take pride in Argentina’s economic development in the latter decades of the nineteenth and early decades of the twentieth centuries, because it was largely driven by (1) UK investment in Argentine agriculture, livestock, transportation, refrigeration, and port infrastructure, and (2) UK marketing knowhow. Remember that Argentina is among the richest countries in the world in terms of resource endowment per capita–it’s 5/6ths as large as India with about 1/25th of India’s population.

I can understand why you, an economist, reflecting on the endless stream of economists’ triumphs in international development over the past half century, above all in Africa, the Islamic countries, and Latin America, and culminating with Jeffrey Sachs’s magical miracles in Bolivia and Russia, would be complacent about the preeminent role of economics and economists in development. But just in case you ever should have some doubts about that golden record of achievement, how about reflecting on economist Guido Tabellini’s work on the effects of culture on variations in European regional development?

And see if this close-to-home case doesn’t move you: a Harvard person who should know estimates that about 35 percent of the Harvard College student body is either East Asian or Jewish. How can one explain this astonishing fact as other than a cultural phenomenon? And please don’t misinterpret this datum as an economic phenomenon reflecting the prosperity of these minorities (which in itself is a largely cultural phenomenon). In the first half of the twentieth century when Harvard used quotas to limit the number of Jews, a significant number of applicants came from the Dorchester/Mattapan ghetto, Jewish then, African-American and Hispanic now, via Boston Latin School, a public high school.

And if that doesn’t move you, how about Alan Greenspan’s words following the collapse of the Russian economy: “I used to think that capitalism was human nature. But it wasn’t at all. It was culture.”

Notes

[1] Cited in The Central Liberal Truth, p. 91

[2] Samuel Huntington, Who Are We? The Challenges to America’s National Identity (New York: Simon and Schuster, 2004)

[3] Arthur Herman, How the Scots Invented the Modern World (New York: Three River Books, 2002)

[4] Lawrence Harrison and Jerome Kagan, eds., Developing Cultures: Essays on Cultural Change (New York: Routledge, 2006)

[5] Lawrence Harrison and Peter Berger, eds., Developing Cultures: Case Studies (New York: Routledge, 2006)

[6] Alexis de Tocqueville, Democracy in America (London: David Campbell Publishers/Everyman’s Library, 1994), 322-23

[7] “Does Africa Need a Cultural Adjustment Program?” in Lawrence Harrison and Samuel Huntington, eds., Culture Matters (New York: Basic Books, 2000), 65-77

[8] Robert Calderisi, The Trouble With Africa (Basingstoke, UK: Palgrave Macmillan, 2006)

Also from This Issue

Lead Essay

  • Culture and Economic Development by Lawrence E. Harrison

    In this month’s information-packed lead essay, Lawrence E. Harrison notes that the role of culture has been badly neglected in serious studies of economic devewlopment. But then, he asks, what explains “why, in multicultural countries where the economic opportunities and incentives are available to all, some ethnic or religious minorities do much better than majority populations?” Harrison reports some results of his recent Culture Matters Research Project, including the finding that “Protestant, Jewish, and Confucian societies do better than Catholic, Islamic, and Orthodox Christian societies…” Harrison provides a number of incisive country case studies, illustrating different ways pre-existing culture can produce economic results, and the ways policy and politics can transform culture.

Response Essays

  • The Universal Culture of Progress by Gregory Clark

    In his reply to Harrison’s lead essay, University of California, Davis economist Gregory Clark writes, “I simultaneously want to endorse [Harrison’s] promotion of culture, and to run screaming from his lethal embrace.” While agreeing that the failure of purely institutional explanations of historical economic growth “opens the door … for culture,” Clark argues that “attempts to introduce culture into economic discussions so far have been generally either ad hoc, vacuous, blatantly false, or void of testability.” Clark points to great variation in economic performance within cultures and religions, and worries that Harrison’s “measures are not a pure probe into the essence of local cultures, but reflect institutions and economic environments that change the real possibilities for people.”

  • The How, The What, and The Why of the “Culture Matters” Thesis by Peter J. Boettke

    In his reply to Lawrence Harrison’s lead essay, George Mason University economist Peter J. Boettke argues that it is not culture but institutions–“the rules of the game that govern the way that people interact with one another”–that are the primary determinant of economic growth. However, culture may be crucial, Boettke argues, since it is “a tool for the self-regulation of behavior” that may raise or lower the cost of monitoring and enforcing compliance with “the rules of the game.” And that can make the difference between the success or failure of growth-conducive institutions and policies such as “private property, freedom on contract, limited scope of regulation, monetary restraint, fiscal responsibility, and open trade.”

  • It’s Not Culture by James A. Robinson

    James A. Robinson of the Harvard University Department of Government argues that Harrison’s measures are insufficient to establish that culture is the x-factor in economic development. For example, Robinson argues that the relative success of certain ethnic and religious minorities may be due to concessions from the majority group, and not the features of the minority culture. Also, Robinson asks, if the economic success of Chinese minorities in other countries is “because they have such a good culture, then why is China one of the world’s poorest countries?” And if Chile’s success lies in its distinctive culture, “then why did it manifest itself so recently?” Robinson concludes that “culture might matter, but doubters like me will not be convinced by the evidence here.”

The Conversation