My reaction to Lawrence Harrison’s essay is one of intellectual schizophrenia. I simultaneously want to endorse his promotion of culture, and to run screaming from his lethal embrace.
As an economic historian who studies economic growth in the long run, I agree completely that the banishment of culture from much of the consideration of wealth and poverty by modern economists has left us with untenable theories of growth.
The standard economist emphasizes that stability, incentives, and laissez-faire are all the magic needed for riches. Harrison’s quote from Bill Easterly, “people are the same everywhere and will respond to the right economic opportunities and incentives,” captures the essence of the economic approach.
But economists have to ignore that the institutional magic was applied for at least 100 years to India by the British before 1947: years when growth was minimal, industrialization negligible, and India fell steadily further behind the west. They have to blind themselves to the fact that pre-industrial England, from 1200 on, experienced minimal gains in economic efficiency, yet was characterized by centuries of monetary and political stability, peace and security, low taxes (often below 1 percent of income), a tiny public debt, and free commodity and labor markets. Were it applying for development aid, the World Bank would have warmly praised prudent medieval economic management.
Nor can we even say that stability and good institutions are even a necessary condition for growth. The northern Italian city states of the Renaissance, the European economic center of the time, were racked by frequent internal violence. Houses were fortified, not against the enemies outside the city walls, but against the murderous designs of fellow citizens.
The failure of the standard, tired institutional explanations opens the doors, it seems, for culture. Further, as someone who lives and teaches in heavily immigrant California, there are daily reminders of important cultural differences between the successful immigrant groups such as the Chinese and Koreans, and the struggling groups such as the Mexicans, Central Americans, and Hmong.
Yet attempts to introduce culture into economic discussions so far have been generally either ad hoc, vacuous, blatantly false, or void of testability. If culture is a key to growth, the fear is that economists will be reduced to rooting about in the intellectual undergrowth with people we hold in low esteem: qualitative sociologists and cultural anthropologists. Since we have no idea of how cultures develop, or how to change cultures, to admit the primacy of culture may be to admit the defeat of the entire economics project.
Most attempts to measure culture by objective, measurable criteria such as religious affiliation, for example, seem to miss most of the interesting variation. Weber, as is well known, thought that certain types of Protestant ideology were conducive to economic growth. Lawrence Harrison’s work validates these findings.
The Catholics of modern southern Germany, however, would think they have a thing or two to teach their Protestant compatriots of the north about the virtues of hard work and self-reliance. The dour and thrifty Calvinists of my native Scotland look with envy now at the successes of the Catholic Irish, and ask how they can emulate this. Deepak Lal discussed how the “Hindu Equilibrium” kept India mired in poverty. But the Hindus of Bombay have recently achieved income levels 4-6 times those of their co-religionists in Uttar Pradesh and Bihar. And Hindu immigrants from India have prospered in both the USA and Great Britain, while their co-religionists in Bihar remain among the poorest people in the world. Confucian values are now growth-promoting. Yet Confucian China stagnated from 1800 to 1949.
The reality is that the explicit tenets of any cultural system, such as the theological content of religions or social codes, is really a very loose garment draped around the body of a society that leaves enormous room for interpretation, innovation, and variation. There are dizzyingly many varieties of Catholics, matched by an equivalent gallimaufry of Protestants. The same Holy Koran that validates the ban on women driving in Saudi Arabia, and the religious police patrolling the shopping malls in search of unmarried couples, also underpinned the relaxed and liberal Ottoman Empire. Protestants on average may have values associated with economic growth, but that seems to have nothing to do with their specific theology.
Lawrence Harrison may seem to escape some of this problem of identifying cultural variation by using a survey of 25 factors that purports to identify systematically the essential elements of cultures that promote high incomes and growth: universal progress cultures. He divides cultures into the “progress-prone” and the “progress-resistant.” In progress-prone societies, for example, people assert “I can influence my destiny.” In progress-resistant societies “fatalism” rules. Progress-prone societies have better economic performance.
Harrison’s project seems in this report to be an echo of David McClelland’s work in the 1950s and early 60s. McClelland argued that societies differed culturally in their “need for achievement,” which could be diagnosed by personality surveys or even by analysis of the popular literature of the society. High need for achievement was characteristic of Protestant societies. This is not to imply that Harrison is wrong, just to suggest that in fifty years the agenda of introducing culture into analysis of growth has not advanced one step from the state of the art of the 1950s.
The problem with both the Harrison and McClelland approaches is that the responses may reflect just the realities of the institutional framework people live within, rather than their cultural attitudes. A North Korean who reports “fatalism” or “resignation” is plausibly no different culturally from a South Korean who states “I can influence my destiny.” These cultural 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. It is hardly unexpected that people in growing or wealthy societies are more open to innovation, more accepting of risk, and more welcoming of advancement by merit. But which came first, the economic dynamism and wealth, or the social attitudes?
So, if we want to measure the effects of culture on economic growth, we need measures of culture that are independent of growth. Earlier attempts to link culture to religious doctrine were in part an attempt to find such a grounding. Recent attempts of those in experimental economics, such as Ernst Fehr, Sam Bowles, and Joe Henrich, to see how subjects from different cultures interact in controlled strategic games show another path to isolating pure cultural differences. Game theory predicts how rational self-interested actors should behave in experiments. By looking at deviations we can identify the existence of cultural norms, and whether they vary across societies. However, the results of these investigations, while suggesting significant cultural differences, so far have not been consistent or informative.
We also find in history clear signs that significant aspects of peoples’ preferences—their degree of impatience, their work inputs, and their propensity to violence—changed over time in ways unrelated to economic circumstances, at least in England, as the society moved from stagnation towards modern growth. Further, there is a dynamic in the pre-industrial world—survival of the richest—that might explain these trends.
But, in general, since Harrison has measures of culture that are not clearly independent of economic circumstances, and since he has no clear intervention to alter culture, the path he plots may lead us as much into the undergrowth as into the light.