Wealth And Poverty Of Nations [Hardcover]

David Landes' thesis is that culture is the key determinant of whether or not people become wealthy. Landes does a Weberian analysis of the disparity in wealth between (mostly) The West and the Rest--a loaded topic, on which much ink has been spilled and which has engendered much chauvinism, brilliant economic insight, and the odd dash of racism. He argues that Calvinist Europe cultivated the cultural virtues that make a society wealthy: hard work, honesty, curiosity, thrift, industry and the respect for private property. According to Landes, it is no surprise that the Industrial Revolution, with its resulting increases in productivity, took place in Western Europe. Even though Islamic, Chinese and Western civilisations were at similar levels of development in the 1100s, Western Europe had pulled away from the rest by the late 1500s.

Landes further contrasts Northwestern (Protestant) Europe with Southern (Catholic) Europe. According to Landes, the discovery of the New World treasure--coupled with the Post-Tridentine Catholic Church's emphasis on simple peasant spirituality (none of all that schooling business) contrived to retard economic progress in Southern Europe and its offshoot civilisations in South America. While Spain and Portugal were busy looting the New World and praying for their souls, the Dutch and British were working hard to generate the wealth that kick-started and reinforced the Industrial Revolution. Landes also examined the rise of Japan (the best chapter of the book, in my opinion). He argues that Japan's openness to Western education, its ability to learn quickly and to mobilise popular feeling in the service of the national cause, put Japan on the road to industrialisation after the Meiji Restoration. So far so good. Landes' thesis that the winners in the capitalist system have cultural values that promote the generation of wealth seemed plausible up to this point.

However, Landes' corollary argument that the absence of "industrial" values--thrift, entrepreneurship, hard work and respect for private property--in poor countries is the key reason for poverty falls flat on its face. He sums up this position succintly in the last chapter of the book: "If we learn anything from the history of economic development, it is that culture matters...One could have foreseen the post-war economic success of Japan and Germany by taking into account culture...the same with Indonesia vs Nigeria." In essence, he says that, in 1960, based on culture alone, one could have predicted the Indonesia's relative economic success and Nigeria's dismal economic performance. Really? Obviously, Professor Landes has never been to the bustling markets of Lagos, Nigeria, to witness first-hand the entrepreneurial drive of Nigerian market women. To argue that Nigeria is poor simply because the culture of the people is inimical to entrepreneurship and wealth generation is to insult the thousands of hard-working, small-scale entrepreneurs who make a living far from the halls of a corrupt, predatory government. As a Nigerian, whose barely literate grandmother was a successful marketwoman, and who has seen the drive and resilience of many small-scale Nigerian entrepreneurs (especially women), I take particular exception to Landes' glib analysis. Landes completely missed it: he failed to distinguish between the state and the people.

Many post-colonial countries are poor not because the people are anti-entrepreneurial, but because the post-colonial state itself is. Hernando de Soto demonstrates this fact conclusively in The Other Path and The Mystery of Capital. Post-colonial states, originally contrived as agents of extraction, systematically thwart the entrepreneurial energies of their people because they are run for the benefit of a very small urban elite to the exclusion of everyone else. Small wonder many Third World countries struggle with huge informal sectors.

The Wealth and Poverty of Nations received much praise for its political-incorrectness. Landes does go out of his way to ruffle politically-correct sensibilities. He rages against left-wing liberals of every breed and often drops in the odd politically-incorrect gems of wisdom. For example, he states, "The British colonists were capable of cold murder, but hot torment and torture?..if I were a [Native American] Indian I would have rather died in British than in Spanish hands". Such an asinine comment is like saying to a Holocaust survivor, "I would have rather died in an industrial-scale extermination camp like Auschwitz than in Stalin's rural concentration camps". Such statements are not just politically-incorrect; they are also tactless and insensitive. One wonders if Landes had an editor.

Tactless remarks notwithstanding, the proof of the cultural argument is its validation in the real world. Test case: India and China. Disappointingly, the book barely discusses post-colonial India and China. Could one have said in 1990 that China and India would achieve remarkable growth rates in the 2000s only from an analysis of their repective cultures? Furthermore, as (Catholic) Spain and Brazil--two countries that Landes ruthlessly grills--achieved higher growth rates than many Protestant countries, could one have attributed these growth spurts to "Catholic" culture?

As one who has experienced the debilitating effects of cultural baggage like clannism in Nigeria, my first reaction to Landes' thesis was to assent in the main: culture really matters. However, after careful reflection, it seemed to me that Landes only got it partly right: Western Europe and Japan got ahead because they were the first to establish the rule of law, transparent(ish) government, institutions that support private enterprise and the promotion of national interests. While Western Europe's economic head-start may have been due in part to its cultural inheritance (hard work, thrift, curiosity, Enlightenment rationality etc), it seems that other factors such as common ethnicity, common language, and geography played important roles.

Landes' thesis suffers from the same flaw that afflicts mono-causal explanations of complex phenomena. Landes explains best: "Economic analysis cherishes the notion that one good explanation should be good enough, but the determinants of complex processes are invariably plural and interrelated." By arguing that culture is the determinant of the wealth and poverty of nations, Landes spectacularly failed to heed his own advice. Is Nigeria poor because Nigerians 'hate' entrepreneurship? Could it be that the causes of Third World poverty are multi-factorial? (the challenge of building viable multi-ethnic post-colonial states, failure to establish the rule of law, the presence of a rent-seeking, predatory elite etc?). By arguing that Western Europe's success is due mainly to its cultural inheritance, Landes overstates the case for culture. For all his wit and insight (especially into Japan's economic miracle), Landes' case that culture is everything is not convincing; it deserves three stars.

This book gives a very fine overview of why certain countries have accumulated more wealth than others.

Another review stated wealth is not the (only) measure for success and dismisses the book for it. Landes agrees with wealth not being the sole purpose of a society, but tries in his book to make understandable just why there are differences in wealth; without judging wealth or the way it is gathered as either good or bad. That is a proper and scientific standpoint.

The book starts in prehistoric times and follows a chronological path of wealth building in various regions: Europe, US (limited), Japan, China, Middle East and Africa. Up to around 1700 his story is entertaining as well as easy to follow: the prescriptions and conditions for wealth are clear, easy to understand and still applicable today (to a certain extent).

From the industrial revolution onward, as societies grow more complex, also the book becomes more complex and the reasoning of Landes becomes harder to follow. The final chapters were for me very difficult to read through. I personally believe the complexity and intertwinedness of societies in the last century makes it increasingly hard to pinpoint what makes the difference between growth and stability.

Since the origins of wealth and of poverty should be described until recent times, also the last chapters are essential. Omitting them would be like stopping before the climax of a movie...Overall I rate this book highly, and would recommend everybody to read it, and take notes per chapter to see where and how the factors for growing wealth still apply.

My opinion of this book is that anyone who wants to know "the causes of the wealth and poverty of nations" would do better to read Jared Diamond's "Guns, Germs and Steel" which is more thoroughly researched, more original, more thought through and more readable.

Having said that, Landes' book, while covering exactly the same subject, is as different from Diamond's as it is possible to be, and I would certainly recommend anyone who found GG&S interesting to read this too.

I liked this book for its ideas, its ambition and broad range and the many fascinating facts, stories and anecdotes. On the other hand on those subjects I have some knowledge of I found it rather shallow and sometimes inaccurate or out-of-date.

Landes has a take-no-prisoners style. At first I found this refreshing and enjoyable (since I mostly agree with what he has to say), but eventually I just got sick of his constant whinging about foreigners, political correctness and academic rivals... Despite what the other reviewers may say I would recommend not to read this book all in one go - unless you are a Daily Telegraph reader, in which case I guess you can cope!