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Yes, culture is important but...
on 9 August 2009
David Landes' thesis is simple: culture is the key determinant of societal-level wealth. 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.
CAVAET EMPTOR: DIRECTION OF CAUSALITY
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 Indonesia's relative economic success and Nigeria's dismal economic performance. Really? His argument rests on two assumptions: (1) That culture is static; and (2) culture is the cause of economic development. Both assumptions are shaky.
Consider the following descriptions of 'German culture' as observed by some well-educated Britons in the nineteenth century:
1. "The Germans never hurry"... "They work as and when they please." Mary Shelley (1843), quoted in Rambles in Germany and Italy, vol. 1 (Edward Monkton, London), p. 276.
2. "The [German] tradesman and the shopkeeper take advantage of you wherever they can, and to the smallest imaginable amount rather than not take advantage of you at all.." Sir Arthur Brooke Faulkner (1833), Visit to Germany and the Low Countries.
The Germans never hurry? The Germans take advantage of you wherever they can? These statements do not resonate with us today because we consider Germans to be the epitome of industry and thrift. We have no reason to believe that these observations are infact true. Might Mary Shelley have suffered from confirmation bias? If these observations were true in the nineteenth century, the fact that Germans are considered industrious today suggests that culture does change.
Is national culture the cause of economic growth? Did today's rich countries 'start off' with superior cultures 200 years ago? The direction of causality is more complex than Landes supposes. No wealthy country got its culture correct right off the bat; instead, the process of industrialisation influenced national culture and vice versa.
WHAT DOES LANDES SEE?
Landes argues that developing countries are poor because their populations have anti-entrepreneurial cultures. This argument conflates the people with the government, but there is an important distinction between them. Obviously, Professor Landes has never been to the bustling markets of Lagos to witness first-hand the entrepreneurial drive of Nigerian market women. To argue that a developing country like Nigeria is poor simply because the culture of the people is inimical to entrepreneurship 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 one who has seen the drive and resilience of many small-scale Nigerian entrepreneurs (especially women), I take exception to Landes' glib analysis. Landes completely missed it: he conflates the state with the people - and they are not the same.
Many post-colonial countries are poor not because the people are anti-entrepreneurial, but because the post-colonial governments are. Hernando de Soto demonstrates this 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 small urban elite to the exclusion of everyone else.
SO MUCH POLITICAL INCORRECTNESS, SO LITTLE ANALYSIS
The Wealth and Poverty of Nations received much praise for its political-incorrectness. Landes goes 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 an Indian [Native American] I would have rather died in British than in Spanish hands". What an asinine comment. It is like saying to a Holocaust survivor, "Wouldn't you rather have died quickly and efficiently in an industrial-scale extermination camp like Auschwitz than in one of Stalin's horridly inefficient concentration camps". Such statements are not only politically-incorrect, they are also tactless and obtuse. One wonders if Landes had an editor.
Tactless remarks notwithstanding, the proof of the cultural argument is real-life validation. Test case: India and China. Disappointingly, the book barely discusses post-colonial India and China. Could one have predicted in 1990 that China and India would achieve remarkable growth rates in the 2000s only from an analysis of their respective national 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?
NOT THE COMPLETE STORY
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. Afterall, Westerners are not the only ones who worked hard or were thrifty. Moreover, economic success further may have re-inforced supporting institutions. Therefore, to argue that Western countries are rich today because Western culture always glorified hard work, thrift and rationality is to be overly simplistic.
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 developing-country poverty are multi-factorial: the detritus of colonial institutions, 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? 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.