Recently I was invited to debate Paul Collier at an event sponsored by the UBS International Center of Economics in Society. You can find videos of our conversation here and here. These are my notes for that event:
I want to start with Karl Marx, because he was probably one of the first economists to see capitalism as a force for universal progress. His views, as expressed in the Communist Manifesto of 1848, are fairly simple: capitalism creates a global market, destroys old ways of doing things and backward societies, and in so doing creates a global culture. Marx’s optimism is interesting not least because most present-day leftists see capitalism and the global markets as the root of all evil. I agree with Paul Collier that this kind of primitive anti-capitalism is counterproductive.
Max Weber and the cultural turn
In 1904, however, the sociologist Max Weber turned Marx on his head with his work on Protestant ethics and the spirit of capitalism. Instead of seeing culture as a superstructure, a product of the interactions of productive base and class structure, Weber saw the specific work ethic and asceticism of Calvinism, the Quakers etc. as a precondition for capitalist entrepreneurship, which in his opinion was why industrial capitalism evolved in the Protestant countries of Northern Europe and in North America rather than in the Catholic countries of the South.
I’m not sure how well Weber’s analysis bears up over time: in Germany, for instance, the once-backward Catholic state of Bavaria is by far the richest part of the country, whereas the protestant North and East are by and large poorer. Newer research seems to indicate that the Protestant countries git their lead less through a superior work ethic than thorough the culture of reading which raised productivity in general. But although Weber’s ideas may be questionable in detail, I think they open up a productive field of investigation.
Let me say right away, that Weber also lends himself to misuse. No culture is in and of itself backward. In the 19th and early 20th Century, Catholics were seen as inherently opposed to progress; now cultural absolutists decry Islam as unreformable. Broad generalizations are probably always wrong. At the same time, it was interesting to see how, during the Euro crisis, Euro member states split up largely along the lines indicated by Weber. However, since there are also lines that run counter to Weber, we need to be very careful. Greece for instance is not a Catholic country. But it is a country, like Spain, that had a fascist government until way into the 70s that corrupted the civil service and indeed a large part of the population with handouts. And so on.
Zionism as a Weberian experiment
It would be interesting to do an experiment. To plonk down a million people or so in a place where they were strangers, where had few resources except their own human capital and nothing to bind themselves together but a shared set of values: how would they fare relative to those who had lived in that place for ages, but had different values? Interestingly, the experiment has been conducted. It’s called Zionism. In “Mein Kampf”, Adolf Hitler wrote a Jewish State in Palestine would be merely a ”refuge for rogues and a university of rogues.” In fact, Israel is the only successful, modern, multicultural and continuously democratic state in the whole region. So studying the Zionist example would be a good point of departure for any discussion of development.
One of the things the Zionist experiment shows us is that neither a shared religion nor a shared culture is a necessary prerequisite for development. Jews from Iraq, Ethiopia or Germany have little in common as far as culture is concerned. Jews from Russia often speak little or no Hebrew in the first generation. Orthodox Jews from Mea Shearim despise secular Jews, and vice versa. There is also a large Arab minority in the state, part Christian, mostly Moslem, that by definition cannot accept the tenets of Zionism. And yet there has been no civil war, no military coup, no limitation of democracy. And the country, originally an exporter of citrus fruits and little else, has transformed itself into a start-up nation, that provides much of the software for the German car industry, for instance, not to mention defence and policing. What holds Israel together is loyalty to the state, what I think Paul Collier would call inclusive nationalism, exemplified by the three years every young person serves in the army, a feeling of being threatened, which generally brings out the best in a nation, a democratic system, including a free press, and an incredible work ethic among the elite. How much all this is informed by the Jewish principle of Tikun Olam is a matter of speculation.
The poisonous legacy of Positivism
let me give you a counter example: Latin America. Many theories have been advanced for the repeated and ongoing failure of Latin America to achieve a similar prosperity to the USA or Canada. Antiimperialists point to the exploitation by the Yankees. Revolutionaries to the landowning system. Anticlerical thinkers to the influence of the Catholic church. I think we also need to consider the political thought of Auguste Comte and the positivists, which became the dominant school in Latin America from about 1850. The positivists thought that only a kind of enlightened dictatorship could bring the benefits of science and industry to the backward countries of the region. This thinking is emblazoned on the flag of Brazil: Order and Progress. In reality, positivist thinking spawned a caudillo system. It is no accident that Brazil has now elected a far-right President, and you don’t have to be a prophet to imagine where Jair Messias Bolsonaro will end. On the other side of the positivist spectrum, Venezuela is sliding, thanks to Chavez and his successor, into total despair.
The elite is key
So what is needed is an elite committed to the ideals of inclusive nationalism, democracy, and hard work. Possibly also, as in Israel, institutions like the Kibbuzim and the army, dedicated to instilling a sense of national service into youth, and working for the good of the country rather than being a parasitic element sucking off wealth. Without at least the germs of this kind of cultural revolution, I fear development will always slide back. We have seen in Syria and Libya, Venezuela and indeed Nicaragua, how easy it is to destroy a country that cannot claim the loyalty of its own citizens.