[Paleopsych] Meme 051: The Maureen Dowd Theory of Western Civilization (plus Deepak Lal)

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Meme 051: The Maureen Dowd Theory of Western Civilization (plus Deepak 
Lal)

Here's a letter I submitted to the Chronicle of Higher Education. It is 
followed by the article by Rodney Stark itself.

There are other theories about how unintended consequences ulitimately 
resulted in Western capitalism. One that you may not know about is a 
purely cultural one, not a gene-culture co-evolutionary one like the one I 
am proposing. Lal traces the eventual emergence of capitalism to some 
decisions by Popes Gregory I and Gregory VII that were intended only to 
benefit the church. I appended articles by and an interview with him.

But whether capitalism would have come about by a different route had the 
two Gregs ruled otherwise is another matter. I think it would have.

------------------

To the editor of The Chronicle of Higher Education

Rodney Stark, "How Christianity (and Capitalism) Led to Science" (December 
2), overlooks the fact that Byzantine Christianity did not lead to 
scientific rationalism. Nor does he explain why European Christians 
focused on the writings of the more rational Church fathers rather than on 
those of obfuscators, obscurantists, and occultists. All religions have 
these two sides voluminously represented in their writings.

The answer lies with temperament. Europeans are more individualistic. For 
Europeans, it is not what the authorities say but the sovereignty of one's 
own individual reason. To explain this, I present (?invoke) the Maureen 
Dowd theory of Western Civilization. The blue eyes and flaming red hair of 
Ms. Dowd owe originally to biological adaptations to the climate of 
Ireland. The side effect was to make men and women more distinct and 
individuated from each other. They paid more attention to one another, 
less to the authorities, and more toward the external, observable world, 
most especially to the Maureens of that external world.

When Darwin's other process, sexual selection, gets into the act, 
evolution can really take off (Geoffrey Miller, _The Mating Mind_). 
Antlers, as everyone knows, are sexual attractors: they help male deer 
acquire mates even as they hinder them in getting food. Antlers are too 
big for the physical environment. Eyes in humans are too often blue, I 
contend, when they are far from Ireland.

Unlike antlers, reason, one might think, would help get food, but in fact 
the brains of primates are big, not so much to get food by finding out 
objective truth as to get along with conspecifics. Primates, and man 
especially, are social animals. Better to go along to get along.

It was flaming red heads (blondes, too) with blue eyes that quite 
accidentally triggered off the revolution of individualism and 
objectivism. And who is more individuated (the objectivity is sometimes 
questionable) than Ms. Dowd?

--------------

How Christianity (and Capitalism) Led to Science
The Chronicle of Higher Education, 5.12.2
http://chronicle.com/weekly/v52/i15/15b01101.htm


By RODNEY STARK

When Europeans first began to explore the globe, their greatest
surprise was not the existence of the Western Hemisphere, but the
extent of their own technological superiority over the rest of the
world. Not only were the proud Maya, Aztec, and Inca nations helpless
in the face of European intruders, so were the fabled civilizations of
the East: China, India, and Islamic nations were "backward" by
comparison with 15th-century Europe. How had that happened? Why was it
that, although many civilizations had pursued alchemy, the study led
to chemistry only in Europe? Why was it that, for centuries, Europeans
were the only ones possessed of eyeglasses, chimneys, reliable clocks,
heavy cavalry, or a system of music notation? How had the nations that
had arisen from the rubble of Rome so greatly surpassed the rest of
the world?

Several recent authors have discovered the secret to Western success
in geography. But that same geography long also sustained European
cultures that were well behind those of Asia. Other commentators have
traced the rise of the West to steel, or to guns and sailing ships,
and still others have credited a more productive agriculture. The
trouble is that those answers are part of what needs to be explained:
Why did Europeans excel at metallurgy, shipbuilding, or farming?

The most convincing answer to those questions attributes Western
dominance to the rise of capitalism, which took place only in Europe.
Even the most militant enemies of capitalism credit it with creating
previously undreamed of productivity and progress. In
The Communist Manifesto, Karl Marx and Friedrich Engels proposed that
before the rise of capitalism, humans engaged "in the most slothful
indolence"; the capitalist system was "the first to show what man's
activity can bring about." Capitalism achieved that miracle through
regular reinvestment to increase productivity, either to create
greater capacity or improve technology, and by motivating both
management and labor through ever-rising payoffs.

Supposing that capitalism did produce Europe's own "great leap
forward," it remains to be explained why capitalism developed only in
Europe. Some writers have found the roots of capitalism in the
Protestant Reformation; others have traced it back to various
political circumstances. But, if one digs deeper, it becomes clear
that the truly fundamental basis not only for capitalism, but for the
rise of the West, was an extraordinary faith in reason.

A series of developments, in which reason won the day, gave unique
shape to Western culture and institutions. And the most important of
those victories occurred within Christianity. While the other world
religions emphasized mystery and intuition, Christianity alone
embraced reason and logic as the primary guides to religious truth.
Christian faith in reason was influenced by Greek philosophy. But the
more important fact is that Greek philosophy had little impact on
Greek religions. Those remained typical mystery cults, in which
ambiguity and logical contradictions were taken as hallmarks of sacred
origins. Similar assumptions concerning the fundamental
inexplicability of the gods and the intellectual superiority of
introspection dominated all of the other major world religions.

But, from early days, the church fathers taught that reason was the
supreme gift from God and the means to progressively increase
understanding of Scripture and revelation. Consequently Christianity
was oriented to the future, while the other major religions asserted
the superiority of the past. At least in principle, if not always in
fact, Christian doctrines could always be modified in the name of
progress, as demonstrated by reason. Encouraged by the scholastics and
embodied in the great medieval universities founded by the church,
faith in the power of reason infused Western culture, stimulating the
pursuit of science and the evolution of democratic theory and
practice. The rise of capitalism also was a victory for
church-inspired reason, since capi-talism is, in essence, the
systematic and sustained application of reason to com-merce --
something that first took place within the great monastic estates.

During the past century Western intellectuals have been more than
willing to trace European imperialism to Christian origins, but they
have been entirely un-willing to recognize that Christianity made any
contribution (other than intolerance) to the Western capacity to
dominate other societies. Rather, the West is said to have surged
ahead precisely as it overcame re-ligious barriers to progress,
especially those impeding science. Nonsense. The success of the West,
including the rise of science, rested entirely on religious
foundations, and the people who brought it about were devout
Christians. Unfortunately, even many of those historians willing to
grant Christianity a role in shaping Western progress have tended to
limit themselves to tracing beneficial religious effects of the
Protestant Reformation. It is as if the previous 1,500 years of
Christianity either were of little matter, or were harmful.

Such academic anti-Roman Catholicism inspired the most famous book
ever written on the origins of capitalism. At the start of the 20th
century, the German sociologist Max Weber published what soon became
an immensely influential study: The Protestant Ethic and the Spirit of
Capitalism. In it Weber proposed that capitalism originated only in
Europe because, of all the world's religions, only Protestantism
provided a moral vision that led people to restrain their material
consumption while vigorously seeking wealth. Weber argued that, before
the Reformation, restraint on consumption was invariably linked to
asceticism and, hence, to condemnations of commerce. Conversely, the
pursuit of wealth was linked to profligate consumption. Either
cultural pattern was inimical to capitalism. According to Weber, the
Protestant ethic shattered those traditional linkages, creating a
culture of frugal entrepreneurs content to systematically reinvest
profits in order to pursue ever greater wealth, and therein lies the
key to capitalism and the ascendancy of the West.

Perhaps because it was such an elegant thesis, it was widely embraced,
despite the fact that it was so obviously wrong. Even today The
Protestant Ethic enjoys an almost sacred status among sociologists,
although economic historians quickly dismissed Weber's surprisingly
undocumented monograph on the irrefutable grounds that the rise of
capitalism in Europe preceded the Reformation by centuries. Only a
decade after Weber published, the celebrated Belgian scholar Henri
Pirenne noted a large literature that "established the fact that all
of the essential features of capitalism -- individual enterprise,
advances in credit, commercial profits, speculation, etc. -- are to be
found from the 12th century on, in the city republics of Italy --
Venice, Genoa, or Florence." A generation later, the equally
celebrated French historian Fernand Braudel complained, "All
historians have opposed this tenuous theory, although they have not
managed to be rid of it once and for all. Yet it is clearly false. The
northern countries took over the place that earlier had so long and
brilliantly been occupied by the old capitalist centers of the
Mediterranean. They invented nothing, either in technology or business
management." Braudel might have added that, during their critical
period of economic development, those northern centers of capitalism
were Catholic, not Protestant -- the Reformation still lay well into
the future. Further, as the Canadian historian John Gilchrist, an
authority on the economic activity of the medieval church, pointed
out, the first examples of capitalism appeared in the great Christian
monasteries.

Though Weber was wrong, however, he was correct to suppose that
religious ideas played a vital role in the rise of capitalism in
Europe. The material conditions needed for capitalism existed in many
civilizations in various eras, including China, the Islamic world,
India, Byzantium, and probably ancient Rome and Greece as well. But
none of those societies broke through and developed capitalism, as
none evolved ethical visions compatible with that dynamic economic
system. Instead, leading religions outside the West called for
asceticism and denounced profits, while wealth was exacted from
peasants and merchants by rapacious elites dedicated to display and
consumption. Why did things turn out differently in Europe? Because of
the Christian commitment to rational theology, something that may have
played a major role in causing the Reformation, but that surely
predated Protestantism by far more than a millennium.

Even so, capitalism developed in only some locales. Why not in all?
Because in some European societies, as in most of the rest of the
world, it was prevented from happening by greedy despots. Freedom also
was essential for the development of capitalism. That raises another
matter: Why has freedom so seldom existed in most of the world, and
how was it nurtured in some medieval European states? That, too, was a
victory of reason. Before any medieval European state actually
attempted rule by an elected council, Christian theologians had long
been theorizing about the nature of equality and individual rights --
indeed, the later work of such secular 18th-century political
theorists as John Locke explicitly rested on egalitarian axioms
derived by church scholars.

All of this stemmed from the fact that from earliest days, the major
theologians taught that faith in reason was intrinsic to faith in God.
As Quintus Tertullian instructed in the second century, "Reason is a
thing of God, inasmuch as there is nothing which God the Maker of all
has not provided, disposed, ordained by reason -- nothing which He has
not willed should be handled and understood by reason." Consequently
it was assumed that reason held the key to progress in understanding
scripture, and that knowledge of God and the secrets of his creation
would increase over time. St. Augustine (c. 354-430) flatly asserted
that through the application of reason we will gain an increasingly
more accurate understanding of God, remarking that although there are
"certain matters pertaining to the doctrine of salvation that we
cannot yet grasp ... one day we shall be able to do so."

Nor was the Christian belief in progress limited to theology.
Augustine went on at length about the "wonderful -- one might say
stupefying -- advances human industry has made." All were attributed
to the "unspeakable boon" that God has conferred upon his creation, a
"rational nature." Those views were repeated again and again through
the centuries. Especially typical were these words preached by Fra
Giordano, in Florence in 1306: "Not all the arts have been found; we
shall never see an end of finding them."

Christian faith in reason and in progress was the foundation on which
Western success was achieved. As the distinguished philosopher Alfred
North Whitehead put it during one of his Lowell Lectures at Harvard in
1925, science arose only in Europe because only there did people think
that science could be done and should be done, a faith "derivative
from medieval theology."

Moreover the medieval Christian faith in reason and progress was
constantly reinforced by actual progress, by technical and
organizational innovations, many of them fostered by Christianity. For
the past several centuries, far too many of us have been misled by the
incredible fiction that, from the fall of Rome until about the 15th
century, Europe was submerged in the Dark Ages -- centuries of
ignorance, superstition, and misery -- from which it was suddenly,
almost miraculously, rescued; first by the Ren-aissance and then by
the Enlightenment. But, as even dictionaries and encyclopedias
recently have begun to acknowledge, it was all a lie!

It was during the so-called Dark Ages that European technology and
science overtook and surpassed the rest of the world. Some of that
involved original inventions and discoveries; some of it came from
Asia. But what was so remarkable was the way that the full capacities
of new technologies were recognized and widely adopted. By the 10th
century Europe already was far ahead in terms of farm-ing equipment
and techniques, had unmatched capacities in the use of water and wind
power, and possessed superior military equipment and tactics. Not to
be overlooked in all that medieval progress was the invention of a
whole new way to organize and operate commerce and industry:
capitalism.

Capitalism was developed by the great monastic estates. Throughout the
medieval era, the church was by far the largest landowner in Europe,
and its liquid assets and annual income probably exceeded that of all
of Europe's nobility added together. Much of that wealth poured into
the coffers of the religious orders, not only because they were the
largest landowners, but also in payment for liturgical services --
Henry VII of England paid a huge sum to have 10,000 masses said for
his soul. As rapid innovation in agricultural technology began to
yield large surpluses to the religious orders, the church not only
began to reinvest profits to increase production, but diversified.
Having substantial amounts of cash on hand, the religious orders began
to lend money at interest. They soon evolved the mortgage (literally,
"dead pledge") to lend money with land for security, collecting all
income from the land during the term of the loan, none of which was
deducted from the amount owed. That practice often added to the
monastery's lands because the monks were not hesitant to foreclose. In
addition, many monasteries began to rely on a hired labor force and to
display an uncanny ability to adopt the latest technological advances.
Capitalism had arrived.

Still, like all of the world's other major religions, for centuries
Christianity took a dim view of commerce. As the many great Christian
monastic orders maximized profits and lent money at whatever rate of
interest the market would bear, they were increasingly subject to
condemnations from more traditional members of the clergy who accused
them of avarice.

Given the fundamental commitment of Christian theologians to reason
and progress, what they did was rethink the traditional teachings.
What is a just price for one's goods, they asked? According to the
immensely influential St. Albertus Magnus (1193-1280), the just price
is simply what "goods are worth according to the estimate of the
market at the time of sale." That is, a just price is not a function
of the amount of profit, but is whatever uncoerced buyers are willing
to pay. Adam Smith would have agreed -- St. Thomas Aquinas (1225-74)
did. As for usury, a host of leading theologians of the day remained
opposed to it, but quickly defined it out of practical existence. For
example, no usury was involved if the interest was paid to compensate
the lender for the costs of not having the money available for other
commercial opportunities, which was almost always easily demonstrated.

That was a remarkable shift. Most of these theologians were, after
all, men who had separated themselves from the world, and most of them
had taken vows of poverty. Had asceticism truly prevailed in the
monasteries, it seems very unlikely that the traditional disdain for
and opposition to commerce would have mellowed. That it did, and to
such a revolutionary extent, was a result of direct experience with
worldly imperatives. For all their genuine acts of charity, monastic
administrators were not about to give all their wealth to the poor,
sell their products at cost, or give kings interest-free loans. It was
the active participation of the great orders in free markets that
caused monastic theologians to reconsider the morality of commerce.

The religious orders could pursue their economic goals because they
were sufficiently powerful to withstand any attempts at seizure by an
avaricious nobility. But for fully developed secular capitalism to
unfold, there needed to be broader freedom from regulation and
expropriation. Hence secular capitalism appeared first in the
relatively democratic city-states of north-ern Italy, whose political
institutions rested squarely on church doctrines of free will and
moral equality.

Augustine, Aquinas, and other major theologians taught that the state
must respect private property and not intrude on the freedom of its
citizens to pursue virtue. In addition, there was the central
Christian doctrine that, regardless of worldly inequalities,
inequality in the most important sense does not exist: in the eyes of
God and in the world to come. As Paul explained: "There is neither Jew
nor Greek, there is neither bond nor fee, there is neither male nor
female, for ye are all one in Christ Jesus."

And church theologians and leaders meant it. Through all prior
recorded history, slavery was universal -- Christianity began in a
world where as much as half the population was in bondage. But by the
seventh century, Christianity had become the only major world religion
to formulate specific theological opposition to slavery, and, by no
later than the 11th century, the church had expelled the dreadful
institution from Europe. That it later reappeared in the New World is
another matter, although there, too, slavery was vigorously condemned
by popes and all of the eventual abolition movements were of religious
origins.

Free labor was an essential ingredient for the rise of capitalism, for
free workers can maximize their rewards by working harder or more
effectively than before. In contrast, coerced workers gain nothing
from doing more. Put another way, tyranny makes a few people richer;
capitalism can make everyone richer. Therefore, as the northern
Italian city-states developed capitalist economies, visitors marveled
at their standards of living; many were equally confounded by how hard
everyone worked.

The common denominator in all these great historical developments was
the Christian commitment to reason.

That was why the West won.

Rodney Stark is university professor of the social sciences at Baylor
University. This essay is adapted from The Victory of Reason: How
Christianity Led to Freedom, Capitalism, and Western Success, to be
published in December by Random House.

   _________________________________________________________________

Modernization Versus Westernization by Deepak Lal
http://www.project-syndicate.org/series/series_text.php4?id=1064&lang=1

Everyone nowadays seems obsessed about the question as to whether or
not Islam can be reconciled with modernization. In discussing this
issue, what constitutes modernization is often confused with
westernization. Understanding the difference is vital.

India's encounter with the West over the past three centuries
underscores the distinction between the two processes - modernization
and Westernization - that are often assumed to be synonymous. In fact,
modernization does not entail Westernization, as the example of
contemporary Japan demonstrates. Whereas modernization entails a
change in belief about the way the material world operates,
Westernization entails a change in cosmological beliefs about the way
that one should live.

Like China and unlike Japan, India resisted changes in its ancient
beliefs about the way the world works (and should work) which
modernization entails. Instead, like many Islamic countries today,
India wrongly believed Gandhi's doctrine that modernization
necessarily means Westernization. Fitfully, and under the influence of
the British Raj, parts of the economy and society were modernized
during the second half of the 19^th century of laissez-faire and free
trade. Some of the traditional literary castes also embraced
Westernization.

British policy turned India into a pioneer of Third World
industrialization, with an economy increasingly based on domestic
capital and entrepreneurship combined with imported technology. But
modernization stalled when protectionist pressures from Lancashire and
the exigencies of Imperial finance led the British to abandon free
trade and laissez faire. At the same time, Westernization fueled the
rise of a nationalist movement.

The introduction of income taxes and UK labor laws in the late 19^th
century led to nearly a century of mounting state intervention in the
economy, a process that accelerated after independence. This damaged
India's growth prospects and hopes of alleviating its ancient scourge
of mass poverty. The breakdown of the global economy in the first half
of the 20^th century in the wake of the First World War further eroded
India's incipient integration into the world economy during the
British Raj. Finally, beginning with the economic reforms of 1991,
India at last rejected inward-looking policies, returning to where it
left off at the end of the 19^th century.

We now have a fairly clear quantitative picture of the performance of
the Indian economy throughout this period. During the 130 years from
1868 until 1999-2000, per capita income more than tripled, as national
income increased by a factor of eight while the population grew nearly
five-fold. This suggests that the age-old combination of economic
stagnation and cultural stability that I call the "Hindu Equilibrium"
seems finally to have been broken. But on closer inspection, it turns
out that this was largely due to the economic performance of the last
two decades.

The sub-period from 1868-1900 saw the beginning of industrialization
and India's partial integration into the world economy under the Raj.
National income did not stagnate, as nationalist historians once
maintained, but grew modestly, at an average annual rate of 1.1%.
Growth was fastest from 1870-1890, followed by large fluctuations in
output. A fairly low rate of population growth ensured a modest annual
rise in per capita income of about 0.7% during this period.

The second sub-period, 1900-1945, saw the breakdown of the global
economy and the start of India's population explosion. Growth of per
capita income decelerated between 1902 and 1930 and declined further
in the last fifteen years of British rule until 1947. After 1920, this
was due entirely to the rise in population growth, to 1.22 % per year,
which outpaced fairly high output growth throughout the decade until
1930. Over this entire 45-year sub-period, output grew at just above
1% annually--the same rate as under the Raj--but yearly population
growth soared to 0.8%, causing virtual stagnation of per capita
income.

The third sub-period, 1950-1980, marked the heyday of economic
planning. Infrastructure investment - which had been difficult for the
embattled British Raj to finance--suddenly boomed. This, together with
high agricultural growth rates, led to a dramatic rise in output,
which increased at an annual average rate of 4.5%. But the demographic
explosion that began in the 1920's had by now driven the rate of
population growth up to 3% per year, so that annual per capita income
grew by only 1.5%.

A departure from what the late Raj Krishna dubbed the "Hindu rate of
growth" came only in the fourth sub-period, from 1980-1999. Partial
economic liberalization, undertaken by the Rajiv Gandhi government in
the mid-1980s, and the more substantial Narasimha Rao-Manmohan Singh
economic reforms in 1991, boosted national income growth to an average
annual rate of 6.8%. At the same time, yearly population growth slowed
to an average of 2.3%, so that per capita income rose at an impressive
annual rate of 4.5%, making a dent in India's mass structural poverty
for the first time in millennia.

If India can now complete the unfinished business of fully integrating
into the global economy, there is no reason why it cannot improve upon
its impressive recent growth performance. If it succeeds, Nehru's
pledge, on the eve of Indian independence, "to wipe every tear from
every eye," will finally be redeemed.

India's Economic Performance : 1868-2000

Year Per Capita Income

   (at 1948-49 prices- Rs.) Population

(million)

1868 176 209

1900 213 238

1945 244 319

1950 221 359

1980 318 679

1999-00 602 991

   Average Annual Growth Rates (per cent per annum)

1868-2000 1868-1900 1900-1945 1950-1980 1980-2000

per capita income 2.6 0.7 0.3 1.5 4.5

population 3.6 0.4 0.8 3.0 2.3

national income 6.2 1.1 1.1 4.5 6.8

Deepak Lal, Professor of international development at the University
of California, Los Angeles, has advised many governments. His books
include: "The Poverty of 'Development Economics'", "The Hindu
Equilibrium", and "The Political Economy of Poverty, Equity and
Growth."

References

   42. http://www.project-syndicate.org/contributors/contributor_comm.php4?id=452

--------------

Deepak Lal on Culture and Development 
http://www.cato.org/pubs/policy_report/v22n1/lal-llosa.html

My UCLA colleague Jared Diamond wrote a marvelous book called Guns, Germs, 
and Steel. He asked, Why is it that Africa, the birthplace of man, tends 
to be one of the planet~Rs poorest places? And why is it that Eurasia, a 
latecomer in evolutionary terms, is wealthier and more powerful? His 
argument is that Eurasia~Rs ecological circumstances gave it a head start 
because they made settled agriculture possible.

My starting point is, Why is it that of those Eurasian civilizations 
stretching from Mesopotamia to the Yellow River in China only one, what we 
now call the West, experienced Promethean growth? A millennium ago, the 
greatest empire was the Islamic Abbaside empire. The great efflorescence 
in China under the Sung was still to come. The Sung had the technological 
ingredients for the industrial revolution, but it did not occur in China.

So technological explanations are inadequate. Many economic historians 
have tried to explain the economic growth of the West in terms of 
political factors. One theory is that decentralization resulted in 
competition among states, making them less predatory and allowing property 
rights to develop. But the trouble with that theory is India. It had 
contestable states, cultural unity just like Western Christendom, and 
early technology. Most of the cross-cultural historical explanations just 
don~Rt wash. As Joseph Needham has said, it~Rs a package; no single 
element will explain it.

My thesis is that cultural factors are missing from the explanations.

Human beings are unique because of their intelligence. Most species have 
to mutate into a new species to survive in a changed environment. Man, on 
the other hand, learns through a process of trial and error to adapt to a 
new environment, adopting new social customs. Those social customs are 
then transferred from one generation to the next, essentially through 
childhood socialization, and form part of a culture.

I~Rd like to distinguish between two types of beliefs. One, material 
beliefs, is what economists are largely concerned about. In order to make 
a living, people change their material beliefs in response to 
technological changes. The second set of beliefs I call cosmological. They 
concern, in Plato~Rs words, how one should live~Wmankind~Rs place in the 
world, ideas about God, the purpose of life.

There~Rs a lot of anthropological and cross-cultural evidence that 
material beliefs are malleable. If the environment changes, people will 
change their beliefs. You have only to look at how quickly peasants in 
many developing countries become industrial workers once the environment 
changes. In contrast, cosmological beliefs are extremely difficult to 
change.

If you understand the importance of these two types of beliefs, you can 
look at transactions costs to understand why we have certain social 
institutions to curb self-seeking behavior. The formal constraint is the 
law. The informal constraint is morality. Those institutional constraints 
on self-seeking behavior are required to reduce transactions costs. There 
are two types of transactions costs. One is the transactions costs of 
exchange, that is, the costs of finding a trading partner.

The other type of transactions costs is the costs of policing 
opportunistic behavior. We basically are self-seeking egotists who will 
lie, cheat, steal, and free ride if we can. Clearly, in your social and 
business interactions, you can~Rt monitor an agent~Rs actions. The agent 
has many incentives to lie, cheat, and steal. So such opportunistic 
behavior has to be controlled.

Cosmological beliefs are very important for policing transactions costs. 
To see that, we need to go back and see what cosmological beliefs were in 
ancient civilizations and why they were altered.

Evolutionary anthropology argues that if you want to see what basic human 
nature is, you should look at the human animal in the Stone Age. In the 
hunter-gatherer phase you have a lot of face-to-face contact with other 
members of the tribe, and clearly cooperation does yield mutual gains. 
Evolutionary anthropologists call this reciprocal altruism. For 
economists, it is a Prisoner~Rs Dilemma game in which the goal is to get 
people to cooperate rather than defect.

The trouble starts once you have settled agriculture. Economic space 
expands, a lot of anonymous strangers appear, and our nasty opportunistic 
instincts come to the fore and we lie, cheat, steal, hit the strangers on 
the head. Most agrarian civilizations have tried to internalize moral 
codes to prevent that type of opportunistic behavior. That is really the 
purpose of morality. Moral codes were not always based on religions. They 
allow societies to police opportunistic behavior. And they form the 
essential core of the cosmological beliefs of civilizations.

Those beliefs are usually transmitted by playing on the moral emotion of 
shame. Shame is used to this day to turn hunter-gatherer monsters into 
moral, civilized beings.

If you want to know the content of cosmological and material beliefs, you 
have to go back to the origins of agrarian civilizations. One of the most 
important aspects of cosmological beliefs is political legitimacy. What do 
people consider politically legitimate? You have to look at the 
cosmological beliefs of early civilizations.

For example, when Chinese civilizations were created, in the confined 
Yellow River area, they were constantly threatened by northern barbarians 
who kept trying to exploit them like cattle. The Chinese created a tightly 
controlled bureaucratic state to prevent barbarian intrusions from the 
north, putting up the Great Wall of China. In that respect, Chinese 
history is repeating itself today. You~Rve got this bureaucratic 
authoritarian state being formed, you get little rebellions, the mandate 
of heaven is taken away, you have a period of chaos, and then another 
bureaucratic authoritarian state is established. That ancient political 
habit is very strong in China. To expect China to suddenly become an 
imitation of America is absurd. People don~Rt change their habits quickly 
after 2,000 years.

The cosmological beliefs of agrarian civilizations are not very conducive 
to modern economic growth, for two reasons. First, the need to prevent 
opportunistic self-serving behavior meant that those moral codes were not 
very individualistic. Second, agrarian civilizations take a very dim view 
of markets and merchants. So the puzzle is, Why, out of the blue, do you 
have one little corner of the huge Eurasian landmass taking off?

I argue that the major change arose because of the unintended consequences 
of two papal revolutions. One was Gregory the Great~Rs changes in Church 
law pertaining to families in the sixth century, and the second, which 
created the whole legal and commercial infrastructure for the market 
economy, was Gregory VII~Rs assertion in 1075 that the pope was the ruler 
of all Christendom and the direct representative of God on earth and, as 
such, had authority over all things temporal.

From the beginning the Christian church had been in the business of 
acquiring property, largely from rich widows. Pope Gregory I~Rs rules 
concerning sex and marriage overturned traditional domestic patterns all 
over Eurasia, where inheritance of land was extremely important. Gregory 
made it more difficult for people to have heirs. All sorts of ways of 
ensuring an heir were banned. Demographers estimate that, as a result of 
these injunctions, 40 percent of families lacked male heirs. That meant 
you had a huge inflow of property to the church. By the end of the seventh 
century, the church held about one-third of the land in France. What 
happens when you have such a huge honeypot? It attracts predators, from 
both inside and outside.

Gregory VII essentially created the church state. To protect the church~Rs 
property, the whole administrative and legal and commercial apparatus of a 
modern state had to be created. And that great revolution, mostly a legal 
one, created infrastructure that led to the rise of the West.

The two papal revolutions are not at all conjoined. Some people maintain 
that the Western family was essential for the industrial revolution; 
there~Rs no evidence of that. There are others who claim that 
industrialization will actually lead to Western-style family domain; 
there~Rs no evidence of that, either. You can choose whatever you like in 
the cosmological sphere, which affects the domestic domain, and still 
adopt Gregory VII~Rs market-based revolution.

So I conclude, looking across civilizations, that to the extent societies 
can adapt, they~Rre perfectly willing to accept changes in material 
beliefs, but they~Rre not nearly as willing to accept changes in 
cosmological beliefs. You can modernize without Westernizing.

--------------

Love And Marriage
http://www.ccsindia.org/people_dl_marriage.htm
[1]Deepak Lal
Thursday, January 8, 1998

The early Church had a self-interest in overthrowing traditional
Eurasian family values, writes Deepak Lal.

The ultimate fear of the cultural nationalists is that modernisation
will undermine traditional mores concerning marriage and the family.
The resistance to the purported cultural pollution coming over the
satellite channels and the shenanigans concerning the Miss World
contest reflect this fear. But is it justified?

Since Marx and Engels there has been the view that with modernisation
the traditional extended family identified with pre-industrial
societies is doomed. Modern families will become more and more like
western families: with love marriages, nuclear families and a
cold-hearted attitude to the old.

There are others who maintain that as the western style of family
seems to go back at least to the Middle Ages in northern Europe. This
family pattern was not merely the consequence but the cause of the
western industrial revolution.

Research by the Cambridge anthropologist, Jack Goody, (The Oriental,
the Ancient and the Primitive) cast serious doubts on both these
positions.

First, as historical evidence shows, the western family revolution
predated the industrial revolution. Clearly, the latter could not have
caused the former. Second, as Goody shows, the purported advantages of
the western system, leading to a greater control of fertility, were to
be found in many other Eurasian family systems which, however, did not
deliver industrial revolutions.

But that the western Christian world, particularly in its
north-western outpost, deviated from what had been the traditional
family pattern in Eurasia from about the late 6th century seems
undeniable. The major difference was that in the West, the Church came
to support the independence of the young: in choosing partners,
setting up households and entering into contractual rather than
affective relationships with the old. They promoted love marriages.
But why did the Church promote love marriages?

It has been thought that romantic love, far from being a universal
emotion, was a western social construct of the age of chivalry in the
Middle Ages. Recent anthropological and psychological research,
however, confirms that this erroneous-romantic love is a universal
emotion. (Jankowiak (ed): Romantic Passion; and Fisher: Anatomy of
Love) Moreover, it has a biological basis.

Neuro-psychologists have shown that it is associated with increased
levels of phenylethylamine, an amphetamine-related compound.
Interestingly, the same biochemicals are also to be found in other
animal species like birds. However, it appears that this emotion is
ephemeral.

After a period of attachment, the brain's receptor sites for the
essential neuro-chemicals become desensitised or overloaded and the
infatuation ends, setting up both the body and brain for separation i
divorce. This period of infatuation has been shown to last for about
three years. A cross-cultural study of divorce patterns in 62
societies between 1947-1989 found that divorces tend to occur around
the fourth year of marriage.

A universal emotion with a biological basis calls for an explanation.
Socio-biologists maintain that in the primordial environment, it was
vital for males and females to be attracted to each other to have sex
and reproduce and also for the males to be attached enough to the
females to look after their young until they were old enough to move
into a peer group and be looked after by hunting-gathering band.

The traditional period between successive human births is four years
-- which is also the modal period for those marriages which end in
divorce today. Darwin strikes again! The biochemistry of love, it
seems, evolved as an "inclusive fitness" strategy of our species.

The capacity to love may be universal but its public expression is
culturally controlled. Given its relatively rapid decay with settled
agriculture, the evolved instinct for mates to stay together for about
four years and then move on to new partners to conceive and rear new
young would have been dysfunctional.

Settled agriculture requires settled households. Not surprisingly,
most agrarian civilisations sought to curb the explosive primordial
emotion which would have destroyed their way of making a living. They
have used cultural constraints to curb this dangerous hominid tendency
by relying on arranged marriages, infant betrothal and the like,
restricting romantic passion to relationships outside marriage.

The West stands alone in using this dangerous biological universal
emotion as the bastion of its marriages as reflected in the popular
song: "Love and marriage go together like a horse and carriage".

The reason for this western exceptionalism goes back to the earliest
period of the Christian Church, which from its inception had grown as
a temporal power through gifts and donations - particularly from rich
widows. So much so, that in July 370 the Emperor Valentinian addressed
a ruling to the Pope that male clerics and unmarried ascetics should
not hang around the houses of women and widows and try to worm
themselves and their churches into their bequests at the expense of
the women's families and blood relations.

The Church was thus from the beginning in the race for inheritances.
The early Church's extolling of virginity and preventing second
marriages helped it in creating more single women who would leave
bequests to it.

This process of inhibiting a family from retaining its property and
promoting its alienation accelerated with the answers that Pope
Gregory I gave to some questions. Four of these nine questions
concerned sex and marriage. Gregory's answers overturned the
traditional Mediterranean and Middle Eastern patterns of legal and
customary practices in the domestic domain.

The traditional system was concerned with the provision of an heir to
inherit family property and allowed marriage to close kin, marriages
to close affines or widows of close kin, the transfer of children by
adoption, and finally concubinage.

Gregory amazingly banned all four practices. Thus, for instance,
adoption of children was not allowed in England till the 19th century.
There was no basis for these injunctions in Scripture, Roman law or
the existing customs in the areas that were Christianised.

This Papal family revolution made the Church unbelievably rich.
Demographers have estimated that the net effect of the prohibitions on
traditional methods to deal with childlessness was to leave 40 per
cent of families with no immediate male heirs. The Church became the
chief beneficiary of the resulting bequests.

But the Church also had to find a way to prevent the social chaos
which would have ensued if the romantic passion its greed had
unleashed as the basis for marriage had been allowed to run its course
in a settled agrarian civilisation. First, it separated love and sex,
and then created a fierce guilt culture based on Original Sin.

Its pervasive teaching against sex and the associated guilt it
engendered provided the necessary antidote to the "animal passions"
that would otherwise have been unleashed by the Church's self-interest
in overthrowing of the traditional Eurasian system of marriage.

But once the Christian God died with the scientific and Darwinian
revolutions, these restraints were finally removed. The family became
sick in the West, as the western humanoids reverted to the "family"
practices of their hunter-gatherer ancestors.

However, there is no reason whatsoever for the rest of the world to
follow this peculiar and particular western trajectory. It is not
modernisation but the unintended consequences of Pope Gregory I's
family revolution which have led to the death in the West of the
Eurasian family values.

The author is James S Coleman Professor of International Development
Studies at the University of California, LA.

Thursday, January 8, 1998

References

1. http://www.ccsindia.org/people_dl_deepak.htm

-------------

Deepak Lal (interview): Papal Revolutions, Political Habits, and Predatory 
States

Policy, Spring 1999

http://www.cis.org.au/Policy/Spr99/spr99-5.pdf

Jason Soon talks to Deepak Lal
Jason Soon is Assistant Editor of Policy.

Deepak Lal is James S. Coleman Professor of International Development 
Studies at the University of California, Los Angeles. He is a highly 
acclaimed economist who, along with Peter Bauer, has long challenged the 
statist nostrums of development economics and proven to be correct in the 
long run. His latest book, Unintended Consequences, is a wide ranging 
examination of the origins of economic and political liberalism and the 
consequences of this for the differential rates of development between 
Western and other societies. The main thesis of his book was presented as 
a speech to the Special Regional Meeting of the Mont Pèlerin Society, held 
recently in Indonesia, and provoked much debate among delegates.

Jason Soon: You once wrote a book called The Poverty of Development 
Economics. How would you assess the state of development economics since 
then?

Deepak Lal: When I first wrote it, development economics was essentially 
the economics of planning and regulation and it was really written in 
anger because it had done great damage to many developing economies, 
particularly India. The most amazing thing which has happened since then, 
of course, is that in the early 1980s you saw the collapse of the type of 
dirigiste policies recommended by development economics. My book seems to 
have done its bit in demolishing the intellectual arguments for dirigisme.

JS: Are there any contemporary writers in the field of development 
economics whom you admire?

DL: The field is much broader than economics so it's hard to say. I think 
the broadness of the discipline has to be emphasised. Inmy book with 
Myint, The Political Economy of Poverty, Equity and Growth, I spent a lot 
of time on political economy to try and explain why countries did not 
follow the type of policies which would yield equitable and 
poverty-reducing growth. And that meant that I had to look at a broader 
range of issues and then link that with all the cultural issues which my 
latest book Unintended Consequences addresses.

JS: Would you then attribute the improvements in development economics to 
developments in other areas of economics which takes us away from the 
naïve view of benevolent social planners, such as public choice theory?

DL: Yes. In a sense my political economy book was inspired by public 
choice but the trouble with public choice theory as it stands is that it 
was really written with the institutions of the US in mind. For many 
developing countries, that's not relevant. Part of the exercise is to try 
and develop the sort of model or sets of models applicable to developing 
countries. I think the model which best fits most developing countries is 
what I call the predatory state. I think this has many more insights than 
public choice theory.

JS: You argued in your speech to this conference, explored at greater 
length in your book, that of the trinity of liberties -political, economic 
and civil-economic and civil liberties are essential to a good polity and 
you are therefore more likely to prescribe them as, in a sense, universal 
solutions. But you are less convinced of the 'universality' of political 
liberty.

DL: Yes, I think that without economic and civil liberties you can't 
preserve private property. You need some way of protecting private 
property and contract for the market to work. But I think those 
institutions can be readily adopted by adopting the appropriate legal and 
commercial codes and installing an independent judiciary.

JS: But why isn't political liberty part of the prescription?

DL: Both through human history and the history of current developing 
countries one can see that civil and economic liberty is possible without 
political liberty. Political liberty is a good in itself but there is no 
necessary connection between political liberties such as the right to vote 
and growth and development.

JS: Perhaps the argument which critics of your contention would make is 
that civil and economic liberties may not be sustainable in the long run 
without political liberty.

Let's put this argument in terms of economic theory. We can conceive of 
the ruler as revenue maximising. The problem is then to subvert the 
private interests of the ruler to the public interest.

It is agreed among liberals that policies which are in the public interest 
are those generally supportive of civil and economic liberties. Such 
policies are also more likely to maximise the wealth of a society in the 
long run and thus from the perspective of a ruler with a long run time 
horizon, are more likely to maximise his revenues in terms of taxes 
collected.

Thus, as you argued at the conference, it is feasible that a hereditary 
monarchy might pursue policies in the public interest given that the time 
horizon of the ruler is lengthened by considerations for his dynasty's 
welfare. He will thus want to maximise the present value of long run tax 
revenues. But in an authoritarian bureaucracy where there aren't any clear 
and stable succession mechanisms (partly because of the perceived 
illegitimacy of the process to the general public) the dictator will 
merely aim at short- run rent extraction. You then have the predatory 
state.

DL: There are two points to be made. Natural resource endowments determine 
how predatory the state is. In the political sense, the best thing is not 
to have any natural resources. Think of Hong Kong or Singapore, they're 
rocks. The only way their rulers are going to get any revenues is by 
cultivation of human resources and open market policies whether you'rea 
democracy or a dictatorship or a monarchy. Itmakes no difference when you 
don'thave natural resources what form of government there is to ensure 
development.

Remember that democratic government, after all, serves the interests of 
the median voter. So all that happens is that any sort of democratic 
government will extract rents and transfer them to the median voter. In an 
autocratic system it will go to the cronies. So the form of government if 
you have natural resource endowments isn't going to make a difference to 
the development path you go down, which will necessarily be less than 
ideal. I don't think that the rent seeking and rent extraction problem can 
be solved.

There's no unique form of government which will solve the problem in a 
natural resource rich country like Indonesia and that's why I prefer to go 
back to some form of government which is in tune with the political habits 
of the people. That particular form is more likely to be sustainable than 
some constructed democratic system. Therefore it seems to me that the way 
forward in Indonesia is to keep to some model of the traditional Javanese 
king. There are good kings and bad kings and they are ultimately held 
responsible for their behaviour. Just look at Soeharto.

Of course the Javanese kings will take a certain cut of tax revenues for 
themselves and their cronies. On the other hand, so long as they provide 
public goods which are important to development, that's fine and I think 
Soeharto by and large did this.

The question is what happens when you change leaders? If you have a bad 
king, the bad king is replaced. It's true, it's not a peaceful change. But 
that doesn't mean that the long run stability of the system is destroyed. 
It's just another form of succession.

JS: So you argue that the stability of succession problem in a 
dictatorship isn't too much of an issue. But nonetheless isn't the high 
magnitude of turmoil during a succession, even if this turmoil only crops 
up infrequently, going to be a major consideration for, say, the 
international investment community? Not to mention the danger that during 
this turmoil civil and economic liberties may slide back as an 
overreaction to political crises?

Doesn't the importance of the succession problem finally lead us back to 
Churchill's contention that democracy is the worst possible system you can 
think of except for the alternatives? I suppose one alternative, as you 
canvassed, is a proper hereditary system but that is hardly feasible in 
modern times.

DL: Well, there can be all sorts of political forms. You can clothe them 
with all sorts of labels. The question of political stability is like the 
problem of changing terms of trade. It just means that the expected income 
stream is slightly different. Investors with long time horizons will take 
these things into account. These problems are extremely exaggerated. 
Finding fixes is dangerous. That's what all this constitution making is 
all about-it's failed. Countries which employ traditional forms of 
governance have a greater chance of success.

JS: I now want to address your theory that the rise of the West can be 
attributed to changes in church doctrine. You suggest that changes in 
church doctrine led to the rise of cultural individualism which in turn 
led to the rise of the West. From this you also derive the contention that 
liberty is a Western concept.

DL: Absolutely. If you start asking yourself, 2000 years ago in all the 
Eurasian civilisations-Roman, Greek, Hindu, Chinese, Egyptian, etc-each of 
them had the preconditions for growth. The Chinese even had all the 
technological ingredients and Hindu civilisations had algebra. What was 
different in the West? There was something else. It comes down to their 
views about how human beings interact with each other. Therewas a great 
change in the conception of social relationships. Max Weber came to the 
same, correct conclusion but he got his dates wrong. He said the great 
change occurred during the Protestant revolution but we know capitalism 
started well before this.

The first Papal revolution in the 6th century, promoted the independence 
of the young. Once that happened, the communal ties of the young to the 
old were broken. People then essentially had contractual relations with 
their children. Wills go back to the 9th century in the West.

Then you have the story about the church's greed in trying to get bequests 
and inheritances. This induced the 11th century Papal revolution which 
really provided all the legal and commercial instruments needed for 
capitalism. It created the joint stock companies, the commercial law and 
accounting systems, all that was essential to a modern economy. This 
gradually put western Europe on a different trajectory. Add to this the 
freeing of individuals away from their community and this led to the 
industrial revolution.

JS: The alternative scenario of how the West grew rich picks up in part on 
what you said before about the role of the Church in developing the soft 
infrastructure of the capitalist economy. This interpretation would 
emphasise the fact that in western Europe, partly for reasons of geography 
and partly from contingent historical factors, societies were splintered 
into competing nation-states. The real source of the superiority of the 
soft infrastructure of the West thus lay in its evolution through 
jurisdictional competition facilitated by the freedom of entry and exit 
enjoyed by merchants. One notable example of this is the development of 
the law merchant.

DL: I'll tell you what the difficulty is with this argument- India. India 
had warring states, free entry and exit between them, a common culture. 
You had exactly similar conditions yet the Industrial Revolution took 
place in Europe. It can't be just jurisdictional competition.

JS: What exactly is the role of cultural individualism in differentiating 
the trajectory taken by the West? Because obviously the nub of your 
argument isn't that cultural individualism is important in sustaining 
development, otherwise that would imply a superiority to Western values in 
sustaining economic development and growth, and that The 11th century 
Papal revolution provided all the legal and commercial instru- ments 
needed for capitalism. It created the joint stock companies, the 
commercial law, accounting systems, all that was essential to a modern 
economy. would take us back to the issue about the trinity of liberties.

DL: Well the individualism comes in in two ways. The cultural 
individualism promoted by the first Papal revolution then led to a 
sequence of events leading to Gregory's 7th Papal revolution. That only 
occurred because the Church wanted to preserve its property and that 
property existed because the first Papal revolution, by dissolving 
communal family ties, promoted individualism. So my thesis is really that 
given this sequence of events the rise of individualism was essential to 
get the legal and commercial instruments constructed by the Church to cash 
in on bequests and inheritances. But once you have this infrastructure the 
rest of the world can adopt it without giving up their own value systems.

JS: So your theory really hinges on the standardisation of the common law 
and other commercial instruments by the church.

DL:This created the framework for civil and economic liberties. It arose 
on a purely contingent basis. There's no theory of history involved here. 
Hayek emphasises spontaneous order. But all the common law that came after 
the Papal revolution has in a sense been constructed. It was a 
contructivist exercise.

JS: But the jurisdictional competition ...

DL: That still holds. You need all these things together.

JS: Arguably what set the stage for the jurisidictional competition is 
political fragmentation and that came with feudalism.

DL: But the political fragmentation starts at the end of the Roman empire. 
The real issue is the tying down of labour to the land-this is a common 
problem faced by agrarian civilisations. Feudalism in the West gave rise 
to property rights in land for people outside the royal family and 
courtiers. That arose because of the ability to raise revenue directly. In 
India by contrast you had a very decentralised system which was based on 
caste. But there wasn't the same capacity to free people from their ties 
to the land because the caste system localised people more and India 
didn't have the legal and commercial framework for a more direct and 
flexible form of revenue collection. Thus in India traders were constantly 
subject to expropriation. You had predatory behaviour even though there 
was jurisidictional competition.

JS: So in fact the jurisidictional competition that prevailed in the West 
was qualitatively different.

DL: The predatoriness of the state came in a different form. The tax take 
on the Indian subcontinent was less than in Elizabethan England. Whoever 
was the overlord in India was accepted automatically because of the caste 
system. And then he had a right to a certain share of the village revenue 
automatically. That meant that the ruler had no incentive to disturb 
relationships. As a result you had something resembling the contractual 
relations between the barons and serfs in Europe. Feudalism was thus not 
an important differentiating factor in the West. What was important was 
the constructed legal framework without which none of the other things 
which made the West successful would have fit together.

JS: But in China there was sufficient centralisation to impose a 
constructivist framework ...

DL: It could have but it wasn't invented ...

JS: And what stopped it from being invented was precisely the 
centralisation of power which instead allowed the State to be predatory 
without losing rents ...

DL: And also because there was no distinction between state and society or 
state and religion. But in both Hindu and Western civilisations the state 
was placed below society. The brahmin in Hindu civilisation stands above 
the prince and in Christianity there is Augustine's primacy of the city of 
God.

JS: Arguably the sustainability of the soft infrastructure for capitalist 
innovation developed by the West lies in continued contestability. 
Feudalism was not an important differen- tiating factor in the West. What 
was important was the constructed legal framework.

DL: I'm not sure about that. Once you've got it, it can go with all sorts 
of political forms.

JS: The other part of your paper which interested me was your take on the 
Chinese family firm and the increased relevance of the putting out system 
in the post-Fordist era. I suppose that could be framed as a response to 
Fukuyama's contention that many East Asian countries, being low-trust 
societies due to factors such as political instability or State repression 
in the past, were in danger of hindering their development. This was 
because by restricting the potential management pool to members of the 
family rather than including non- kin relations, they had much less chance 
of choosing the best talent and therefore of diversifying and expanding 
their firms.

DL: I don't agree with Fukuyama at all. Firstly no mode of production is 
ideal for all circumstances. Today, the family firms have found a niche. 
The second reason that Fukuyama is wrong is that trust is also a family 
value. What the Papal revolution did was create a system in which people 
didn't need to trust each other to get things done. I don't have to trust 
you but I sign a contract with you and have it enforced by someone else. 
The market extends the exchange between us. There's no reason why once 
China accepts the legal and commercial framework of the West the family 
businesses there won't expand as has happened in the West.

I suppose you can put a cultural spin on it. Because Asian families are 
still intact it's much easier to have these large family enterprises than 
if they were just nuclear families.

JS: Now on to a few shorter questions. You once wrote an essay called 
`Markets and Mandarins' in which you were critical of neoclassical welfare 
economics and you expressed some interest in Austrian economics.

DL: The problem is that neither of these schools are quite satisfactory. 
Neoclassical economics has this utopian vision of perfect competition from 
which you measure deviations in an actual economy. It's a nice way of 
thinking about things but the reason it has gone wrong is that it's 
started drawing policy conclusions in terms of desirable interventions. 
That's where Austrian economics is much more sensible-it shows you why 
neoclassical economics' derived intervention is utopian. No real economy 
can ever be in a state of perfectly competitive equilibrium. Hence Hayek's 
insight about the division of knowledge being absolutely essential to a 
market economy, and the importance of the Austrian insights about the role 
of the entrepreneur and disequilibrium.

On the other hand it seems to me that Austrian economics, the radical 
subjectivist version-not Hayek but Mises-which wants essentially to remove 
objective reasoning away from economics, becomes like a religion. I don't 
like that at all. If I'm trying to look at a particular market and how 
some prices are moving, neoclassical economics provides a way of thinking 
which is rigorous and can be tested. So I'm not at all one of those people 
who want to throw out neoclassical economics. I look at myself as a 
neoclassical economist with an Austrian spin.

JS: Some participants at this conference have raised the issue of whether 
the Asian crisis was really a refutation of economic liberalism.

DL: I don't buy that at all. Looking at the Asian crisis, there were two 
sorts of people. My side said that there was never free trade in the Asian 
miracle countries, but high outward orientation, a glass half full or half 
empty. People on my side said the Asian miracle economies hadn't gone down 
the full path to liberalism but they had gone further down than India or 
parts of Latin America. What we were then saying during the miracle growth 
period was that even a partial move towards a liberal economy could yield 
all these benefits. But the other side was saying that these countries had 
grown because of smart interventions like industry policy. But what the 
crisis then showed was the debauching of the financial sector entailed by 
this `Asian model' is always a time bomb waiting to go off.

JS: So it was the consequence of those interventions in the financial 
sector which built up and debauched the whole system.

DL: Yes, for instance in Japan and Korea. It didn't happen in Taiwan. All 
those countries which were soft versions of Japan and Korea suffered.

JS: You have expressed the view that the moral hazards created by the 
International Monetary Fund (IMF) had a hand in the crisis. You have also 
argued that the World Bank and IMF are past their used-by dates. But if 
there's a need to transplant the soft infrastructure of Western capitalism 
into the East Asian countries and to ensure transparency perhaps this 
could be an alternative role for one of these organisations.

DL: It could be. On the other hand, these skills can come from accounting 
firms and so on. The countries can pay for these services. There are no 
special skills in the IMF or World Bank in giving this advice.

JS: I've met a lot of Indian libertarians at this conference.

DL: You've met all of them. You've probably met every single Indian 
libertarian at this conference, there aren't anymore.

JS: Do you think that the prospects for liberalism are better in India 
than in other Asian countries?

DL: In the long run I think so. This goes back to the question we've been 
groping around on political freedom. India has done a lot less than other 
countries in economic reform because of its democratic system. But once 
the reforms take place and once people see the benefits from the full 
liberal democratic system in India there will be a lot more people there 
who will recognise the desirability of such a system.

JS: Let's go back to this political freedom issue. You've expressed the 
view that what Oakeshott calls the no enterprise state is the best form of 
governance.

DL: Yes, but that's a characterisation of the content, not a form of 
government.

JS: But perhaps in the long run a liberal democracy constrained by a 
constitution might be the best means of preserving a no enterprise state 
compared to other forms of governance.

DL: No, because just look at experience. The US is theoretically a 
constitutional democracy but this hasn't stopped predatory behaviour by 
the State. The predator there is different-it's the median voter. I think 
it's an insoluble problem in principle. JS: So how much ground would you 
give to the particularities of a culture and the political habits of its 
people, in deciding the extent of its governance? More importantly, how 
would you decide whether this is genuinely culturally based or a creation 
of an authoritarian elite, as some have alleged in the case of Singapore?

DL: I don't like Singapore but there's not a great deal of tyranny there. 
The fact that in the last 30 to 40 years it's been a stable system 
suggests to me that there has been some legitimacy in the system. So who 
am I to judge? You should look at this with the eyes of an anthropologist. 
Try and explain what is it about the system which fits in with the 
political habits of the people and if that's so, that's so.

-----------------

As Japan has shown, and China will too, the west's values are not 
necessarily universal
http://www.guardian.co.uk/print/0,3858,5198003-103677,00.html

  Martin Jacques
  Friday May 20, 2005

  Not so long ago, Japan was the height of fashion. Then came the
  post-bubble recession and it rapidly faded into the background,
  condemned as yesterday's story. The same happened to the Asian tigers:
  until 1997 they were the flavour of the month, but with the Asian
  financial crisis they sank into relative obscurity. No doubt the same
  fate will befall China in due course, though perhaps a little less
  dramatically because of its sheer size and import.

  These vagaries tell us nothing about east Asia, but describe the
  fickleness of western attitudes towards the region's transformation. A
  combination of curiosity and a fear of the unknown fuel a swelling
  interest, and then, when it appears that it was a false alarm, old
  attitudes of western-centric hubris reassert themselves: the Asian
  tigers were victims of a crony culture and Japan was simply too
  Japanese.

  During Japan's crisis, western - mainly American - witch doctors
  advised that the only solution was to abandon Japanese customs like
  lifetime employment and adopt more Anglo-Saxon practices such as
  shareholder value. The age-old western habit of believing that its
  arrangements - of the neo-liberal variety, in this instance - are
  always best proved as strong as ever: it is in our genes. The fact
  that the US was at the time in the early stages of its own bubble
  might have suggested a little humility was in order. In the event,
  Japan largely ignored the advice and has emerged from its long,
  post-bubble recession looking remarkably like it did before the
  crisis.

  Japan has long been part of the advanced world. It was the only
  non-western country to begin its industrialisation in the 19th
  century, following the Meiji Restoration in 1867. It has the second
  largest economy and enjoys one of the highest standards of living in
  the world. By any standards, it is a fully paid-up member of the
  exclusive club of advanced nations. Yet Japan is quite unlike any
  western society. In terms of the hardware of modernity - cars,
  computers, technology, motorways and the rest - Japan is,
  unsurprisingly, largely familiar. However, in terms of social
  relations - the way in which society works, the values that imbue it -
  it is profoundly different.

  Even a casual observer who cannot understand Japanese will almost
  immediately notice the differences: the absence of antisocial
  behaviour, the courtesy displayed by the Japanese towards each other,
  the extraordinary efficiency and orderliness that characterise the
  stuff of everyday life, from public transport to shopping. For those
  of a more statistical persuasion, it is reflected in what are, by
  western standards, extremely low crime rates. Not least, it finds
  expression in the success of Japanese companies. This has wrongly been
  attributed to an organisational system, namely just-in-time
  production, which, it was believed, could be imitated and applied with
  equal effect elsewhere. But the roots of the success of a company such
  as Toyota lie much deeper: in the social relations that typify
  Japanese society and that allow a very different kind of participation
  by the workforce in comparison with the west. As a result,
  non-Japanese companies have found it extremely difficult to copy these
  ideas with anything like the same degree of success.

  So how do we explain the differences between Japan and the west? The
  heart of the matter lies in their different ethos. Individualism
  animates the west, now more than ever. In contrast, the organising
  principle of Japanese society is a sense of group identity, a feeling
  of being part of a much wider community. Compared with western
  societies, Japan is a dense lattice-work of responsibilities and
  obligations within the family, the workplace, the school and the
  community. As Deepak Lal argues in his book Unintended Consequences,
  the Japanese sense of self is quite distinct from the western notion
  of individualism. As a result, people behave in very different ways
  and have very different expectations, and their behaviour is informed
  by very different values. This finds expression in a multitude of
  ways.

  Following the recent train crash in which 106 people died, the
  president of the operating company, JR West, was forced to resign:
  this is the normal and expected response of a company boss when things
  go seriously wrong. Income differentials within large corporations are
  much less than in their Anglo-Saxon equivalents, because it is group
  cohesion rather than individual ego that is most valued. Even during
  the depth of the recession, the jobless figure never rose much above
  5%: it was regarded as wrong to solve a crisis by creating large-scale
  unemployment. Even those who do the more menial tasks - shop
  assistants, security staff, station attendants and canteen workers -
  display a pride in their work and a courtesy that is in striking
  contrast to the surly and resentful attitude prevalent in Britain and
  other western societies.

  In a survey conducted by the Japanese firm Dentsu, 68% of Americans
  and 60% of Britons identified with "a society in which everyone can
  freely compete according to his/her will and abilities" compared with
  just 22% of Japanese. In the same survey, only 15% of Japanese agreed
  with the proposition that "it's all right to break the rules,
  depending on the circumstances", compared with 37% of Americans and
  39% of Britons. This finds rather bizarre expression - to an
  Englishman at least - in the way pedestrians invariably wait for the
  pedestrian lights to turn to green even when there is not the
  slightest sign of an approaching vehicle. Even the preferred choice of
  car reflects the differing ethos: whereas in the US and Britain, the
  fashionable car of choice is a 4x4 - the very embodiment of a "bugger
  you and the environment" individualism - the equivalent in Japan is
  the tiny micro-car, much smaller than a Ford Ka - a genre that is
  neither made nor marketed in the UK.

  The differences are legion, and not always for the better. Japan, for
  example, is still blighted by a rigid and traditional sexual division
  of labour. In a survey on the gender gap published last week by the
  World Economic Forum, Japan came 38th out of 58 countries, an
  extraordinarily low ranking for a developed nation. Or take democracy,
  that hallowed and allegedly universal principle of our age. Japan has
  universal suffrage, but the idea of alternating parties in government
  is almost entirely alien. Real power is exercised by factions within
  the ruling Liberal Democrats rather than by the other political
  parties, which, as a consequence, are largely marginal. We should not
  be surprised: in a society based on group culture rather than
  individualism, "democracy" is bound to be a very different kind of
  animal.

  Far from conforming to the western model then, Japan remains
  profoundly different. And so it has always been. After the Meiji
  Restoration it deliberately sought to engineer a modernisation that
  was distinctively Japanese, drawing from its own traditions as well as
  borrowing from the west. Globalisation notwithstanding, this is still
  strikingly the case. Indeed, Japan remains unusually and determinedly
  impervious to many of the pressures of globalisation. The lesson here,
  perhaps, is that we should expect the same to be true, in some degree
  or another, of the Asian tigers - and ultimately China too. That is
  not to say they will end up looking anything like Japan: China and
  Japan, for example, are in many respects chalk and cheese. But they
  will certainly be very different from the west because, like Japan,
  they come from very different histories and cultures.

  · Martin Jacques is a visiting professor at the International Centre
  for Chinese Studies at Aichi University in Japan

  [4]martinjacques1 at aol.com

[I am sending forth these memes, not because I agree wholeheartedly with 
all of them, but to impregnate females of both sexes. Ponder them and
spread them.]