Saturday, May 11, 2013

The Importance of Limits on State Action in the 'Miracle' Development of the West is running a very important essay by Professor Ralph Raico. Among the many important points he makes in the essay are these:

Among writers on economic development, P.T. Bauer is noted both for the depth of his historical knowledge, and for his insistence on the indispensability of historical studies in understanding the phenomenon of growth (Walters 1989, 60; see also Dorn 1987). In canvassing the work of other theorists, Bauer has complained of their manifest "amputation of the time dimension":

The historical background is essential for a worthwhile discussion of economic development, which is an integral part of the historical progress of society. But many of the most widely publicized writings on development effectively disregard both the historical background and the nature of development as a process. (Bauer 1972, 324–25)

Too many writers in the field have succumbed to professional overspecialization combined with a positivist obsession with data that happen to be amenable to mathematical techniques. The result has been models of development with little connection to reality:
Abilities and attitudes, mores and institutions, cannot generally be quantified in an illuminating fashion.… Yet they are plainly much more important and relevant to development than such influences as the terms of trade, foreign exchange reserves, capital output ratios, or external economies, topics which fill the pages of the consensus literature. (Ibid., 326)
[...] At the root of the approach criticized by Bauer there appears to be a methodological holism that prefers to manipulate aggregates while ignoring individual human actors and the institutions their actions generate. Yet, "differences in people's capacities and attitudes and in their institutions are far-reaching and deepseated and largely explain differences in economic performance and in levels and rates of material progress" (Ibid., 313–14; emphasis added).
David Landes was sketching the essentials of the newer outlook. In seeking to answer the question why the industrial breakthrough occurred first in western Europe, he highlighted two factors "that set Europe apart from the rest of the world … the scope and effectiveness of private enterprise, and the high value placed on the rational manipulation of the human and material environment" (Landes 1970, 14–15). "The role of private enterprise in the West," in Landes's view, "is perhaps unique: more than any other factor, it made the modern world" (Ibid., 15).

But what was it that permitted private enterprise to flourish? 

Landes pinpointed the circumstance that would be vital to the new interpretation — Europe's radical decentralization:
Because of this crucial role as midwife and instrument of power in a context of multiple, competing polities (the contrast is with the all-encompassing empires of the Orient or the Ancient World), private enterprise in the West possessed a social and political vitality without precedent or counterpart. (Ibid.; emphasis in original)
Damaging incursions by government did occur, and the situation in some parts of Europe conditioned a social preference for military values; "on balance, however, the place of private enterprise was secure and improving with time; and this is apparent in the institutional arrangements that governed the getting and spending of wealth" (Ibid.).
A precondition of economic expansion was the definition and defense of property rights against the political authority. This occurred early on in Europe. Landes contrasts the European method of regular taxation (supervised by assemblies representative of the tax-bearing classes) with the system of "extortion" prevalent in "the great Asian empires and the Muslim states of the Middle East … where fines and extortions were not only a source of quick revenue but a means of social control — a device for curbing the pretensions of nouveaux riches and foreigners and blunting their challenge to the established power structure" (Ibid., 16–17).[6] 
Landes's insights, briefly sketched in a few pages of introduction to his Prometheus Unbound, have been vastly elaborated upon by the new school. The upshot is an overall interpretation of Western history that may be stated as follows:
Although geographical factors played a role, the key to western development is to be found in the fact that, while Europe constituted a single civilization — Latin Christendom — it was at the same time radically decentralized.[7]  In contrast to other cultures — especially China, India, and the Islamic world — Europe comprised a system of divided and, hence, competing powers and jurisdictions.
The stereotype of the Middle Ages as "the Dark Ages" fostered by Renaissance humanists and Enlightenment philosophes has, of course, long since been abandoned by scholars. Still, the "consensus" writers on economic development whom Bauer faults have by and large ignored the importance of the Middle Ages for European growth[...]
In Europe, as trade and industry expanded, people discovered that "commerce thrives on freedom and runs away from constriction; normally the most prosperous cities were those that adopted the most liberal policies" (Ibid., 90).
One highly important factor in the advance of the West, possibly linked to Christianity, has not, however, been dealt with by the newer economic historians. It is the relative lack of institutionalized envy in Western culture. In a work endorsed by Bauer, the sociologist Helmut Schoeck has drawn attention to the omnipresence of envy in human societies (Schoeck [1969] 1987). Perceived as a grave threat by those at whom it is directed, it typically results in elaborate envy-avoidance behavior: the attempt to ward off the dangers of malicious envy by denying, disguising, or suppressing whatever traits provoked it. The antieconomic consequences of socially permitted — or even encouraged — envy and reactive envy-avoidance scarcely lend themselves to quantification. Nonetheless, they may clearly be highly damaging. Drawing on anthropological studies, Schoeck stresses the harm that institutionalized envy can inflict on the process of economic and technical growth (Ibid., 73). Western culture, according to Schoeck, has somehow been able to inhibit envy to a remarkable degree. Why this is so is less clear. Schoeck links this fact to the Christian faith: "It must have been one of Christianity's most important, if unintentional, achievements in preparing men for, and rendering them capable of, innovative actions when it provided man for the first time with supernatural beings who, he knew, could neither envy nor ridicule him" (Ibid., 79). Yet the evident variation in socially permitted envy in different Christian societies (e.g., Russia as against western Europe) suggests that the presence of Christian faith alone is not an adequate explanation.[...]
The meaning of the European miracle can be better seen if European developments are contrasted with those in Russia. Colin White lists, as the determining factors of Russian backwardness "a poor resource and hostile risk environment … an unpropitious political tradition and institutional inheritance, ethnic diversity, and the weakness of such key groups limiting state power as the church and landed oligarchy." (White 1987, 136) After the destruction of Kievan Rus by the Tatars and the rise of Muscovy, Russia was characterized for centuries by the virtual absence of the rule of law, including security for persons and property.[...]
The fact that Russia received Christianity from Byzantium rather than Rome shaped the entire course of Russia's history (Pipes 1974, 221–43). In the words of Richard Pipes, the Orthodox church in Russia became, like every other institution, "the servant of the state." Pipes concludes, regarding the "relations between state and society in pre-1900 Russia":
None of the economic or social groups of the old regime was either able or willing to stand up to the crown and challenge its monopoly of political power. They were not able to do so because, by enforcing the patrimonial principle, i.e., by effectively asserting its claim to all the territory of the realm as property and all its inhabitants as servants, the crown prevented the formation of pockets of independent wealth or power. (Ibid., 249)
Read the entire essay here. 

No comments:

Post a Comment