Some Thoughts on Harrison and Hojman

In response to Lawrence Harrison, I agree that there are huge development problems in Africa, but I don’t see the evidence connecting this to culture. Botswana has been a great success, and it is true that a large proportion of GDP (about 40%) is diamonds, but diamonds are usually connected to political instability and poverty in Africa, think of Sierra Leone or Angola. Even without diamonds Botswana would be much richer than other African countries. Yes, there has been good leadership, but Botswana had good leadership in the 19th century [1] so this is not a coincidence, nor can it be tied in a simple way to culture. What distinguished the Tswana states, from which modern Botswana sprang, was not their culture but rather their political institutions and this is the root of a succession of leaders who internalized public welfare.

As I said, it might be true that if one had the right institutions and policies in place, Africa would not grow, but I don’t see any evidence supporting this, and Botswana is certainly against it.

I find the attempt to provide a cultural explanation of the economic success of Chile since 1985 utterly unconvincing. The fact that Chile had free trade in the 19th century is unremarkable—so did every other Latin American country. Most Liberal governments massively cut tariffs and removed obstacles to trade, and the first growth in these countries was based on trade—coffee in Colombia or Costa Rica, guano in Peru, wool, mutton and beef in Argentina. The notion that Chile was somehow a “civilized and free country” compared to other Latin American countries in untenable. First, it is difficult for me to connect civilization, even if I am not sure what its relationship is with culture, with the murderous Pinochet dictatorship who bequeathed a structure of political institutions designed to bolster the right. Second, Chile was not free. Illiterates were only given the vote in Chile by Salvador Allende in the early 1970s, whereas they were enfranchised much earlier in most Latin American countries—in 1936 in Colombia, for example, and in the 19th century in Argentina. Moreover, there was huge coercion in elections in rural areas, as I noted. It was only after this was stopped in 1958 that campesinos were free to vote for who they wanted, which drove Allende into power. The Chilean economic miracle has little to do with culture but is rather the joint outcome of the massive deconstruction of the traditional rural economy achieved by the land reforms in conjunction with the change in the incentive environment that flowed from some of Pinochet’s reforms. These changes allowed a dynamic rural sector to emerge for the first time.

I would certainly be the last person to argue that economists such as Jeffery Sachs have been startlingly successful in promoting development. But why would you expect them to be? It is foolish to imagine that economists can come up with a magic bullet to solve the problem of development. Underdevelopment is not a coincidence and arises because societies become trapped in dysfunctional political equilibria where the incentives to invest and innovate, and do all the things that makes a society prosperous, are absent. Such a situation is difficult to change because it is not just about economics (getting the prices right, etc.) but also about politics, which we understand much less well. While I have tremendous respect for the work of Guido Tabellini, his work only establishes to my mind that some variables capturing aspects of what we might call culture are correlated with income per-capita. As with the facts about the success of minority groups much beloved by cultural theorists, I find these correlations interesting, but I am not convinced that they demonstrate the causal role of culture. Many things are positively correlated—for example, latitude and income per-capita—but this does not mean they cause one another.

This exchange does, however, demonstrate a different failure of economists: they have so far not focused intensively enough on articulating and testing theories of how culture influences development. Here Tabellini’s work is seminal. We probably all agree that we need much more of this.

Notes

[1] Q. Neil parsons, King Khama, Emperor Joe and the Great White Queen, (Chicago: University of Chicago Press, 1998).

Also from this issue

Lead Essay

  • Culture and Economic Development by Lawrence E. Harrison

    In this month’s information-packed lead essay, Lawrence E. Harrison notes that the role of culture has been badly neglected in serious studies of economic devewlopment. But then, he asks, what explains “why, in multicultural countries where the economic opportunities and incentives are available to all, some ethnic or religious minorities do much better than majority populations?” Harrison reports some results of his recent Culture Matters Research Project, including the finding that “Protestant, Jewish, and Confucian societies do better than Catholic, Islamic, and Orthodox Christian societies…” Harrison provides a number of incisive country case studies, illustrating different ways pre-existing culture can produce economic results, and the ways policy and politics can transform culture.

Response Essays

  • The Universal Culture of Progress by Gregory Clark

    In his reply to Harrison’s lead essay, University of California, Davis economist Gregory Clark writes, “I simultaneously want to endorse [Harrison’s] promotion of culture, and to run screaming from his lethal embrace.” While agreeing that the failure of purely institutional explanations of historical economic growth “opens the door … for culture,” Clark argues that “attempts to introduce culture into economic discussions so far have been generally either ad hoc, vacuous, blatantly false, or void of testability.” Clark points to great variation in economic performance within cultures and religions, and worries that Harrison’s “measures are not a pure probe into the essence of local cultures, but reflect institutions and economic environments that change the real possibilities for people.”

  • The How, The What, and The Why of the “Culture Matters” Thesis by Peter J. Boettke

    In his reply to Lawrence Harrison’s lead essay, George Mason University economist Peter J. Boettke argues that it is not culture but institutions—“the rules of the game that govern the way that people interact with one another”—that are the primary determinant of economic growth. However, culture may be crucial, Boettke argues, since it is “a tool for the self-regulation of behavior” that may raise or lower the cost of monitoring and enforcing compliance with “the rules of the game.” And that can make the difference between the success or failure of growth-conducive institutions and policies such as “private property, freedom on contract, limited scope of regulation, monetary restraint, fiscal responsibility, and open trade.”

  • It’s Not Culture by James A. Robinson

    James A. Robinson of the Harvard University Department of Government argues that Harrison’s measures are insufficient to establish that culture is the x-factor in economic development. For example, Robinson argues that the relative success of certain ethnic and religious minorities may be due to concessions from the majority group, and not the features of the minority culture. Also, Robinson asks, if the economic success of Chinese minorities in other countries is “because they have such a good culture, then why is China one of the world’s poorest countries?” And if Chile’s success lies in its distinctive culture, “then why did it manifest itself so recently?” Robinson concludes that “culture might matter, but doubters like me will not be convinced by the evidence here.”

The Conversation