Wednesday, October 31, 2007

A Politically Incorrect Theory of Growth

Noted economist Robert Samuelson reviews a new book, A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark who suggests that culture predisposes some societies to rapid growth and others to poverty or meager growth.

Clark suggests that much of the world's remaining poverty is semi-permanent. Modern technology and management are widely available, but many societies can't take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can't overcome this bedrock resistance.

Before 1800, says Clark, most societies were stagnant. With some exceptions, people lived no better than their ancestors in the Stone Age. Economic growth was virtually nonexistent. Then England broke the pattern, as textile, iron and food production increased dramatically.
What distinguished England, he says, was the widespread emergence of middle-class values of "patience, hard work, ingenuity, innovativeness, education" that favored economic growth. After examining birth and death records, he concludes that in England -- unlike many other societies -- the most successful men had more surviving children than the less fortunate. Slowly, the attributes of success that children learned from parents became part of the common culture.
Societies dominated by tribal, religious, ideological or political values that disparage the qualities needed for broad-based growth will not get growth.

Interesting thesis - I would suggest that the gradual (and sometimes sudden) lowering of informational barriers will blur the culture "wall". One thing IS for sure - President Faust won't be discussing this at Harvard.

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