The values of the system. Cultural Beliefs That Will Encourage Economic Growth
How can any nation hope to make the economic and political changes that we outlined in the previous chapters?
The most effective way to do this, and the only way that will bring long-term change to a nation, is to persuade people to change any cultural beliefs and traditions that are hindering economic development. If these beliefs and traditions can be replaced with new ones that promote economic growth, the nation will change.
These cultural values are therefore the most strategic matters that we discuss in this book, because they will ultimately determine all the other factors. The cultural values of a nation determine what kind of economic system it adopts, what kinds of laws and policies the government enacts, whether corruption is tolerated, whether freedoms are protected, and what kinds of goals individuals set for their personal lives. It is important, therefore, to understand exactly what kinds of cultural values lead a nation to support the kinds of economic and governmental systems we described in earlier chapters.
Daron Acemoglu and James A. Robinson, in their frequently insightful book Why Nations Fail, dismiss the idea that cultural values have much influence on the economic development of a nation. They write:
Is the culture hypothesis useful for understanding world inequality? Yes and no. Yes, in the sense that social norms, which are related to culture, matter and can be hard to change, and they also sometimes support institutional differences, this book’s explanation for world inequality. But mostly no, because those aspects of culture often emphasized—religion, national ethics, African or Latin values—are just not important for understanding how we got here and why the inequalities of the world persist. Other aspects, such as the extent to which people trust each other or are able to cooperate, are important but they are mostly an outcome of institutions, not an independent cause.
Our response to Acemoglu and Robinson is to say, first, that we agree that economic and political institutions have a massive impact on the economic development of a nation. That is why we devoted chapters 3, 4, 5, and 6 to discussing the kind of economic system that is needed, and chapters 7 and 8 to the kind of governmental system that is needed for an economically productive society. In fact, the economic and political institutions that Acemoglu and Robinson recommend as “inclusive” have many of the characteristics that we recommended in these chapters.
However, our second response is that Acemoglu and Robinson wrongfully minimize or even dismiss the role of cultural values both in enabling nations to adopt the wealth-creating inclusive institutions that they recommend and in helping people who live under those institutions to function in more economically productive ways. It is not a one-way street. Yes, institutions modify cultural values, but cultural values also create and modify institutions.
This shortcoming in the analysis of Acemoglu and Robinson is evident when they try to explain why certain countries adopted the inclusive institutions that they recommend while other countries did not. In proposing a solution for poor nations, they write: “The solution to the economic and political failure of nations today is to transform their extractive institutions toward inclusive ones. . . . This is not easy.”
They then say that the transformation of institutions in a nation requires “the presence of broad coalitions leading the fight against the existing regime,” but they fail to explain what will motivate these broad coalitions to form or to act. In another place, they say that nations that have successfully established inclusive institutions “succeeded in empowering a fairly broad cross-section of society,” but they do not say how this happened. In fact, they say, “The honest answer of course is that there is no recipe for building such institutions.”
When they actually analyze how nations succeeded at previous points in history in establishing inclusive institutions, their explanation seems to come down to mere luck, or what they sometimes call “contingency” (which we take as another word for inexplicable luck). At other times, they say that changes happened because of what they call “institutional drift,” but they add that it is impossible to predict whether an institution will drift one way or another. They write (all emphases added):
Two otherwise similar societies will also slowly drift apart institutionally. . . . Institutional drift has no predetermined path.
[In the Glorious Revolution of 1688 in England, which led to inclusive institutions,] the entire path leading up to this political revolution was at the mercy of contingent events.
In India, institutional drift worked differently and led to the development of a uniquely rigid hereditary caste system that limited the functioning of markets and the allocation of labor across occupations.
Fortunate turns of contingency [were partially responsible for strengthening inclusive institutions in England].
[France, Japan, the United States, and Australia] pulled ahead of the rest. . . . Many challenges to inclusive institutions were overcome, sometimes because of the dynamics of the virtuous circle [that is, inclusive institutions perpetuating inclusive institutions], sometimes thanks to the contingent path of history.
Still none of this [that is, history prior to 1688 in England] made a truly pluralistic regime inevitable, and its emergence was in part a consequence of the contingent path of history. . . . The path of major institutional change was, as usual, no less contingent than the outcome of other political conflicts. . . . In this instance, therefore, contingency and a broad coalition were deciding factors underpinning the emergence of pluralism and inclusive institutions.
[In England’s Glorious Revolution of 1688] luck was on the side of Parliament against James II.
Things could have turned out very differently in Botswana, especially if it hadn’t been so fortunate as to have leaders such as Seretse Khama, or Quett Masire.
No less important, the contingent path of history worked in Botswana’s favor. It was particularly lucky because Seretse Khama and Quett Masire were not Siaka Stevens [dictator in Sierra Leone] and Robert Mugabe [dictator in Zimbabwe].
In addition some luck is key, because history always unfolds in a contingent way.
There was no historical necessity that Peru end up so much poorer than Western Europe or the United States. . . . The turning point was the way in which this area was colonized and how this contrasted with the colonization of North America. This resulted not from a historically predetermined process but as the contingent outcome of several pivotal institutional developments during critical junctures.
Naturally, the predictive power of a theory where both small differences and contingency play key roles will be limited.
Whether such a process will . . . open the door to further empowerment, and ultimately to durable political reform [in China] will depend . . . on the history of economic and political institutions, on many small differences that matter and on the very contingent path of history.
One of the most important historical events that Acemoglu and Robinson discuss is the Glorious Revolution in England in 1688, when Protestant leaders in Parliament invited William of Orange to invade England and become king. When William arrived with a Dutch army of fifteen thousand men, King James II did not even offer resistance. In the ensuing events, William (who became King William III of England) agreed with Parliament on many changes:
The Glorious Revolution limited the power of the king and the executive, and relocated to Parliament the power to determine economic institutions. At the same time it opened up the political system to a broad cross section of society. . . . The Glorious Revolution was the foundation for creating a pluralistic society. . . . It created the world’s first set of inclusive political institutions.
But Acemoglu and Robinson fail to even mention that William of Orange had been educated in Holland under Protestant teaching since childhood, especially in Calvinistic Reformed theology.
The same failure to mention strong Protestant training in the background of a significant leader occurs in Acemoglu and Robinson’s discussion of Botswana. They report that most of the continent of
Africa “has experienced a long vicious circle of the persistence and re-creation of extractive political and economic institutions,” but then they say, “Botswana is the exception.” They attribute this primarily to Seretse Khama, who became king of Botswana at a decisive time. They say, “Khama was an extraordinary man, uninterested in personal wealth and dedicated to the building of his country.”
Khama made a crucial decision affecting Botswana’s history when diamonds were discovered:
The first big diamond discovery was under Ngwato land, Seretse Khama’s traditional homeland. Before the discovery was announced, Khama instigated a change in the law so that all subsoil mineral rights were vested in the nation, not the tribe. This ensured that diamond wealth would not create great inequities in Botswana.
The result of such enlightened leadership is that Botswana became “one of the fastest-growing countries in the world. Today Botswana has the highest per capita income in sub-Saharan Africa.”
But Acemoglu and Robinson fail to mention Khama’s strong educational background in Protestant Christian schools. Do they think that such training in biblical moral values had no role whatsoever in the formation of the moral character of such a remarkable leader?
Historian Susan Williams writes that Khama “had attended the premier schools for Africans in South Africa: Adams College, a mission school near Durban; the missionary-run Lovedale College in Alice, in the Eastern Cape; and Tiger Kloof in Vryburg, which was . . . run by the London Missionary Society.”
In an article published in the United States in 1951, Khama wrote:
I have every intention of going back to my country with my wife by my side. For like the Ruth of the Bible, we often find our strength and our comfort in this passage of Scripture: “Entreat me not to leave Thee or return from following after Thee, for whither Thou goest I will go and where Thou lodgest I will lodge. Thy people shall be my people and Thy God my God.”
In fact, Khama’s Christian heritage can be traced back to his grandfather, Khama III, who was king of Bechuanaland (now Botswana) from 1875 to 1923. Early in his life, Khama III became a Christian and decided to promote the Christian faith by helping the establishment of many churches and schools throughout the country, especially by the London Missionary Society. Dickson Mungazi writes:
[Khama III] adopted Christianity as the basis for new life for his people. . . . For many years, the education of Africans was totally in the hands of the missionaries. Both Africans and missionaries felt that they both had one thing in common: a desire to initiate change that was designed to accelerate the rate of African advancement.
But as they do in the case of William of Orange, Acemoglu and Robinson fail to mention the Christian background in Khama’s training.
Finally, Acemoglu and Robinson, in their attempt to show that inclusive institutions are the single reason why nations succeed economically, fail to mention, or mention only in passing, many of the factors that we name in this book as important for economic development. These include a stable currency, low taxes, a free-market system (though that might be the implication of what they call inclusive economic institutions), separation of powers in government, a fair court system, absence of bribery, protection of patents and copyrights, protection against foreign invasion, avoidance of wars of conquest, protection against destruction of the environment, freedom to use resources, universal education, stable families, and freedom to acquire wealth and become rich by legal means. They also fail to discuss the economic importance of values such as belief in God; accountability to God; belief that God approves of productivity and that it is morally right; moral constraints against stealing, lying, and discrimination; the belief that time is valuable and that change is possible; as well as many other beliefs that we mention in the remainder of this chapter.
Changing deeply held cultural beliefs is never easy. In fact, it is the most difficult of all the solutions we discuss in this book. Values that are embedded in a nation’s history, traditions, customs, music, litera?ture, patterns of language, religious institutions, beliefs, educational systems, and parenting habits represent hundreds, if not thousands, of years of enculturation.
However, that does not mean that beliefs and values can never be changed. In fact, Lawrence E. Harrison of Tufts University summarizes the hopeful conclusions of about sixty scholars involved in the Culture Matters Research Project in the book The Central Liberal Truth: How Politics Can Change a Culture and Save It from Itself. Harrison provides extensive summaries of effective ways that leaders within nations have brought about cultural changes in several nations, changes that not only helped improve the material prosperity of those nations, but also their quality of life.
Harrison recognizes that some of his more specific recommendations are controversial, but he believes that “a majority of the world’s people surely would agree with the following assertions” (derived from the 1948 United Nations Universal Declaration of Human Rights):
While changing cultural values is difficult, it is the place where religious organizations—especially, from our perspective, Christian churches and organizations that emphasize Christian teaching—can have a great influence for good on a nation. In fact, Christian teaching has often transformed cultures in very positive ways in the past.
Pastors especially can contribute by teaching Christian cultural values in ways that promote better moral standards within a nation and also contribute to helping a nation’s economy. (See further comments about pastors at 32, 161, 186, 305, 366-67.)
The history of economic development also indicates the importance of culture. At the conclusion of his massive study of economic development in various nations of the world, David S. Landes concludes, “If we learn anything from the history of economic development, it is that culture makes all the difference.”
To take one example among many, Landes notes the lack of economic development (except for oil wealth) in Middle Eastern nations. He says that the reason for this lack of development lies “with the culture, which (1) does not generate an informed and capable workforce; (2) continues to mistrust or reject new techniques and ideas that come from the enemy West (Christendom); (3) does not respect such knowledge as members do manage to achieve, whether to study abroad or by good fortune at home.”
In this chapter, we discuss cultural beliefs in thirteen broad categories. Each category contains cultural beliefs that contribute positively to economic development. If these beliefs are rejected, economic development will be hindered to some degree.
Some of the sections in this chapter return to themes mentioned earlier in the book. For example, in chapters 3, 4, and 8, we mentioned the economic importance of private ownership of property. But in this chapter, we emphasize the need for a society to believe that private ownership of property is morally right, and therefore we discuss the Bible’s teachings about private property. The material on private property in this chapter is intended to inform the cultural value of respecting private ownership of property, and that cultural value is the necessary ingredient for establishing and maintaining a system that protects private property in a nation.
Similarly, in this chapter we discuss the belief that the purpose of government is to serve the nation and bring benefit to the people as a whole. If that belief is deeply held, it provides the strongest protection against government corruption, which occurs when people use their government positions for personal gain rather than for the good of the nation as a whole.
This chapter does not list all the values that are important for a society. We do not list generosity, hospitality, and kindness, for example, but the Bible surely counts these as important. And many poor countries excel in these values more than some wealthy Western societies. In this chapter, however, our purpose is to discuss those cultural values that are most directly related to the specific steps toward economic prosperity that we have discussed in the previous chapters. This chapter therefore outlines the deeply held values that will enable a country to adopt and maintain the solutions discussed to this point in this book.