August 17, 2009

Was Max Weber right… at all?

Posted in International development at 6:27 pm by Eamon Aghdasi

max_weber

Max Weber, author of The Protestant Ethic and the Spirit of Capitalism, and inspiration to lazy economists everywhere

For a long time I’ve been fascinated by the idea that economic outcomes might somehow be related to cultural and ethical norms. Do societies which value work tend to be wealthier or develop faster? What about societies in which people more commonly believe in women’s freedom? What about those in which individuals look more favorably on democracy, or more critically at corruption and bribery?

Economists and social scientists have grappled with these questions for about a century. The topic goes as far back at least as Max Weber, who in defining the “Protestant ethic” argued that Protestant societies, by virtue of their religious and cultural history, were better equipped to succeed than Catholic societies. Soon after Weber, Werner Sombart published a book called The Jews and Modern Capitalism, in which he argued that Jews had qualities that allowed them to succeed in capitalistic environments.

More recently, economists have pointed at culture as a burden in some countries’ economic development. For better or worse, this cultural argument for development stagnancy has fallen flat on its face in recent years. The lone fact that Ireland and India were two common examples supporting the culture-as-economic-constraint argument now render this line of argument ridiculous. Amid India as one of today’s shining examples of emerging market performance, the phrase “Hindu rate of growth” is now used only to giggle at economists’ lack of foresight. Similarly, the once disappointing Ireland now finds itself with a higher per capita GDP level than the United Kingdom.

While many economists now focus on the role of institutions in development, few seem interested in revisiting things like culture or religion as explanations for development outcomes. My sense is that the cultural arguments have been shot down so consistently and so embarassingly over time that few academics want to risk being the next one to look stupid by bringing it up again. There’s also the unfortunate racial motivation for some of these studies in the past, which renders more modern versions of this research as suspicious. Read the rest of this entry »