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Social capability: its historical persistence and its meaning going forward

August 10, 2012

In the last post, I provided a brief sketch of the mounting body of evidence that there has been persistence over centuries and millennia of advantages in technology and social organization. I was responding, in part, to Acemoglu and Robinson’s stimulating book, Why Nations Fail.  As evidence that the quality of economic and political institutions is critical, those authors point out that the places that became the U.S., Canada, and Australia were technological and political backwaters in the 15th century while the ones that became Mexico, Peru and Bolivia were the homes of agrarian civilizations which were advanced, by comparison.  Today, the first three countries are among the world’s richest and are ranked highly for the quality of their economic and political institutions, using criteria such as prevalence of corruption, security of property, and rule of law.  The last three, by contrast, are middle income countries scoring more poorly on those institutional scales.  In Acemoglu and Robinson’s  view, this helps to prove that institutions are the main determinants of economic growth. 

But both institutions and growth could be due to a third factor, the persistent strengths and weaknesses of societies and the people who comprise them.  Between 1500 and the 20th century, the U.S., Canada and Australia came to be populated mainly by the descendants of immigrants from countries that were technologically and socially more advanced than Mexico, Peru and Bolivia in 1500.  The homelands of most of the rich countries’ ancestors—mainly in Europe—had experienced two millennia of literate civilization, metallurgy, horse-drawn vehicles, improving methods of navigation and ship-building, and had developed the use of the plow, the printing press, paper, and many other technologies.  The people in the now middle-income countries mentioned had, by comparison, a shorter history of civilization, worked only soft metals for ornamentation, lacked the horse and wheel, the plow, printing, paper, and so forth.  It didn’t help that on the way to becoming modern Mexico, Peru and Bolivia, those people and their cultures were treated brutally by Spanish conquerors who built societies rife with class conflict, starting from the virtual enslavement of their native populations.  But we’ll never know to what degree the poorer outcomes, so far, of Mexico and the others are due to the way the conquest played itself out, and to what degree it simply reflects the persistence of earlier relative advantages.  That Mexico and the others, with roughly two thirds of their ancestors being Amerindian, are poorer today than the U.S., Canada and Australia, with 80% or more of their ancestors being from Europe, might be sufficiently explained by the persistence of whatever advantages gave Europeans and not Amerindians the horse, wheel, steel, printing, and the rest.

Many readers will recognize the similarity of my discussion of European versus Amerindian technological progress before 1500 to the widely read and deservedly acclaimed book, Guns, Germs and Steel, by Jared Diamond.  Diamond’s book mostly focused, though, on explaining why Europeans had the technological advantages that allowed them to easily conquer all of the Americas, Oceania, and less advanced portions of Africa and Asia.  My interest is much less in why some societies gained advantages over others and much more on the fact that those advantages, which were already becoming apparent two thousand years ago, have persisted to the present day.

To begin with the colonial era itself, Diamond argued that Europe’s ability to subjugate the Americas and Oceania was due not so much to distinctly European advantages as to the exchange of technological knowledge and other ideas across civilizations spanning the entire Eurasian landmass, an exchange that had been intermittently occurring since the first agrarian civilizations of Mesopotamia, Egypt, China and India.  Most important technological advances attained by Europe after the Roman Empire collapsed had originated in China or in the Muslim world.  Lack of contacts across the major oceans meant that they failed to reach the Americas and Oceania until Europeans arrived. 

Diamond’s general insight on colonization and technological advantages is supported by a new study I recently completed with Arhan Ertan and Martin Fiszbein, where we show in a formal statistical analysis of data on 111 non-European countries that the level of technological development in those lands in the year 1500 is a strong predictor of whether they were colonized at all by Spain, Portugal, Holland, England, France or more minor Western colonizers, and if so in what year.  No lands that had been part of the Eurasian technological exchange was colonized in the 15th and 16th centuries.  The eventual colonization of some of those lands waited until Europe obtained a decisive technological advantage around or after the onset of the industrial revolution.  And countries including the Turkish core of the old Ottoman Empire, Persia, China and Japan, were never colonized by Europeans.

An equally interesting fact not considered in Diamond’s book is one concerning economic growth in the post-colonial world, especially since the 1970s.  Until that time, the only relatively rich and industrialized countries in the world were either located in Europe or were overwhelmingly populated by Europeans.  The one exception, Japan, in a sense proves the rule, because its sprint to industrialization began in the 1880s on a relatively advanced pre-industrial technological base.  The fastest growing economies after the 1970s were all former participants in the old Eurasian technological exchange, including Japan itself, South Korea, Taiwan, China, and more recently India.  Upper middle income countries like Turkey and Iran were also modernizing their economies from technological bases not so far behind Europe’s.  Even the higher-income economies of Latin America have large populations of Old World origin.    

As I wrote in the last post, I don’t view the evidence for the importance of the skills, knowledge, and attitudes passed down from generation to generation within given populations as implying that countries with less propitious pre-modern developmental endowments—for instance the two Congos or New Guinea or Guatemala—should expect to wait a few thousand more years for their own days in the sun.  The ways in which knowledge and skills can spread from person to person are far different today from what they were in the remote past, and a world determined to close the economic gaps between its rich and poor could do much to speed development if it gave the human factor more attention.

My fundamental point is that we need to move on more than the institutions front emphasized by Acemoglu and Robinson, as well as on more than the front of combatting diseases and other tropical geographic disadvantages emphasized by Jeffrey Sachs, if we are to successfully close the economic gaps between the world’s rich and poor.  Those factors are also important, but we need to focus at least as much of our attention on what makes the people of poor countries different from those of rich ones.  Genes, skin color, and the like have nothing to do with it, what’s inside people’s heads everything.  That includes knowledge, but also attitudes towards learning, and the social attitudes that govern everything from the prevalence of corruption to the dedication of public servants and the vibrancy of democracy.  All of this and more, which might go under the heading of “social capability,” should be top target of policy making, and learning how to upgrade social capabilities more effective should be a top priority in development research.Image

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