Sunday, April 22, 2012

Characteristics of Wealth Producing Societies

In his outstanding book The Wealth And Poverty Of Nations, Harvard Professor David Landes analyzed the concrete facts (geographic, ecological and technological) that allowed some nations to develop the industry and commerce that increased their wealth and welfare. He also presents a detailed explanation of the values and cultural factors that were indispensable in economic development. Conversely, societies that have failed to advance them, have faced far greater difficulties in economic development. Foreseeing the left wing critique of his vision, Landes stated "No society on earth has ever matched this ideal...The most efficient, development-oriented societies of today, say those of East Asian and the industrious nations of the West, are marred by all manner of corruptiopn, failures of government, priovate rent-seeking. This paradigm nevertheless highlights the direction fo history.  These are th virtues that have promoted economic and material progress. They represnet a marked deviation from earlier social and political arrangements; and it is not a coincidence that the first industrial nations came closest earliest to this new kind of social order."

"These values and institutions are so familiar to us (that's why we call them modern) that we take them for granted. They represent however, a big departure from older norms and have been accepted and adopted, over time and in different places, only in the faces of tenacious resistance. Even now, the older order has by no means vanished."

"Let us begin by delineating the ideal case, the society theoretically best suited to pursue material progress and general enrichment. Keep in mind that this is not necessarily a "better" or "superior" society (words to be avoided), simply one fitter to produce goods and services. This ideal growth-and-development society would be one that:"

"1) Knew how to operate, manage, and build the instruments of productions and to create, adapt, and master new techniques on the technological frontier.

2) Was able to impart this knowledge and know-how to the young, whether by formal education or apprenticeship training.

3) Chose people for jobs by competence and relative merit promoted; promoted and demoted on the basi of performance.

4) Afforded opportunities to individual or collective enterprise; encouraged initiative, competition, and emulation.

5) Allowed people to enjoy and employ the fruits of their labor and enterprise.

These standards imply corollaries: gender equality (thereby doubling the pool of talent); no discrimination on the basis of irrelevant criteria (race, sex, religion, etc.); also a preference for scientific (means-end) rationality over magic and superstition (irrationality).

Such a society would also possess the kind of political and social institutions that favor the achievement of these larger goals, that would for example"

1) Secure rights of private property, the better to encourage saving and investment.

2) Secure rights of personal liberty - secure them against both the abuses of tyranny and private disorder (crime and corruption).

3) Enforce rights of contract, explicit and implicit.

4) Provide stable government, not necesarily democratic, but itself governed by publically know rules (a government of laws rather than men). If democratic, that is, based on periodic elections, the majorit wins but does not vuiolate the rights of the  losers; while the losers accept their loss and look forward to anotherr tyurn at the polls.

5) Provide responsive government, one that will hear complaint and make redress.
6) Provide honest government, such that economic actors are not moved to seek advantage and privilge inside or outside the marketplace. In economic jargon, there should be no rents to favor and position.

7) Provide moderate, efficient, ungreedy government,. The effect should be to hold taxces down, reduce the government's claim on the social surplus, and avoid pribviege.

The ideal society would also be honest. Such honesty would be enfofced by law, but ideally, the law would not be needed. People would believe that honesty is right (also that i pays) and would live and act accordingly.

More corollaries: this society would be makred by geographic and social mobility. People would move about as they sought opportunity, and would rise and falls as they made something or nothing of themselves. This society would value new as against old, youth as against experience, change ans risk as against safety. It would not be a society of equal shares, because talents are not equal; but it would tend to a more even distrubution of income than is found with privilege and favor. IT would have a relatively large middle class. This greater equality would show in more homogernous dress and easier manners across class lines.

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