Darn Beliefs comment

Darn Beliefs comment

Doug North Understanding the Process of Economic Change pp.57,58,135,137

Any discussion of the role of beliefs and values in shaping change inevitably turn to Max Weber’s pioneering work. His Protestant Ethic and the Spirit of Capitalism emphasizes the religious origins of such values. Yujiro Hayami has stressed the importance of moral codes in business transactions in Japan, “it was an admixture of Confucianism, Buddhism and Shintoism, but in substance it taught the same morals that Adam Smith considered to be the basis of the wealth of nations – frugality, industry, honesty and fidelity. Clearly this ideology was an important support for commercial and industrial development in the late Tokugawa period, as it suppressed moral hazards and reduced the costs of market transactions.”

Elsewhere

In his Protestant Ethic and the Spirit of Capitalism, Max Weber is concerned to show that the religious ethic embodied in Protestantism – and specifically Calvinism – contained values that promoted the growth of capitalism. But which way does the causation run; and how do we know that both the values and the growth of capitalism did not stem from some other source? Weber makes a connection between religious views and values, and between values and economic behavior; but he does not demonstrate how the consequent behavior would generate the growth of the specific institutions and organizations that produced a growing economic system. Moreover Counter-Reformation Catholicism may have equally encouraged the same individualism and sense of discipline that Weber uniquely ascribes to Protestantism.

A long-standing view of many scholars has been that individualistic behavioral beliefs are congenial to economic growth. Alan Macfarlane’s controversial The Origin of English Individualism traces the sources of English individualism back to the thirteenth century or earlier. It paints a picture of a fluid, individualistically oriented set of attitudes toward the family, the organization of work, and the social structure of the community.

The belief structure embodied in Christian dogma was, despite some notorious contrary illustrations, amenable to evolving in directions that made it hospitable to economic growth. Both Ernst Benz and Lynn White maintain that Christian belief gradually evolved the view that nature should serve mankind and that therefore the universe could and should be controlled for economic purposes. Such an attitude is an essential precondition for technological progress. But it was particularly the unique institutional conditions of parts of medieval/early modern Europe that provided the sort of experiences that served as part of the catalyst to precipitate such perceptions. From this perspective Weber’s protestant ethic is a part of the story of this adaptation but is “downstream” from the originating sources.

Deepak Lal Reviving the Invisible Hand pp.31,34

Concerning the evolution of international property rights:

These international standards built on the system of commercial law that had been created as a result of Pope Gregory VII’s papal revolution in the eleventh century, which established the church-state, and a common commercial law for Christendom.

…in his detailed and careful study piecing together long-term estimates of world GDP and population, Maddison conclusively shows that the so-called Great Divergence, which led one small part of the Eurasian continent to begin a process that slowly but certainly led it to forge ahead of the other Eurasian civilizations, began in the eleventh century. This date also fits my argument in Unintended Consequences, that it was the change in the material beliefs of the West inaugurated by the second of the two papal revolutions which led slowly but certainly to the Great Divergence. Maddison finds that “Western Europe overtook China in per capita performance in the 14^th century. Thereafter China and most of the rest of Asia were more or less stagnant in per capita terms until the second half of the 20^th century.”