1âEXPLAINING ECONOMIC GROWTH
The Problem
From the top of the campanile, or Giottoâs bell tower, in Florence, one can look out over the city in all directions, past the stone banking houses where the rich Medici lived, past the art galleries they patronized, past the magnificent cathedral and churches their money helped to build, and on to the Tuscan vineyards where the contadino works the soil as hard and efficiently as he probably ever did. The city below is busy with life. The university halls, the shops, the restaurants are crowded. The sound of Vespas, the âwaspsâ of the machine age, fills the air, but Florence is not today what it once was, the center in the 15th century of a great civilization, one of the most extraordinary the world has ever known. Why? What produced the Renaissance in Italy, of which Florence was the center? How did it happen that such a small population base could produce, in the short span of a few generations, great historical figures first in commerce and literature, then in architecture, sculpture and painting, and finally in science and music? Why subsequently did Northern Italy decline in importance both commercially and artistically until at the present time it is not particularly distinguished as compared with many other regions of the world? Certainly the people appear to be working as hard and energetically as ever. Was it just luck or a peculiar combination of circumstances? Historians have been fascinated by such questions ever since they began writing history, because the rise and fall of Florence or the whole of Northern Italy is by no means an isolated phenomenon. In fact, as Kroeber (1944) has demonstrated, âconfigurations of culture growthâ are the rule rather than the exception, âsuccesses...occur close together in relatively brief periods within nations or limited areasâ (1944, p. vii).
This book will not take as its province all kinds of cultural growthâartistic, philosophical, militaryâbut will try to shed some light on a narrower problem, namely, the reasons for economic growth and decline. The way wealth is distributed is a matter of special interest, partly because it may well be basic to growth in other cultural areas and partly because it has become so uneven in the past century that curiosity has been aroused. Certain countries, primarily in northern Europe and North America, have accumulated wealth probably at a faster rate and certainly to a much higher average level than has ever been known before in the history of the world. In the United States, per capita income in constant prices rose from around $244 in 1850 to around $1140 in 1950, a five-fold increase (Woytinsky, 1953, p. 383). In Great Britain average income quadrupled in the same period. At the present time, the average per capita income varies tremendously from one country to another, as Table 1.1 demonstrates. Thus, the average person in northern Europe or the United States has ten to twelve times as much wealth at his disposal as the average person in most of Africa or Asia. Or, to put it in its most striking fashion, approximately 7 per cent of the worldâs population in North America enjoy about 43 per cent of the worldâs wealth, while 55 per cent of the population, in Asia, have only about 16 per cent of the worldâs wealth. Even a quick glance at the table raises some interesting questions. Why should Argentina lag so far behind the United States or Australia in per capita income? Is it so much less favored by climate and natural resources? Or compare France and Poland with the United Kingdom and Sweden. The differences here in climate and natural resources are by no means outstanding, and yet there is a marked difference in economic development to date. One is led to think immediately of differences in the peoples who live in those countriesâin their motives and values, social and political institutions. In fact, in our time the political question has become paramount. It is widely felt that the reason why some countries have not developed as rapidly as others is because they have been improperly governed, that is, exploited either by colonial powers or by internal minorities.
One of the fundamental differences between the Communist countries and the Western democracies lies precisely in their views as to how the people should be governed so as to bring about their economic improvement. Everyone accepts the goal of economic development as of paramount importance. Certainly one of the most striking phenomena of our times is the great effort that the populous poor nations of the worldâIndia, China, Indonesiaâare making to catch up with the industrialized West. The differences arise over how best to do it, the Communists stressing centralized authoritarian rule by a minority and the Western democracies advocating a freer participation by all segments of the population in their own self development.
For practical political reasons, then, as well as to satisfy scientific curiosity, it has become of very great importance to understand some of the forces that produce rapid economic development. It would certainly not surprise us to discover that these forces lie largely in man himselfâin his fundamental motives and in the way he organizes his relationships to his fellow man. At least it should be worth a serious attempt to see what modern psychology can contribute to an understanding of why some men concentrate on economic activities and are conspicuously successful at them. Such is the primary purpose of this book. The reader should, however, not set his hopes too high. Modern quantitative psychology is young, about fifty years old to be exact, even younger than the study of economics. And the scientific study of motives and values is even younger still. Furthermore, psychology has not concerned itself much with problems of economics. The present effort should, therefore, be viewed as a first attempt by a psychologist interested primarily in human motivation to shed some light on a problem of historic importance.
General Explanations of Cultural Growth and Decline
Before we plunge into the heart of the matter, it will be worthwhile to consider the problem in historical perspective. After all, many distinguished men have written on the subject of why civilizations wax and wane, or more particularly on what are the forces responsible for economic growth and decline. The psychologistâs contribution can best be seen against the background of such other explanations. There may be many who feel that the psychologists can contribute little because we have explanation enough already or because no general explanation is in the end really possible. Those who take the latter point of view simply avoid the whole problem. They contend that there are too many facts that no general explanation can fit. For example, Muller, who takes what he calls the âtragicâ view of history, at times appears to argue that Byzantium persisted as a great, or reasonably great, civilization for hundreds of years for no good reason whatsoever. In his words, âWhat kept this static civilization going? Why was it preserved by a tradition that failed to preserve Rome? I can see no very good reasons, or at least none that illustrates a satisfying philosophy of history....it had a strong walled capital, with an excellent location for purposes of trade and defense....it had the secret of âGreek fire,â the diabolic weapon that scattered or destroyed enemy fleets besieging Constantinople....Above all, it had good luck in its emperors during its worst crises, being periodically saved by the emergence of a strong, able ruler. This looks like mere luck, because the rise of such a savior was not provided for by any peculiar wisdom in its political institutions.â (1957, p. 20.)
Muller seems to be wondering in this passage, as many skeptics have before him, whether history makes any sense at all. Most historians, however, would go at least one step further, as he himself does in this passage, and search for some particular factorâa strong ruler, a military secret, a geographical locationâwhich contributed to the growth, preservation, or fall of a particular civilization at a particular time. Many would then stop here and regard a search for any general explanation of the rise and fall of civilizations as useless because the reasons are uniquely different in every case.
In a sense they are right. Every event is in some respects different from every other event. No historical epoch is precisely like any other despite the ability of men like Toynbee and Spengler to see similarities. No person is exactly like any other person. No stone, for that matter, is exactly like any other stone. Yet beginning with stones, scientists have seen similarities and made generalizations based on features that events or objects have in common without denying the uniqueness of any particular event or object. Psychologists are so used to being told that they can never make generalizations about anything so complex and variable as human nature that they may be forgiven for assuming that history could hardly be more difficult to generalize about. Perhaps if we grant at the outset that all instances of economic growth or cultural flowering are unique in some respects, the skeptics might then at least admit the possibility that certain common features of many or most of them could also be identified.
Many attempts have been made to discover such common features and arrive at general interpretations. One that is only slightly less skeptical than Mullerâs âironicalâ view of history has much in common with the anthropologistâs concept of âcultural diffusion.â According to this view, mankind is engaged over space and time in a variety of social or cultural âexperimentsâ which involve different methods of economic, political, religious or social organization. Every so often a social âmutationâ occursâa particularly fortunate combination of interests or leaders or methods of organizing different spheres of activity, a new development which leads either to growth in the economic or some other cultural sphere.
In modern times, one might focus on the technological revolution, for example, starting with basic scientific developments in the 17th century which were converted in the 18th and 19th centuries into technical inventions of very great economic value. The spread of such an obviously more successful way of dealing with the world occurs by âdiffusionâ; that is, other people see the advantages of the new techniques and adopt them as soon as they learn about them. In a sense, such a view of economic development is little more than a description of what happened, since it does not attempt to explain why it happened in the first place.
To the extent that it relies on âdiffusionâ or, as the economists would phrase it, on âtradeâ (Buchanan and Ellis, 1955, p. 407) as a cause of economic development elsewhere, the case is certainly not a very strong one. China certainly knew about many of the technical developments in the West from the time of Marco Polo onward, yet was not recognizably eager to adopt them until the present century. Even more striking is the Moslem contact with the West, which was reasonably close in the Mediterranean throughout the entire period when the West was developing technically and economically at such a rapid rate. Yet very little of Western methods or techniques managed to âdiffuseâ by trade into the Middle East. By way of contrast consider Japan which, although it came in contact with Western ideas much later than did the Arab world, absorbed technological advances at a much more rapid rate. Some channels of communication along which knowledge of better techniques can be carried are undoubtedly necessary, but are not in themselves sufficient to produce economic growth in another country. Diffusion out of a âsocial mutationâ appears to describe some cases of development but does not go far toward explaining any of them.
More strictly explanatory are two theories which, as Toynbee points out, have been favorites ever since scholars began worrying about the problemânamely, race and climate. Perhaps some peoples are simply more energetic, or some climates are simply more favorable to culture growth. For instance, one can argue that Nordic peoples have played a significant role in the rise of more great civilizations than any other group. One can assert that it was they who entered Greece from the North as the wandering Achaeans and produced the flowering of Ancient Greece, with some side-effects on India through Alexanderâs conquests; that they were largely responsible for the âProtestant ethicâ which figured so prominently in the rise of modern capitalism (Wax, 1955); and that they are now among the richest people on earth. Even if we overlook the problem of defining âtheyâ in statements like these, the basic difficulty remains, as with all racial theories, that such assertions do not explain why a particular people are more energetic at some times than others.
Thus it is hard to imagine, for example, that the gene pool in Florence and Northern Italy was markedly different in the 17th century from what it had been in the 15th and 16th; yet the Renaissance was largely over and the âraceâ was no longer productive.
It is strange how the fascination for biological explanations of economic development persists in view of such an elementary difficulty. Fanfani, a leading contemporary Italian politician and formerly a professor of economics, has written a book (1935) in which he refutes Max Weberâs thesis that Protestantism had something to do with the rise of capitalism. He argues that Catholicism invented modern capitalism long before Protestantism appeared on the scene and pursued business just as energetically. But Fanfani, still faced with the obvious fact that the Protestant countries are wealthier than the Catholic countries, decides that the shape of their heads must be a factor: long-headed people make better businessmen. But even if this could be proven by careful statistical study (and it certainly never has been), how explain the fact that long-headed people did not show any particular concern for business during lengthy periods of history? The same objection appears to apply to more recent attempts by Sheldon (1940) and Morris (1948) to associate vigorous cultural activity with mesomorphy, a body structure in which muscle predominates. It is difficult to believe that the proportion of mesomorphy shifted enough in the 50-or 100-year period of the Renaissance to explain the sudden flowering of arts and sciences.
To a considerable extent, environmental explanations run into the same problem. Was the climate of Northern Italy suddenly more stimulating for one to two hundred years? Or what happened to the climate in Greece in the 8th or 7th century B.C. to stimulate culture growth there, and not in adjacent geographical areas such as the Italian or Iberian peninsulas? Climate has one advantage as an explanation over race. It is known to change rather dramatically in the same area over reasonably long periods of time. Thus, it is at least conceivable that a series of favorable growing seasons occurring in succession could produce the economic surplus necessary to stimulate a sustained period of growth. On the negative side, it is even easier to find instances of environmental calamities, such as prolonged droughts or plagues, which could seriously interfere with the continued economic development of a country.
Huntington (1915) has made perhaps the best case for the role of climate in the production of great civilizations. He points out that none of the great civilizations, at least as we understand the term today, has ever flourished in the tropics or in the far North. In fact, he argues quite specifically that the most stimulating climate for man involves a mean temperature range between winter and summer of 40° to 60°F with moderate rainfall and frequent mild storms. His classification of climates in terms of the energy they presumably evoke in man corresponds fairly closely to the climates of those regions of the world where high civilizations either now exist or have existed in the past. Climate may very well set some limits on the places where man can build a high civilization, but it does little to pinpoint specifically why growth occurs rapidly in one place rather than another in the same energy belt. Thus, both Poland and Great Britain are in the same âvery high energyâ belt (see Woytinsky, 1953, p. 30), but, as Table 1.1 shows, the average per capita income in England is some seven or eight times that of Poland. Climate is at best a gross limiting factor, and much more detailed knowledge is needed of specific variations within favorable or unfavorable environments.
Toynbee, while specifically rejecting an environmental theory of the rise and fall of civilizations, still managed to write most of A Study of History (1947) in terms of a modified environmental theory. For him it is the âchallenge of the environmentâ which is responsible for the genesis of civilizations. As he employs the term, âenvironmentâ refers not only to geography, but also to social conditions. What is important is the âstimulusâ which may arise from hard countries, from new soil to exploit, from living in a frontier position, from being penalized as a minority group. The stimulus must be neither too strong nor too weak, but just right. Thus the Vikings were stimulated by Iceland, but Greenland proved too severe a challenge for them. The Chinese have responded vigorously to mild social discrimination against them in Malaya but have âyieldedâ to a much stronger discrimination against them in California. The difficulty with Toynbeeâs theory is that it is so general that it cannot possibly be wrong. If a civilization has shown a creative response, it must have had just the right amount of stimulus. And since the stimulus may come from a large number of different sourcesâclimate, the pressures of other peoples, internal conditions, etc.âthe historian can always âproveâ that...