Economics, Character and Causation

Peter Dunn, in a previous comment thread made this observation about why people in Africa are not succeeding in the global economic order:

“I believe the first thing that is necessary for development is that there needs to be a change in character the majority of the people towards taking more individual responsibility.”

The problem with this argument (and I have seen it presented elsewhere) is that it reverses the line of causation and makes too much about the culture of a nation in adapting to different economic systems. People do not adopt the values of industrialized society and then become industrialized, rather as a process of industrialization proceeds, people shift their values to adapt to their new economic realities.

There is a great example of this in the book Bad Samaritans in which there are collected the writings of British travelers in Germany in the 19th Century. What is significant here is that Britain industrialized in the early 19th C. while Germany was still a patchwork of agrarian duchies, principalities, and kingdoms. Germany of course played a furious game of catch-up in the latter part of the 19th Century to become the industrial power we know today. The gap though in the 19th C. records the depictions of pre-industrial Germans as recorded by industrialized Brits. The characterizations of Germans speak of a “dull and heavy people” who “never hurry” and who are a “plodding and easily contented people… endowed neither with great acuteness of perception nor quickness of feeling.” Don’t try to get them to adopt anything new either since, “it is long before [a German] can be brought to comprehend the bearings of what is new to him, and it is difficult to rouse him to ardour in its pursuit.”

It goes on like this suggesting that Germans are unable to cooperate, have poor infrastructure, are universally dishonest and overly emotional – and its not just about Germans either, the chapter is entitled “Lazy Japanese and Thieving Germans” and it goes through a number of stereotypes about two of the great economic powers of today when they were still pre-industrial. The same kinds of criticisms are today leveled against other countries that have yet to industrialize. The habits of people are not some kind of destiny as Max Weber suggested about protestants and capitalism, but rather they are adapted to their realities.

Here’s another, somewhat related observation from Scott Adams of Dilbert fame:

“Warren Buffett modestly says he was lucky that his brain is wired in a way that suits the times. A few hundred years ago he would have been the crazy peasant who was always talking about ways to increase crop production if only he had the capital.”

Again, the habits of mind of capitalist profit one very little in another economic system. If we imagine that capitalism is not the final system as Fukuyama has suggested, then perhaps some day some other habits of mind will be profitable that today are considered deranged. What I’d suggest though for Africa is that if the economic reality changes (access to highly subsidized European and American markets as one sort of example), people will adapt – either to modern international capitalism or some other system. Unless and until it does, they have no reason to do so.