2.According to Rosenberg and Birdzell: • “The system that generated Western econ
ID: 1115614 • Letter: 2
Question
2.According to Rosenberg and Birdzell:
• “The system that generated Western economic growth evolved before it was recognized as a system or advocated as an ideology.” (p. xi)
• “The West’s economic resources are its wealth; the problem is how the West generated the organizational and technological skills required to produce and exploit that wealth.”(p. 10)
Organizations - Markets - Competition
Using North’s ideas about institutions and the simplified form of our Drucker -Alchian -Hayek model sketched above as an organizing framework,
Describes and explains the institutions identified by Rosenberg and Birdzell that led to sustained productivity-driven economic growth in the West?
Explanation / Answer
Interplay between culture and development has fascinated economists and sociologists for generations. Social preconditions have an impact on the economic development, as the way a society operates is important in regards to how prosperous that society can become. This is largely a matter of culture, and for most of the world culture basically means religion. Religion drives culture; culture drives social forms; social forms drive development.
Confucianism, an existential and political philosophy that originated in China and spread through East and Southeast Asia, is often mentioned as one such possible trigger in the Asian development Model. As two relatively closed societies and as Asia's only two large-scale economies to attain the status of developed countries, Japan and South Korea offer an interesting case study for the examination of the importance of Confucianism.
In Zhu Xi's Neo-Confucian tradition, "the natural world and man's social world [are] seen as a unity and believed to be governed by the same moral principle..." and thus the natural order is used to "justify existing social norms and institutions" (Hane 1969: 357). More broadly, the term Confucianism is frequently used to describe Chinese culture at large, often incorporating elements which are not part of the Confucian tradition per se. Importantly, Confucianism associates nobility with government service and orthodox scholarship. As such, it does not tend to encourage reformers and "prophets" (Taylor & Arbuckle 1995: 352) and Max Weber famously, and perhaps erroneously, described it as the least conducive of all "World Religions" to capitalist development (Hamilton 1985:70; Dubs 1953).
The idea of a uniquely Asian Development Model gained prominence in the early 1990s, following the rapid growth in the "Tiger" economies of South Korea, Taiwan, Singapore, and Hong Kong, as well as the "Tiger Cub" economies of Indonesia, Malaysia, Thailand, and the Philippines2.
it is clear that existing values and behaviors played an important role in determining the development course in Japan and Korea. Still, it is impossible, based on available data, to pin down the influence of any specific cultural factor, both in its direct effect on either country or as an explanation to the divergence in development between the two countries. The availability of more compelling theories concerning other factors that affected Japanese and Korean development also marginalizes the notion that Confucian heritage can be considered important in explaining Asian economic performance. Any attempt to use Confucianism as a common and important element in the development of Korea and Japan is frustrated by several paradoxes - the failure to explain the divergence in attitude towards foreign methods and industrialization; the divergence in the pace and scope of development once foreign methods were introduced to either country; the difference in so-called "Confucian" aspects of Korea and Japanese industry; and the general difficulty in defining what exactly in these two societies can be considered "Confucian", what should be attributed to other cultural and religious influences, and what is simply a consequence of more mundane economic and political forces. More broadly, the disparity in economic performance amongst other Asian economies also suggests that beyond a common cultural heritage, a variety of other factors probably played a more important role in determining the development path of countries in the region.
Finally, the fact that Confucian heritage has been systematically used to justify limitations on individual freedoms - from Tokugawa Japan, through Lee Kuan Yew's Singapore, and through to 21st Century China - triggers an instinctive suspicion of any emphasis of its importance. That said, it is clear that the existing literature on the subject leaves a lot to be desired, and perhaps the significance of Confucian heritage in explaining Korean and Japanese development will come into sharper relief in future research. Until then, we are left with a nagging feeling that we are, perhaps like the Shoguns of old, trying too hard to impose an ideal mold from the past on a fragmented and complex present.
b) Regarding different religions and their level of conduciveness to growth there are a number of illustrations. Lifestyle which arose from Protestantism played a decisive role in the creation of modern prosperity. Then worldly asceticism became a source of growth and capital accumulation. Worldly asceticism upheld the virtue of productive labor in this world, as opposed to an otherworldly orientation often associated with medieval Catholicism. The focus on this life as opposed to the afterlife tends to create large income streams. But worldly asceticism looks askance at lives of excessive spending and conspicuous consumption, which are often associated with wealth. The result is a well-educated, highly skilled diligent work force and large pools of capital. Without this, or something like it, modern capitalism would not have arisen as it did.
Not all religions, at least in the current form, have these same characteristics; therefore not all religions are equally conducive to development.
Protestant effect expressed itself in different ways in different times and places: historically in America in her Puritan heritage. Currently in the developing world, it reveals itself in the explosive growth of Evangelicalism which is helping to create modern developed economies. Perhaps Pentecostalism plays a role in the Third World similar to that played by Calvinism in Europe and North America, or at least is an important factor in the emergence of a middle class.
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