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Sunday, March 4, 2018

Annals Of Underdevelopment–Why African Countries Just Can’t Seem To Make It

“America was lucky”, said a consultant at a well-known international development agency, “to have had Washington, Jefferson, Hamilton, and Adams.  Without such luck, she said, the country would have foundered for decades.

While there is no doubt that the Founding Fathers formed a ‘genius cluster’, a unique configuration of talent, intelligence, savvy, and will that is rare in any discipline; their political insights were not fortuitous.  Jefferson was a student of Rousseau and Locke, briefed and learned about European history and its rise to international power and preeminence, and a student of Western civilization.  He knew that the origins of democracy were rooted in Plato and Aristotle; that the theology and ethical framework of Christianity underlay European political and social development; and that any new nation to survive must be founded on both sound political and moral principles; and he applied these principles and concepts to the new American Republic.

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The Enlightenment for Jefferson was not merely an academic reference, but a profound influence.  Logic, reason, and the rights of man must be the basis for democratic rule; Christianity must provide the foundation for right action; and individualism within community values must be its modus operandi.

America’s rapid rise to power, prosperity, and international influence was no accident.  The Republic was based on principles evolved over 2000 years, codified by men who understood the law and who knew that a legal framework was essential to the functioning of any complex society.  Contracts, agreements, codicils, and precedent were to be an integral part of a system of justice which was predicated on competitive and countervailing forces but reflected Christian compassion.

America was fortunate to have the likes of Jefferson and his colleagues, but not lucky.  It was no accident that these wealthy, influential, powerful, and smart men had already garnered a measure of power and authority under the British, and no surprise that they exercised it after England was defeated.

The America that the Founding Fathers inherited was already populated by men who, although without the intellectual discipline of Jefferson and Adams, understood the importance of freedom of religions, speech, and assembly.  They fled persecution in Europe and were committed to the establishment of a democratic republic even though they may not have envisaged it.  The combination of an enlightened, intellectual leadership and a motivated, committed populace was not fortuitous but determined by history; and the democratic dynamism that resulted was no accident.  Calvinism, so often singled out as a socially retrograde movement – censorious, misogynist, and narrow – nevertheless provided a religious foundation for economic aspirations.  God’s chosen, Calvinists believed, could be identified by their material successes.  Jesus in his parable of the rich man, the camel and the eye of the needle, never condemned material wealth; but only warned against its seductiveness.

Africa has had no such advantages.  It’s population before independence was tribal and animist, had no universal legacy of advanced civilization, and was dispersed, economically marginal, and impossibly divided.  While the Gao and Ghanaian Empires were important and not insignificant in terms of cultural and linguistic impact, they had none of the centrally unifying character of European ones.  They left no architecture, no body of literature, no institutionalized religion, and no centralized social and political authority.  They came and went; but could not be looked to as foundations for modern Africa.

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While the negative influences of colonialism and the equally damaging effects of Cold War politics cannot be denied, once independence was achieved, African countries had little foundation for accession to the developed world.  It was no surprise that  authoritarianism was governance after the colonial powers left.  The ‘big men’ who rose to power had debts to pay for their rise to power – to their extended families, to their tribes, to their ethnic regions, and last but least, their countries.  How could anyone expect any different? A country suddenly deprived of governance, authority, and civil rule and without any strong cultural roots on which to build a new, independent society, could only fall into the hands of a dictator. 

“Give Africa time”, said the colleague.  “They will sort things out in an African way”, yet in far less time and in far fewer years than the fifty odd since African independence, China, India, and Russia have become international economic and political powers. Russia was economically, intellectually, and politically destitute in 1989.  Yet, a scant thirty years later it has returned to power, challenging the United States militarily and politically.  It is once again America’s principle adversary.  How did it so quickly evolve from a failed state whose political philosophy had been discredited, its economic principles dismissed, and its productive infrastructure destroyed return to quickly to power? Both Africa and Russia started from ground zero – i.e. African independence and the fall of the Soviet Union – the economies of both regions were marginal at best; and their peoples both left exploited and bereft. One survived, prospered, and dominated.  The other deteriorated and declined.

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Mao’s Cultural Revolution destroyed the Chinese economy and the foundations of Chinese society.  Intellectuals and social leaders were murdered or imprisoned, the dynamism of the Chinese entrepreneurial class neutered, and the means of agricultural and industrial production destroyed in hysterical collectivization.  Yet in the short few decades after the rise to power of Deng Xiaoping, China has become the preeminent world power, holder of vast reserves of foreign currency, aggressively successful in new international markets, owner of a significant proportion of US debt, and an emerging military power.  In a few short decades China went from a brutally reductionist medieval agrarian society to a premier nation.

How did this happen? First and most simply, pent-up demand. China had always been a merchant, trading, entrepreneurial nation, and Communism, even the brutal type instituted by Mao, was not enough to destroy the spirit of enterprise and individual effort. Perhaps more importantly, China after Deng quickly abandoned cultural socialism and returned to its moral and ethical cultural roots.

Lawrence Harrison, one of the first outspoken advocates for considering culture as an important factor in economic development recently wrote the lead essay for a conference on Culture and Economic Development sponsored by the Cato Institute. In it he said:

The "Confucian" countries (more accurately the countries strongly influenced by Chinese culture, which also embraces, in addition to Confucianism, Taoism, Buddhism, and ancestor worship) all share substantially in the universal culture of progress: education, achievement, work ethic, merit, and frugality are all highly valued in the East Asian societies. Their economic success contradicts Weber's analysis in The Religion of China in which he asserts that rapid capitalist development is unlikely in China in large measure because of the absence of anything like the Calvinist "tension" caused by uncertainty about being of the "elect."
Many observers attributed the stagnation of the East Asian economies (Japan excepted) at mid-twentieth century to Confucianism, particularly to the influential role played by the Mandarin literati (Mao a prototype) and the low prestige that attached to economic activity in the Confucian scheme of things. But all that was necessary to release the powerful education/achievement/merit/frugality undercurrent to perform its economic magic was encouragement from the political leadership, in the cases of South Korea and Taiwan stimulated by security concerns. The trigger for the magic in China was Deng Xiaoping's 1978 pronouncement, "To get rich is glorious," effectively marking the end of Mao's Marxist revolution.

Not only has China been dramatically successful over the last twenty years, but its diaspora population has thrived in every country in which it is a minority.  Chinese communities throughout East Asia (Malaysia, Vietnam, Thailand, etc.), the United States, and increasingly in Central Asia enjoy incomes, educational status, and economic influence far out of proportion to their numbers. Overseas Chinese are estimated to control 1.5 to 2 trillion USD in liquid assets and have considerable amounts of wealth to stimulate economic power in China.

In other words it was impossible for the Communists to snuff out 3000 years of cultural history.

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India languished for decades under the Nehru’s Soviet socialism; but once government rejected import substitution and opened trade and currency markets to international competition, the country thrived; and the thirty years since that dramatic opening,  the country has become an international economic powerhouse and challenge to China.  Like the Chinese, Indians had for centuries been international investors, entrepreneurs, and businessmen; and the brief dalliance with Soviet-style socialism was not enough to destroy the spirit.

Harrison goes on to disaggregate ‘culture’ and suggests, based on his and others’ research that there are a number of characteristics which characterize successful cultures, whether as nations or communities living abroad:

Some economists have confronted culture and found it helpful in understanding economic development. Perhaps the broadest statement comes from the pen of [Harvard economist] David Landes: "Max Weber was right. If we learn anything from the history of economic development, it is that culture makes almost all the difference." Elaborating on Landes's theme, Japanese economist Yoshihara Kunio writes, "One reason Japan developed is that it had a culture suitable for it. The Japanese attached importance to (1) material pursuits; (2) hard work; (3) saving for the future; (4) investment in education; and (5) community values."

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The Argentine scholar and journalist Mariano Grondona developed a ‘progress-prone, progress-resistant model’ of economic development – that is one which matched economic progress with prevalent cultural factors.  He had Argentina in mind for a country which was progress-resistant and the United States which was progress-prone; but expanded his research and conclusions more broadly.

He devised 25 factors broken down into four groups: Worldview, Values and Virtues, Economic Behavior, and Social Behavior. Of the most important in the Economic Behavior cluster are:
    • Work/Achievement, which contrasts the progress-prone “Live to work” with the resistant “Work to live.”
    • Frugality: “the mother of investment” vs. “a threat to equality.”
    • Risk propensity: moderate in the progress-prone culture; low, with occasional adventures, in the progress-resistant culture.
    • Competition: leads to excellence vs a threat to equality—and privilege.
    • Innovation: the progress-prone culture is open to and quick to adapt innovation, while the resistant culture is suspicious of and slow to adapt it.
    • Advancement: merit vs. family/patron connections.
Perhaps the more interesting research was carried out by Harrison and his colleagues at the Fletcher School at Tufts University (Culture Matters Research Project) to see how these general categories correlated or were associated with certain cultural factors, such as religion:
The data roundly validated Max Weber’s thesis in The Protestant Ethic and the Spirit of Capitalism: Protestant countries do better than Catholic countries in creating prosperity. To be sure, the averages for the Catholic countries are depressed by Latin America’s slow development, but even when one looks only at First World democratic-capitalist societies, Protestant countries do substantially better than Catholic countries with respect to prosperity, trust, and corruption.

More broadly, the analysis of religions suggests that Protestant, Jewish, and Confucian societies do better than Catholic, Islamic, and Orthodox Christian societies because they substantially share the progress-prone Economic Behavior values of the typology whereas the lagging religions tend toward the progress-resistant values.

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Harrison cites the Nordic experience as an example of the importance of religion and culture to economic development:

All five Nordic countries—Finland, Sweden, Norway, Denmark, and Iceland—have a Lutheran background, even though few today are churchgoers. Lutheranism is the source of much of the Nordic value system that has produced high educational levels, extensive welfare programs, and high quality entrepreneurship symbolized by Finland's Nokia and Sweden's Volvo, Saab, and Ikea. The compatibility of economic efficiency and social spending in the Nordic context is apparent form the 2006 World Economic Forum ratings.

It is no surprise therefore that African countries have made little progress since independence, and in most cases have retrogressed.  Despite billions in foreign aid, much of it invested in institution-building – rule of law, principles of civil society, the development and application of democratic precepts, free and fair elections, a restrained and civilly- controlled military – there is little to show.  Big Man autocracies are the rule, democracy is a false front for continued corruption, and liberal economics a chimera.

To complicate matters further, traditional and radical Islam have been unfortunate limits on socio-economic progress, affecting countries of North Africa and the Sahel. Timur Kuran and Anantdeep Singh of Duke and University of Southern California, respectively, studied the question of Islam and economic development in India  where Muslims are a significant minority, but lag far behind Hindus in per capita income.(Economic Modernization in Late British India: Hindu-Muslim Differences 2004).  Kuran and Singh cite two principle factors behind this lag – the waqf inheritance system and Shari ’a Law.   The traditional inheritance system which channeled money through inefficient family structures, inhibited the flow of financial resources to modern institutions; and while Hindus were investing in banks and other financial institutions and using their profits for further growth, Muslims did not, and their growth was stagnant.

Kuran and Singh also cite Muslim adherence to Shari ’a law which kept them out of the mainstream of British civil, contract, and criminal justice.

Kuran (2003) identifies the absence in Islamic law of the concept of a corporation and two institutional bottlenecks that once seriously hampered
economic growth in the Muslim world: the Islamic law of inheritance, which inhibits capital accumulation, and the waqf system, which locks vast
resources into unproductive organizations designed to deliver social services. (USAID, op.cit)

Thirdly Kuran and Singh cite Islamic education as an obstacle to development – i.e. a religion-based educational system cannot possibly expose students to the more general learning of the modern world.

In summary, it is no surprise that some countries – in fact entire regions – lag far behind others in economic, political, and social progress.  How can Africa possibly progress without the benefit of the two- or three-thousand year cultural history of the West? On what foundations can it possibly build a liberal political democracy?  It of course can, but it will have to do so sui generis, and on that score there is little hope.

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