58 Economics brief The EconomistSeptember 5th 2020
2 of scale and which can drive the adoption
of new technologies. This suggests that it is
no coincidence that the average business
in Lombardy, a rich northern region in Ita-
ly, has 13 employees, compared with five in
Calabria, a poor southern one.
Others look beyond Italy. In “A Culture
of Growth”, published in 2016, Joel Mokyr
of Northwestern University puts the “prin-
ciple of contestability” as the reason why
some countries industrialised but others
did not. Organisations such as the Royal
Society, founded in London in 1660, were
forums for the exchange of ideas, where
people put forward their discoveries and
fiercely interrogated the theories of others.
Crucially, too, over time the goal of western
European science shifted from one con-
cerned with the “mindless piling up of em-
pirical facts”, as Mr Mokyr puts it, towards
discoveries which could be put to use in the
real world. Scientific inquiry laid the
groundwork for European economic ex-
ceptionalism. Nothing quite comparable
happened in other parts of the world.Culture club
The revival of cultural explanations for
wealth and poverty seems to be a method-
ological step forward. Yet it raises two big
questions. The first concerns the origins of
cultural traits: where do they come from?
The second is why people from apparently
similar cultures sometimes have very dif-
ferent economic outcomes. To answer
these questions, economists have come to
appreciate the importance of history—and,
in particular, historical accident.
Take first the question of the origin of
cultural traits. Some research suggests that
they are the product of changes which took
place hundreds of years ago. A 2013 paper
by the late Alberto Alesina and two of his
colleagues looks at why countries have
very different rates of female labour-force
participation. Egypt and Namibia are about
as rich as each other, but the share of Na-
mibian women in the labour force is more
than twice that of Egyptian women. The pa-
per puts such differences largely down todifferences in pre-industrial agriculture
and environmental conditions. Plough
cultivation, common in Egypt, required
lots of upper-body strength—so men were
at an advantage. Shifting cultivation, more
common in Namibia, used hand-held tools
like the hoe which suited women better.
The effect of these agricultural technol-
ogies echoes in statistics today.
Other economists look to the distant
past to explain contemporary disparities in
income and wealth. A paper from last year
by Benjamin Enke of Harvard University
finds evidence that pre-industrial ethnici-
ties which were exposed to a high local
prevalence of pathogens exhibited tighter
kinship systems—meaning, in effect, that
people were strongly loyal to their extend-
ed family but suspicious of outsiders. In a
place threatened by disease, tight family
ties were beneficial because they reduced
the need to travel, and therefore the risk of
being exposed. Places which had tighter
kinship systems hundreds of years ago
tend to be poorer today, a relationship
which first emerged during the industrial
revolution. Other research has looked even
further back, suggesting that contempo-
rary cultural traits are the result of genetic
variation. But this remains a niche pursuit,
and most economists turn queasy when it
comes to talking about genetics.
A separate body of research focuses on
cases where culture is not a sufficient ex-
planation for economic outcomes. Take
the case of Guatemala and Costa Rica. “The
two countries had similar histories, simi-
lar geographies and cultural inheritance,
and were faced with the same economic
opportunities in the 19th century,” write
Daron Acemoglu and James Robinson in
“The Narrow Corridor”, a book published
last year. But today the average Costa Rican
is more than twice as rich as the average
Guatemalan. The cause of the divergence
initially appeared random, according to Mr
Acemoglu and Mr Robinson. Eventually it
became clear it was down to coffee. In Costa
Rica the development of coffee plantations
for the European market led to a more bal-anced relationship between state and soci-
ety, possibly because the country had more
marginal land and more smallholders. In
Guatemala, by contrast, it led to the emer-
gence of a rapacious government.
In addition to culture, therefore, a grow-
ing band of economists is looking at “insti-
tutions”, often taken to mean the legal sys-
tem and regulations. Some cultural
economists argue that the focus on institu-
tions proves their point: what are institu-
tions if not the product of norms, values
and preferences? Americans’ and Euro-
peans’ differing beliefs about the causes of
inequality, for instance, go a long way to-
wards explaining why European welfare
states are more generous than America’s.
But in many cases the emergence of dif-
ferent institutions may have nothing to do
with a country’s culture. Sometimes it is
just luck. Mr Mokyr shows that Europe,
which was fragmented into lots of states,
was the perfect setting for innovation: in-
tellectuals who challenged received wis-
dom and incurred the wrath of the authori-
ties could move elsewhere (Thomas
Hobbes wrote “Leviathan” in Paris). By con-
trast in China, Mr Mokyr argues, free think-
ers had few escape routes. Europeans did
not plan such a system. It just happened.
Other work by Mr Acemoglu and Mr
Robinson, along with Simon Johnson of
mit, has found a further element of ran-
domness which may explain contempo-
rary patterns of wealth and poverty—
namely, which countries are more prone to
certain diseases. The mortality rate of set-
tlers was low in some colonised countries,
such as New Zealand and Australia, in part
because the kinds of diseases that were
there were less virulent. In others, such as
Mali and Nigeria, mortality rates were far
higher. Colonisers did not want to settle in
countries with a high risk of disease, even
as they wanted to take those countries’ raw
materials. So in countries such as Mali and
Nigeria, rather than permanently settling,
they set up systems which enabled the
maximum of resource extraction with the
fewest boots on the ground. That, say
Messrs Acemoglu, Johnson and Robinson,
produced rapacious political systems
which have endured to this day.
Are economists any closer to answering
the foundational question of their science?
Far from the simplistic certainty of Weber,
it seems likely that some countries are rich
and others poor because of a messy combi-
nation of economic incentives, culture, in-
stitutions and chance—which is most im-
portant remains unclear. In 1817 Thomas
Malthus, one of the early economists,
wrote in a letter to David Ricardo, another,
that “the causes of the wealth and poverty
of nations [were] the grand object of all en-
quiries in Political Economy”. The revival
of cultural economics two centuries on has
helped in that quest, but it is not over yet. 7ThewealthofnationsSource:MaddisonProjectDatabaseGDPperperson,$’000, 2011 pricesBritain China0102030401500 50 1600 50 1700 50 1800 50 1900 50 2016FranceIndia