Deepak Lal. Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-run Economic Performance. Cambridge, Mass: MIT Press, 1998. x + 287 pp. $45.00 (cloth), ISBN 978-0-262-12210-8.
Reviewed by Carolyn Tuttle (Department of Economics, Northwestern University)
Published on EH.Net (December, 1999)
The book makes a significant contribution to the development literature by exploring the interaction of factor endowments, culture and politics in explaining when and why intensive growth occurred in the West. The interdisciplinary approach and historical analysis challenges the economist to look beyond the material (those related to ways of making a living) determinants of growth to the cosmological (those related to understanding the world around us) determinants of growth. Lal examines the great civilizations to discern whether the developmental, cultural and political differences can be explained by material beliefs alone or also require cosmological beliefs. He concurs with many other economic historians that materialist forces (a hospitable climate for merchants and commerce; recognition of private property rights by the state and the applications of the "inquisitive Greek Spirit") lead to the European miracle. He departs from most development economists, however, when he places religion at the center of the early success and recent social decay of the West.
Although the content of the book is extremely valuable, it is not for the faint hearted. A book that explores the role of economic, cultural and political factors on the long run economic growth of the West and "the Rest" from the dawn of ancient civilizations to contemporary day is a massive endeavor. To accomplish such a lofty feat, Lal must carefully select and develop the kernels of insight that contribute to his explanation for economic development while ignoring or condensing other material that may offer alternate explanations for economic prosperity. Thus, some readers may be frustrated because there is no discussion about the differences in human capital, the role of education or technological innovation in economic growth while others will be encouraged because the discussion about the conflict between religion and secularism as well as individualism and communalism contributes new answers to the age-old question of "What stimulates and what hinders economic growth in a society?" In an attempt to cover so much history, the book is extremely dense and the early chapters can leave the reader with a disorganized array of insights into the past as he "gallops through human history." Fortunately, the confusion subsides and the story becomes cohesive as Lal ingeniously weaves together the role of religion, social psychology, political theory and economics in long run economic growth in the second half of the book. The effort the reader puts forth in sifting through a plethora of information on the cultural, political, social and economic fabric of the Near East, the Middle East and the Far East are rewarded with Lal's provocative conclusion that several nonwestern countries have the social basis for modernizing without westernizing, citing Japan as a case in point.
The economic historian will appreciate the discussion of the role of religion in cosmological beliefs and how religion affected intensive growth in several countries. Lal contrasts the "religion of anxiety in the West" with the "religions of tranquility of the East" and demonstrates the role they have in establishing a value system which restrains the destructive instincts of the individual in order to maintain social order. The analysis is a complex one, however, because some "shame based" societies like India, China and Islam have not experienced Promethean growth while others, like Japan, have. At the same time, the West, with its "guilt-based" society has successfully experienced Promethean growth although the death of God (announced by Nietzsche is 1881) has left a "moral abyss" in the West which has lead to a selfish society that worships wealth and casts aside family values, care for the elderly and respect for human life. Politicians have stepped in to fill this void and created the "welfare state" which takes on the insurance and charitable functions of the family to care for the elderly, the poor and the helpless. As Lal clarifies the economic and cultural consequences of the welfare state, the economist must pause at the exploding deficits, divorce rates, illegitimacy rates and rising number of single-parent families that define the "successful" western countries. This deterioration of the social fabric will not occur, however, in the "shame based" societies because the Death of God cannot undermine their belief and values. Thus, Lal concludes that countries like Japan can enjoy the benefits of western materialism without suffering from its social consequences.
Another very interesting theme which runs throughout the book is the role of individualism in promoting intensive growth. Lal carefully develops the two opposing tendencies of man's character-individualism and communalism. The economic historian will find the development of this theme valuable because it integrates the theories of several disciplines (economics, anthropology, social psychology, and sociology ) in such a way to expose the consequences of the tensions of an individual's civilized character between individual competitive survival strategies and group cooperative coexistence tendencies. Lal concludes that the western family system promoted individualism by allowing individuals to choose their marriage partners and establish separate households early which eventually lead to great material prosperity. Here again he points out that one of the social determinants of growth had also become a determinant of societal deterioration. The economist is on familiar ground in this discussion of the benefits and costs of individualism as espoused by Adam Smith. Individualism not only lead to great material prosperity in the West but by its very egocentric nature undermined the cement that holds these prosperous societies together-the family. Lal hints at the possibility that the communal societies like India, China, Islam and Japan which are family-oriented societies may choose laissez faire to drive their economic system while not choosing democracy to drive their political system. Hence, a revelation to many libertarians that there is no necessary connection between economic and political individualism. More importantly, Lal's discussion reveals there is a development path different from the one forged by the West which attains economic prosperity without sacrificing a constructive set of norms and values that promote social stability.
The book has something for everyone and would appeal to a wide range of readers. The interdisciplinary approach of this book will interest and intrigue the inquisitive minds of economists, sociologists, political philosophers, historians and social psychologists concerned with economic growth and development. Economists will especially enjoy the discussion of four formal models (the Boserup model, the model of the predatory state, the dual preference model and Domar's model of a labor-scarce economy) in the appendix which capture the essence of Lal's main arguments. Economic historians will find this book to be a provocative addition to their bookshelf because it integrates the evolutionary concerns of the hard scientist with the humanitarian issues of the social psychologist and arrives at a conclusion familiar to the dismal scientist (the economist).
Deepak Lal is the James S. Coleman Professor of International Development Studies at the University of California, Los Angeles.
Carolyn Tuttle is a Full Professor in the Department of Economics and Business at Lake Forest College. Currently, she is a Visiting Professor at Northwestern University in the Economics Department. Her book, Hard at Work in Factories and Mines: The Economics of Child Labor During the Industrial Revolution, was recently published by Westview Press.
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Carolyn Tuttle. Review of Lal, Deepak, Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-run Economic Performance.
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