Ha Joon Chang on Culture and Economic Development

Ha-Joon Chang, Cambridge University Professor of Economics makes an eloquent argument for why differences in culture don't explain differences in income:

"...in the early days of capitalism when most economically successful countries happened to be Protestant Christian, many people argued that Protestantism was uniquely suited to economic development. When Catholic France, Italy, Austria, and Southern Germany developed rapidly, particularly after the Second World War, Christianity, rather than Protestantism, became the magic culture. Until Japan became rich, many people thought East Asia had not develop because of Confucianism. But when Japan succeeded, this thesis was revised to say that Japan was developing so fast because its unique form of Confucianism emphasised cooperation over individual edification, which the Chinese and Korean versions allegedly valued more highly. And then Hong Kong, Singapore, Taiwan, and Korea also started doing well, so this judgment about the different varieties of Confucianism was forgotten. Indeed Confucianism as a whole suddenly became the best culture for development because it emphasised hard work, saving, education, and submission to authority. Today, when we now see Muslim Malaysia and Indonesia, Buddhist Thailand, and even Hindu India doing economically well, we can soon expect to encounter new theories that will trumpet how uniquely all these cultures are suited for economic development (and how their authors have known about it all along)."

Culture has a certain appeal on both the left and the right as a determinant of a country's politics and economics. But cultural arguments are often subject to a winner's bias: since rich countries will typically have high levels of education and entrepreneurial spirit, we can look for teachings within a given culture that promote those values. But we're looking the wrong way. As Chang argues:

Culture is the result, as well as the cause, of economic development. It would be far more accurate to say that countries become “hardworking” and “disciplined” (and acquire other “good” cultural traits) because of economic development, rather than the other way around.

This is from a chapter in Chang's book "Bad Samaritans", a critical look at global trade. It's definitely worth a look.