"Why Europe? Because Europe enjoyed a relative lack of political constraint."
By
ralph raico
Among
writers on economic development, P.T. Bauer is noted both for the depth of his
historical knowledge, and for his insistence on the indispensability of
historical studies in understanding the phenomenon of growth (Walters 1989, 60;
see also Dorn 1987). In canvassing the work of other theorists, Bauer has
complained of their manifest "amputation of the time dimension":
The
historical background is essential for a worthwhile discussion of economic
development, which is an integral part of the historical progress of society.
But many of the most widely publicized writings on development effectively disregard
both the historical background and the nature of development as a process.
(Bauer 1972, 324–25)
Too
many writers in the field have succumbed to professional overspecialization
combined with a positivist obsession with data that happen to be amenable to
mathematical techniques. The result has been models of development with little
connection to reality:
Abilities
and attitudes, mores and institutions, cannot generally be quantified in an
illuminating fashion.… Yet they are plainly much more important and relevant to
development than such influences as the terms of trade, foreign exchange
reserves, capital output ratios, or external economies, topics which fill the
pages of the consensus literature. (Ibid., 326)
Even
when a writer appears to approach the subject historically, concentration on
quantifiable data to the neglect of underlying institutional and
social-psychological factors tends to foreshorten the chronological perspective
and thus vitiate the result:
It is
misleading to refer to the situation in eighteenth -and nineteenth-century
Europe as representing initial conditions in development. By then the west was
pervaded by the attitudes and institutions appropriate to an exchange economy
and a technical age to a far greater extent than south Asia today. These
attitudes and institutions had emerged gradually over a period of eight
centuries. (Ibid., 219–20)[1]
At the
root of the approach criticized by Bauer there appears to be a methodological
holism that prefers to manipulate aggregates while ignoring individual human
actors and the institutions their actions generate. Yet, "differences in
people's capacities and attitudes and in their institutions are far-reaching
and deepseated and largely
explain differences in economic performance and in levels and rates of material
progress" (Ibid., 313–14; emphasis added).
Bauer's
critique thus draws attention to the need to study both the centuries of
European history antedating the Industrial Revolution and "the
interrelationships between social, political, and legal institutions" in
that period (Ibid., 277).[2] Here his assessment links up with
an impressive body of scholarship that has emerged in recent years emphasizing
precisely these points.
The
"European Miracle"
While
it would be wrong to suggest the existence of any monolithic analysis, a number
of scholars concerned with the history of European growth have tended to
converge on an interpretation highlighting certain distinctive factors. For the
sake of convenience, we shall, therefore, speak of them, despite their
differences, as forming a school of thought. The viewpoint may be referred to
as the "institutional" — or, to use the title of one of the
best-known works in the field — the "European miracle" approach.[3]
The
"miracle" in question consists in a simple but momentous fact: It was
in Europe — and the extensions of Europe, above all, America — that human
beings first achieved per capita economic growth over a long period of time. In
this way, European society eluded the "Malthusian trap," enabling new
tens of millions to survive and the population as a whole to escape the
hopeless misery that had been the lot of the great mass of the human race in
earlier times. The question is: why Europe?
"It
was in Europe — and the extensions of Europe, above all, America — that human
beings first achieved per capita economic growth over a long period of time."
One
possible answer, which has long enjoyed powerful support in intellectual
circles in the West and among officials in underdeveloped countries, was
heavily influenced by socialist and even Marxist tenets.[4] It accounted for Europe's
extraordinary growth largely by the more or less spontaneous advance of
science, combined with a "primitive accumulation" of capital —
through imperialism, slavery and the slave trade, the expropriation of small
farmers, and the exploitation of the domestic working class. The conclusion was
clear. The extraordinary growth of Europe was at the expense of untold millions
of the enslaved and downtrodden, and the European experience should serve
decision makers in underdeveloped countries more as a cautionary tale than an
exemplar.
The
contributors to the newer model, however, reject this venerable legend.
Concerned as they are with comparative economic history, they have sought for
the origins of European development in what has tended to set Europe apart from
other great civilizations, particularly those of China, India, and Islam. To
one degree or another, their answer to the question, why Europe? has been:
Because Europe enjoyed a relative lack of political constraint. As Jean Baechler,
in a pioneering work, pointedly expressed it:
The
first condition for the maximization of economic efficiency is the liberation
of civil society with respect to the state…The expansion of capitalism owes
its origins and raison d'être to political anarchy.(Baechler 1975, 77, 113;
emphasis in original)
The
Uniqueness of Europe
John
Hicks partially adumbrated this approach in the late 1960s (Hicks 1969).[5] In A Theory of Economic
History, Hicks laid out the "chief needs" of the expanding,
mercantile phase of economic development — the protection of property and the
enforcement of contracts — and stated:
The Mercantile
Economy, in its First Phase, was an escape from political authority — except in
so far as it made its own political authority. Then, in the Middle Phase, when
it came formally back under the traditional political authority, that authority
was not strong enough to control it. (Ibid., 33, 100)
Hicks's
account, however, proved to be much too schematic, besides limiting itself to
economic analysis and deliberately ignoring political, religious, scientific,
and other factors (see Bauer 1971). Around the same time as Hicks, David Landes
was sketching the essentials of the newer outlook. In seeking to answer the
question why the industrial breakthrough occurred first in western Europe, he
highlighted two factors "that set Europe apart from the rest of the world
… the scope and effectiveness of private enterprise, and the high value placed
on the rational manipulation of the human and material environment"
(Landes 1970, 14–15). "The role of private enterprise in the West,"
in Landes's view, "is perhaps unique: more than any other factor, it made
the modern world" (Ibid., 15).
But
what was it that permitted private enterprise to flourish? Landes pinpointed
the circumstance that would be vital to the new interpretation — Europe's
radical decentralization:
Because
of this crucial role as midwife and instrument of power in a context of
multiple, competing polities (the contrast is with the
all-encompassing empires of the Orient or the Ancient World), private
enterprise in the West possessed a social and political vitality without
precedent or counterpart. (Ibid.; emphasis in original)
Damaging
incursions by government did occur, and the situation in some parts of Europe
conditioned a social preference for military values; "on balance, however,
the place of private enterprise was secure and improving with time; and this is
apparent in the institutional arrangements that governed the getting and
spending of wealth" (Ibid.).
A
precondition of economic expansion was the definition and defense of property
rights against the political authority. This occurred early on in Europe.
Landes contrasts the European method of regular taxation (supervised by
assemblies representative of the tax-bearing classes) with the system of
"extortion" prevalent in "the great Asian empires and the Muslim
states of the Middle East … where fines and extortions were not only a source
of quick revenue but a means of social control — a device for curbing the
pretensions ofnouveaux riches and foreigners and blunting their
challenge to the established power structure" (Ibid., 16–17).[6]
Landes's
insights, briefly sketched in a few pages of introduction to his Prometheus
Unbound, have been vastly elaborated upon by the new school. The
upshot is an overall interpretation of Western history that may be stated as
follows:
Although
geographical factors played a role, the key to western development is to be
found in the fact that, while Europe constituted a single civilization — Latin
Christendom — it was at the same time radically decentralized.[7] In contrast to other cultures —
especially China, India, and the Islamic world — Europe comprised a system of
divided and, hence, competing powers and jurisdictions.
"The
key to western development is to be found in the fact that, while Europe
constituted a single civilization — Latin Christendom — it was at the same time
radically decentralized."
After
the fall of Rome, no universal empire was able to arise on the Continent. This
was of the greatest significance. Drawing on Montesquieu's dictum, Jean
Baechler points out that "every political power tends to reduce everything
that is external to it, and powerful objective obstacles are needed to prevent
it from succeeding" (Baechler 1975, 79). In Europe, the "objective
obstacles" were provided first of all by the competing political
authorities. Instead of experiencing the hegemony of a universal empire, Europe
developed into a mosaic of kingdoms, principalities, city-states,
ecclesiastical domains, and other political entities.
Within
this system, it was highly imprudent for any prince to attempt to infringe
property rights in the manner customary elsewhere in the world. In constant
rivalry with one another, princes found that outright expropriations,
confiscatory taxation, and the blocking of trade did not go unpunished. The
punishment was to be compelled to witness the relative economic progress of
one's rivals, often through the movement of capital, and capitalists, to
neighboring realms. The possibility of "exit," facilitated by
geographical compactness and, especially, by cultural affinity, acted to
transform the state into a "constrained predator" (Anderson 1991, 58).
Decentralization
of power also came to mark the domestic arrangements of the various European
polities. Here feudalism — which produced a nobility rooted in feudal right
rather than in state-service — is thought by a number of scholars to have
played an essential role (see, e.g., Baechler 1975, 78). Through the struggle
for power within the realms, representative bodies came into being, and princes
often found their hands tied by the charters of rights (Magna Carta, for
instance) which they were forced to grant their subjects. In the end, even within
the relatively small states of Europe, power was dispersed among estates,
orders, chartered towns, religious communities, corps, universities, etc., each
with its own guaranteed liberties. The rule of law came to be established
throughout much of the Continent.
Thus,
there is general agreement that crucial to laying the foundations for the
European miracle were, in Jones's words, the "curtailment of predatory
government tax behavior" and "the limits to arbitrariness set by a
competitive political arena" (Jones 1987, xix, xxi). Over time, property
rights — including rights in one's own person — came to be more sharply
defined, permitting owners to capture more of the benefits of investment and
improvement (North 1981). With the freer disposition of private property came
the possibility of ongoing innovations, tested in the market. Here, too, the
rivalrous state system was highly favorable. The nations of Europe functioned
"as a set of joint-stock corporations with implicit prospectuses listing
resources and freedoms" in such a way as to insure "against the
suppression of novelty and unorthodoxy in the system as a whole" (Jones
1987, 119). A new social class arose, consisting of merchants, capitalists, and
manufacturers "with immunity from interference by the formidable social
forces opposed to change, growth, and innovation" (Rosenberg and Birdzell
1986, 24).
Eventually,
the economy achieved a degree of autonomy unknown elsewhere in the world except
for brief periods. As Jones puts it:
Economic
development in its European form required above all freedom from arbitrary
political acts concerning private property. Goods and factors of production had
to be free to be traded. Prices had to be set by unconditional exchange if they
were to be undistorted signals of what goods and services really were in
demand, where and in what quantities. (Jones 1987, 85)
The
system protecting the ownership and deployment of private property evolved in
Europe by slow degrees — over at least "the eight centuries"
mentioned by Bauer. Quite logically, therefore, the economic historians
concerned with "how the West grew rich" have directed a great deal of
their attention to the medieval period.
The
Importance of the Middle Ages
The
stereotype of the Middle Ages as "the Dark Ages" fostered by
Renaissance humanists and Enlightenmentphilosophes has, of course,
long since been abandoned by scholars. Still, the "consensus" writers
on economic development whom Bauer faults have by and large ignored the
importance of the Middle Ages for European growth — something that makes as
much sense as beginning the explanation of the economic and cultural successes
of European Jewry with the eighteenth century. Economic historians, however,
following in the footsteps of the great Belgian historian Henri Pirenne
(Pirenne 1937), have had a quite different estimation of the medieval period.
Carlo M. Cipolla asserts that "the origins of the Industrial Revolution go
back to that profound change in ideas, social structures, and value systems
that accompanied the rise of the urban communes in the eleventh and thirteenth
centuries" (Cipolla 1981, 298).
Of
Europe from the late tenth to the fourteenth centuries, Robert S. Lopez states:
Here,
for the first time in history, an underdeveloped society succeeded in developing
itself, mostly by its own efforts … it created the indispensable material and
moral conditions for a thousand years of virtually uninterrupted growth; and,
in more than one way, it is still with us. (Lopez 1971, vii)
Lopez
contrasts the European evolution with that of a neighboring civilization,
Islam, where political pressures smothered the potential for an economic
upsurge:
The
early centuries of Islamic expansion opened large vistas to merchants and
tradesmen. But they failed to bring to towns the freedom and power that was
indispensable for their progress. Under the tightening grip of military and
landed aristocracies the revolution that in the tenth century had been just
around the corner lost momentum and failed. (Ibid., 57)
In
Europe, as trade and industry expanded, people discovered that "commerce
thrives on freedom and runs away from constriction; normally the most
prosperous cities were those that adopted the most liberal policies"
(Ibid., 90). The "demonstration effect" that has been a constant
element in European progress — and which could exist precisely because Europe
was a decentralized system of competing jurisdictions — helped spread the
liberal policies that brought prosperity to the towns that first ventured to
experiment with them.
"Over
time, property rights — including rights in one's own person — came to be more
sharply defined, permitting owners to capture more of the benefits of
investment and improvement."
Scholars
like Cipolla and Lopez, attempting to understand European development in the
Middle Ages, make constant reference to ideas, value systems, moral
conditions, and similar cultural elements.[8] As Bauer has emphasized, this is a
part of the distinctive European evolution that cannot be divorced from its
institutional history. In regard to the Middle Ages, prime importance, in the
view of many writers, attaches to Christianity. Harold J. Berman (Berman 1974)[9] has stressed that with the fall of
Rome and the eventual conversion of the Germans, Slavs, Magyars, and so forth,
Christian ideas and values suffused the whole blossoming culture of Europe.
Christian contributions range from the mitigation of slavery and a greater
equality within the family to the concepts of natural law, including the
legitimacy of resistance to unjust rulers. The Church's canon law exercised a
decisive influence on Western legal systems: "it was the church that first
taught Western man what a modern legal system was like" (Ibid., 59).
Berman,
moreover, focuses attention on a critical development that began in the
eleventh century: the creation by Pope Gregory VII and his successors of a
powerful "corporate, hierarchical church … independent of emperors, kings,
and feudal lords," and thus capable of foiling the power-seeking of
temporal authority (Ibid., 56).[10] In this way, Berman bolsters Lord
Acton's analysis of the central role of the Catholic church in generating
Western liberty by forestalling any concentration of power such as marked the
other great cultures, and thus creating the Europe of divided and conflicting
jurisdictions.[11]
In a
major synthesis, Law and Revolution, Berman has highlighted
the legal facets of the development whose economic, political, and ideological
aspects other scholars have examined (Berman 1983): "Perhaps the most
distinctive characteristic of the Western legal tradition is the coexistence
and competition within the same community of diverse legal systems. It is this
plurality of jurisdictions and legal systems that makes the supremacy of law
both necessary and possible" (Ibid., 10)[12]
Berman's
work is in the tradition of the great English scholar, A.J. Carlyle, who, at
the conclusion of his monumental study of political thought in the Middle Ages,
summarized the basic principles of medieval politics: that all — including the
king — are bound by law; that a lawless ruler is not a legitimate king, but a
tyrant; that where there is no justice there is no commonwealth; that a
contract exists between the ruler and his subjects (Carlyle and Carlyle 1950,
503–26).
Other
recent scholarship has supported these conclusions. In his last, posthumous
work, the distinguished historian of economic thought, Jacob Viner, noted that
the references to taxation by St. Thomas Aquinas "treat it as a more or less
extraordinary act of a ruler which is as likely as not to be morally
illicit" (Viner 1978, 68–69). Viner pointed to the medieval papal
bull, In Coena Domini — evidently republished each year into
the late eighteenth century — which threatened to excommunicate any ruler
"who levied new taxes or increased old ones, except for cases supported by
law, or by an express permission from the pope" (Ibid., 69). Throughout
the Western world, the Middle Ages gave rise to parliaments, diets, estates-generals,
Cortes, etc., which served to limit the powers of the monarch. [13] A.R. Myers notes:
Almost
everywhere in Latin Christendom the principle was, at one time or another,
accepted by the rulers that, apart from the normal revenues of the prince, no
taxes could be imposed without the consent of parliament … By using their power
of the purse [the parliaments] often influenced the rulers policies, especially
restraining him from military adventures. (Myers 1975 29–30)
In a
recent synthesis of modern medievalist scholarship, Norman F. Cantor has
summarized the heritage of the European Middle Ages in terms strikingly similar
to those employed by the current institutional historians:
In the
model of civil society, most good and important things take place below the
universal level of the state: the family, the arts, learning, and science;
business enterprise and technological process. These are the work of
individuals and groups, and the involvement of the state is remote and
disengaged. It is the rule of law that screens out the state's insatiable
aggressiveness and corruption and gives freedom to civil society below the
level of the state. It so happens that the medieval world was one in which men
and women worked out their destinies with little or no involvement of the state
most of the time. (Cantor 1991, 416)
"Ideas,
value systems, moral conditions, and similar cultural elements are a part of
the distinctive European evolution that cannot be divorced from its
institutional history."
One
highly important factor in the advance of the West, possibly linked to
Christianity, has not, however, been dealt with by the newer economic
historians. It is the relative lack of institutionalized envy in Western
culture. In a work endorsed by Bauer, the sociologist Helmut Schoeck has drawn
attention to the omnipresence of envy in human societies (Schoeck [1969] 1987).
Perceived as a grave threat by those at whom it is directed, it typically
results in elaborate envy-avoidance behavior: the attempt to ward off the
dangers of malicious envy by denying, disguising, or suppressing whatever
traits provoked it. The antieconomic consequences of socially permitted — or
even encouraged — envy and reactive envy-avoidance scarcely lend themselves to
quantification. Nonetheless, they may clearly be highly damaging. Drawing on
anthropological studies, Schoeck stresses the harm that institutionalized envy
can inflict on the process of economic and technical growth (Ibid., 73).
Western culture, according to Schoeck, has somehow been able to inhibit envy to
a remarkable degree. Why this is so is less clear. Schoeck links this fact to
the Christian faith: "It must have been one of Christianity's most
important, if unintentional, achievements in preparing men for, and rendering
them capable of, innovative actions when it provided man for the first time
with supernatural beings who, he knew, could neither envy nor ridicule
him" (Ibid., 79). Yet the evident variation in socially permitted envy in
different Christian societies (e.g., Russia as against western Europe) suggests
that the presence of Christian faith alone is not an adequate explanation.
Case
Studies of Development
Obviously,
all of Europe did not progress at the same rate. In particular, in the modern
period the Netherlands and then England became the pacesetters of economic
growth, while other countries declined. These facts can also be accounted for
by the model.
The Low
Countries had long benefited from the legal system inherited from the dukes of
Burgundy. These rulers, who governed in collaboration with an active
estates-general,[14] had promoted an open commercial and
industrial system, based on protection of property rights. In the rise of the
"northern Netherlands" (the United Provinces, or "Holland")
we have a near-perfect example of the European miracle in operation. First, the
area had been a major participant in European economic, political, social, and
cultural developments for centuries. As Cipolla has observed, "The country
that in the second half of the sixteenth century rebelled against Spanish imperialism
and then rose to the role of Europe's economically most dynamic nation, was
anything but an underdeveloped country from the outset" (Cipolla 1981,
263). Owing its independence to the decentralized state system of Europe, it
emerged itself as a decentralized polity, without a king and court — a
"headless commonwealth" that combined secure property rights, the
rule of law, religious toleration, and intellectual freedom with a degree of
prosperity that amounted to an early modern Wirtschaftswunder. It
is not surprising that Holland exerted a powerful demonstration effect. As K.W.
Swart states:
both
foreigners and Dutchmen were apt to believe that the Dutch Republic was unique
in permitting an unprecedented degree of freedom in the fields of religion,
trade, and politics…. In the eyes of contemporaries it was this combination of
freedom and economic predominance that constituted the true miracle of the
Dutch Republic. (Swart 1969, 20)
"One
highly important factor in the advance of the West is the relative lack of
institutionalized envy in Western culture."
The
success of the Dutch experiment was noted with great interest, especially in
England, whose soil was already well prepared to accept the idea that
prosperity is a reward of freedom. The deep roots of economic individualism,
and hence of development, in English medieval history have been emphasized by
Alan Macfarlane (Macfarlane 1978 and 1987).[15] In the early modern period, the
common law, which had evolved over many centuries, acted as a guarantor of the
sanctity of property and free entry to industry and trade against the policies
of the early Stuart kings. In the face of authoritarian usurpations, Sir Edward
Coke and his fellow jurists acted, in the words of North and Thomas, "to
place the creation of property rights beyond the royal whim; to embed existing
property rights in a body of impersonal law guarded by the courts" (North
and Thomas 1973, 148). Crucial in the case of both the Netherlands and England
was the preservation, against attempted royal encroachments, of traditional
representative assemblies determined to deny the ruler the right to tax at will.
Here the antiauthoritarian side exploited — and further developed — the
inherited discourse whose key concepts included "liberties,"
"rights," "the law of nature," and "constitution."
The
decline of Spain, on the other hand, is also taken into account in the model.
Confiscation of the property of Jews and Moors by the Spanish crown was,
according to North and Thomas:
only
symptomatic of the insecurity of all property rights . . seizure, confiscation,
or the unilateral alteration of contracts were recurrent phenomena which
ultimately affected every group engaged in commerce or industry as well as
agriculture…. As no property was secure, economic retardation was the
inevitable consequence. (Ibid., 131)
The
economic decay of Spain, in turn, provided a negative demonstration effect that
played a potent role in the policy choices of other countries.
The
theme of the autonomy of the market and the inhibition of the predator-state as
major factors in economic growth is pursued in the examination of non-European
cultures. Baechler, for instance, states that "each time China was
politically divided, capitalism flourished," and maintains that Japanese
history manifests conditions approximating those of Europe (Baechler 1975,
82–86). Anderson, after surveying economic growth in the history of Sung China
and Tokugawa Japan, as well as the Netherlands and England, concludes that the
common element is that "they occurred when governmental constraints on
economic activity were relaxed" (Anderson 1991, 73–74)[16]
While,
needless to say, much more research requires to be done on economic development
in the history of non-European civilizations, the evidence so far suggests
strong support for the basic thrust of the institutional approach.
Contrast
of Europe with Russia
The
meaning of the European miracle can be better seen if European developments are
contrasted with those in Russia. Colin White lists, as the determining factors
of Russian backwardness "a poor resource and hostile risk environment … an
unpropitious political tradition and institutional inheritance, ethnic
diversity, and the weakness of such key groups limiting state power as the
church and landed oligarchy." (White 1987, 136) After the destruction of
Kievan Rus by the Tatars and the rise of Muscovy, Russia was characterized for
centuries by the virtual absence of the rule of law, including security for
persons and property.
"Crucial
in the case of both the Netherlands and England was the preservation, against
attempted royal encroachments, of traditional representative assemblies
determined to deny the ruler the right to tax at will."
The
lawlessness — as well as the poverty — of Muscovite Russia was notorious. When
the emissary of Elizabeth I inquired of Ivan the Great the status of his
subjects, he was told: "All are slaves" (Besançon, in Baechler, Hall,
and Mann 1988, 161). Ivan IV, the Terrible, annihilated the flourishing
commercial republics of Novgorod and Pskov, and loosed his Oprichnina (Ivan's
praetorian guard) on the kingdom for a frenzy of butchery that came to stand
for what was permissible in the Muscovite state. Alain Besançon remarks dryly,
"Of the three legends (Romanian, German, and Russian) that depict, in the
guise of Dracula, the reign of Vlad the Impaler, the Russian alone sings the
praises of the prince" (Ibid.).
The
nobility in Russia was a state-service nobility, lacking any independent base.
As White observes: "Russia was never truly feudal in the west European
sense of the term" (White 1987, 10). In contrast to Europe and America,
the towns, as well, were "simply another arm of the state" (Ibid.,
137–38). The differences between Russia and the West can be seen in their
respective ideas of "absolutism." Ivan IV's concept is well known. It
may be compared with that of a political writer in the West who is famous as a
defender of royal absolutism, Jean Bodin. Alexander Yanov has pointed out that,
for all his faith in absolutism:
Bodin
regarded the property of the citizens as their inalienable possession, in the disposition
of which they were no less sovereign than was the monarch in ruling his people.
To tax citizens of a part of their inalienable property without their voluntary
consent was, from Bodin's point of view, ordinary robbery. (Yanov 1981, 44–45)[17]
In this
connection, Yanov reports a telling anecdote. A French diplomat in a
conversation with an English colleague affirmed his belief in the principle
enunciated by Louis XIV, that the king was ultimate owner of all the property
within his kingdom (a principle which even the Sun-King never dared to act
upon). The Englishmen retorted: "Did you study public law in Turkey?"
(Ibid., 44 n. 17)
The
fact that Russia received Christianity from Byzantium rather than Rome shaped
the entire course of Russia's history (Pipes 1974, 221–43). In the words of
Richard Pipes, the Orthodox church in Russia became, like every other
institution, "the servant of the state." Pipes concludes, regarding
the "relations between state and society in pre-1900 Russia":
None of
the economic or social groups of the old regime was either able or willing to
stand up to the crown and challenge its monopoly of political power. They were
not able to do so because, by enforcing the patrimonial principle, i.e., by
effectively asserting its claim to all the territory of the realm as property
and all its inhabitants as servants, the crown prevented the formation of
pockets of independent wealth or power. (Ibid., 249)
What
ideas of liberalism came to Russia came perforce from the West. It was from
listening to the lectures on natural law at the University of Leipzig that
Alexander Radishchev first learned that limits may be put to the power of the
tsar (Clardy 1964, 37–38). The beginnings of the shift to a more
market-oriented economic policy before the First World War are traced by
Besancon to the fact that the Russian ministers read the liberal economists
(Besancon, in Baechler, Hall, and Mann 1988, 166).
The
Downfall of Marxist Historiography
The
Marxist philosophy of history is filled with manifold, often strategic,
contradictions and ambiguities. Yet, if "historical materialism" has
any significant content at all it is as a technological interpretation
of history (Mises 1957, 106–12; Bober 1962, 3 — -). Although Nathan Rosenberg
has denied that Marx held that "technological factors are, so to speak,
the independent variable in generating social change, which constitutes the
dependent variable" (Rosenberg 1982, 36; see also 34–51),[18] the weight of evidence is heavily
against him (Cohen 1978, 134–0).
"One
highly important factor in the advance of the West is the relative lack of
institutionalized envy in Western culture."
According
to Marx, Engels, and the theoreticians of the "Golden Age" of the
Second International, history proceeds basically via changes in the
"material productive forces" (the technological base), which render
obsolete the existing "mode of production" (the property system).
Because of technological changes, the mode of production is compelled to
change; with it, everything else — the whole legal, political, and ideological
"superstructure" of society — is transformed, as well (Marx [1859]
1969b, 8-). As Marx put it aphoristically: "The wind mill yields a society
with feudal lords, the steam mill a society with industrial capitalists"
(Marx [1847] 1969a, 130).
Marxism
has, of course, been subjected for generations to withering rebuttal on many
different fronts, not least in regard to its philosophy of history. The newer
understanding of European history is particularly destructive of its
fundamental claims, however, in that it directs attention to the peculiar shallowness of
"historical materialism." This newer understanding insists that the
colossal growth of technology in the Western world in the past millennium must
itself be explained, and the explanation it provides is in terms of the
institutional and moral matrix that emerged in Europe over many
centuries.[19] New and more productive machines
did not spring forth mysteriously and spontaneously, nor was the spectacular
expansion of technical and scientific knowledge somehow inevitable. As Anderson
has summed up the evidence, "the scientific and technical stasis that
followed the remarkable achievements of the Song dynasty, or of the flowering
of early Islam, indicates that scientific inquiry and technology do not
necessarily possess in themselves the dynamism suggested by the European
experience" (Anderson 1991, 46). On the contrary, technology and science
emerged out of an interrelated set of political, legal, philosophical,
religious, and moral elements in what orthodox Marxism has traditionally
disparaged as the "superstructure" of society.
Conclusion
According
to the Indian development economist R.M. Sundrum, if we are to understand how
development can be promoted in the poorer countries today, we must understand
the historical process which transformed developed countries in the past, and
why this process failed to take place elsewhere (cited in Arndt 1987, 177).
This is the position that P.T. Bauer, too, has insisted upon. Rejecting the
"timeless approach" to economic development, Bauer has accentuated
the many centuries required for economic growth in the Western world, and the
interplay of various cultural factors that were its precondition. Most
important, in Bauer's view, is that in the Western world institutions and
values evolved that favored private property and the market, set limits to
state arbitrariness and predation, and encouraged innovation and the sense that
human beings are capable of improving their lot through their actions on the
market.
"Why
Europe?
Because Europe enjoyed a relative lack of political constraint."
Because Europe enjoyed a relative lack of political constraint."
Recently,
W.W. Rostow, in a summary of Bauer's career, chided him for failing "to
take adequately into account the extremely large and inescapable role of the
state in early phases of development" (Rostow 1990, 386).[20] Such a criticism is not surprising,
coming from one of the leaders of what Bauer has for years assailed as the
"spurious consensus." Yet it finds little support in the work of the
historians dealt with here. (For some reason, Rostow ignores this whole body of
scholarship in his very lengthy history of theories of economic growth; Ibid.,
passim). While some of these authors would stipulate a significant role for the
state in certain areas — particularly in defining and enforcing property rights
— this is consistent with Bauer's viewpoint. Moreover, the overall thrust of
their work — which stresses the importance of limits on state action in the
development of the West — tends to corroborate Bauer's position rather than
Rostow's. Peter Burke, for instance, writing on one of the earliest examples of
European development — the merchant-states of northern Italy and the
Netherlands — describes them as "pro-enterprise cultures in which
governments did relatively little to frustrate the designs of merchants or
hinder economic growth, a negative characteristic which all the same gave those
countries an important advantage over their competitors" (Burke in
Baechler, Hall, and Mann 1988, 230). William H. McNeill notes that "within
Europe itself, those states that gave the most scope to private capital and
entrepreneurship prospered the most, whereas better governed societies in which
welfare on the one hand or warfare on the other commanded a larger proportion
of available resources tended to lag behind." As the growth leaders
McNeill cites "such conspicuously undergoverned lands as Holland and
England" (McNeill 1980, 65). And F.L. Jones takes as a guiding principle
in the explanation of growth a famous passage from Adam Smith: "Little
else is requisite to carry a state to the highest degree of opulence from the
lowest barbarism, but peace, easy taxes, and a tolerable administration of
justice; all the rest being brought about by the natural course of things"
(Jones 1987, 234–35, cited in Stewart [1793] 1966, 68).
The new
paradigm generated by the work of these and other scholars has already helped
produce further major works of research and synthesis.[21] It goes without saying that a great
deal more study is required. Yet it is likely that further research will
provide additional substantiation of the viewpoint steadfastly represented by
Professor Bauer. As Anderson observes: "The emphasis on release from
constraints points to a fruitful direction of research into why some societies
experienced economic development and others didn't" (Anderson 1991,
73–74). In any case, the subject will continue to be of very great theoretical
interest to scholars — and to many millions in the underdeveloped world, a
matter of life and death.
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Notes
[1] Cf. Roberts (1985, 75), who writes
of "the general liberation of the economy," which was well on the way
to autonomy everywhere in western Europe by 1500, if autonomy means regulation
by prices providing undistorted signals of demand and a substantial degree of
security for property against arbitrary confiscation by king, lord, or robber."
[2] Cf. Rosenberg (1976, 286), who
raises the question why Western European civilization was able to evolve a
uniquely powerful combination of cultural values, incentive systems, and
organizational capabilities, and remarks: "Interesting answers to this
question are unlikely to come from any single social science discipline."
[3] Major works in the field include
North and Thomas (1973); Baechler (1975); North (1981); Rosenberg and Birdzell
(1986); Jones (1987); Baechler, Hall, and Mann (1988), especially the essays by
Michael Mann, John A. Hall, Alain Besançon, Karl Ferdinand Werner, and Peter
Burke; and Jones (1988). Summaries of some of the scholarship are provided by
Anderson (1991); and Weede (1988) and (1990, 40–59). See also Osterfeld (1992,
43–46). The essay by McNeill (1980) makes creative use of the fundamental
concepts of the approach.
[4] F.A. Hayek in the 1950s referred to
"a socialist interpretation of history which has governed political
thinking for the last two or three generations and which consists mainly of a
particular view of economic history." See Hayek (1954, 7).
[5] The idea of a strong connection
between the relative freedom of European society and its economic success can,
of course, be traced back to much earlier authors, including those in the Whig
historical tradition. Here it is being considered in the context of recent,
mainly economic, historiography.
[6] A secondary theme (Landes 1970,
21–22) is the character of the European Weltanschauung. Landes
points to the emphasis on rationality in European culture, relative to others,
fostered by elements in Christianity that ultimately may be traced to Judaism's
disparagement of magic and superstition.
[7] Cf. Baechler (1975, 74): Europe was
"a society based upon the same moral and material civilization that never
ended up in political unity, in short, in an Empire."
[10] Cf. Roberts (1985, 67–9), on the
Hildebrandine reform, and his comment, 68–69: "The preservation of an idea
of liberty and its transmission to the future thus owes an incalculable amount
to the quarrels of church and state."
[11] See Lord Acton's great essay,
"The History of Freedom in Christianity (Acton 1956): To that conflict of
four hundred years [between the Church and the temporal rulers] we owe the rise
of civil liberty… although liberty was not the end for which they strove, it
was the means by which the temporal and the spiritual power called the nations
to their aid. The towns of Italy and Germany won their franchises, France got
her States-General, and England her Parliament out of the alternate phases of
the contest; and as long as it lasted it prevented the rise of divine
right" (86–87).
[12] Cf. Chirot (1986, 23): "The
main reason for the legal rationalization of the West, then, was the long,
indecisive, multisided political struggle between king, nobles, the church, and
the towns."
[13] See A.R. Myers (1975, 24), who
states of these parliamentary bodies: "they flourished at one time or
another in every realm of Latin Christendom. They first emerge clearly towards
the end of the twelfth century in the Spanish kingdom of Leon, in the
thirteenth century in Castile, Aragon (and also Catalonia and Valencia),
Portugal, Sicily, the Empire and some of the constituent states such as
Brandenburg and Austria, and in England and Ireland. In the fourteenth century
… in France … the Netherlands, Scotland, more of the German and Italian states,
and Hungary; in the fifteenth century … in Denmark, Sweden, and Poland."
[14] Cf. Chirot (1986, 18): "a
Burgundian states-general met 160 times from 1464 to 1567, exercising great
fiscal powers and defending the rights of towns and merchants."
[15] Cf. Baechler (1975, 79): "If
the general political structure of the West was favorable to economic
expansion, it would be the most marked in that country where political power
was most limited and tolerated the greatest autonomy of civil society."
That country, according to Baechler, was England.
[17] Compare Carlyle and Carlyle (1950,
512): "And most remarkable is it that Budé, who set out the doctrine of
the absolute monarchy in France in the most extravagant terms, should have at
the same time felt compelled to draw attention to the fact that the French
Kings submitted to the judgment of the Parliament of Paris; and that Bodin
should have contended that the judges should be permanent and irremovable,
except by process of law, because the kingdom should be governed by laws and
not by the mere will of the prince."
[18] Rosenberg states that the
technological interpretation of the Marxist philosophy of history relies upon a
few "aphoristic assertions, often tossed out in the heat of debate"
(1982, 36). Nowhere in his essay, however, does he allude to the locus
classicus of the subject, Marx's Preface to A Contribution to
a Critique of Political Economy (Marx [1859] 1969b).
[19] Anderson (1991, 41) rejects
technical change as an independent variable explaining economic growth:
"Technology is more appropriately seen as dependent on the institutional
structure and the availability of capital, including 'human capital' expressed
as an educated, skilled, and healthy workforce. The availability of capital is
in turn dependent on a favorable set of institutions."
[20] Rostow's dismissive tone in his
treatment of Bauer may well have been affected by Bauer's devastating review of
Rostow's magnum opus, The Stages of Economic Growth. See Bauer
(1972: 477–89).
[21] See, for instance, Roberts (1985):
Chirot (1986); and Kennedy (1987, 19–20), where the author of this celebrated
book writes of the "decentralized, largely unsupervised growth of commerce
and merchants and ports and markets [in Europe]… there was no way in which such
economic developments could be fully suppressed … there existed no uniform
authority in Europe which could effectively halt this or that commercial development;
no central government whose change in priorities could cause the rise or fall
of a particular industry; no systematic and universal plundering of businessmen
and entrepreneurs by tax gatherers, which so retarded the economy of Moghul
India."
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