Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism

destiny, as many culturalists are wont to do. To understand this, let’s go back for a moment to those puzzles of the lazy Japanese and the thieving Germans.

One reason why Japanese or German culture in the past looked so bad for economic development is that observers from richer countries tended to be prejudiced against foreigners (especially poor foreigners). But there was also an element of genuine ‘misinterpretation’ due to the fact that rich countries are very differently organized from poor countries.

Take laziness – the most frequently cited ‘cultural’ trait of people in poor countries. People from rich countries routinely believe that poor countries are poor because their people are lazy. But many people in poor countries actually work long hours in backbreaking conditions. What makes them appear lazy is often their lack of an ‘industrial’ sense of time. When you work with basic tools or simple machinery, you don’t have to keep time strictly. If you are working in an automated factory, it’s essential. People from rich countries often interpret this difference in sense of time as laziness.

Of course, it was not all prejudice or misinterpretation. Early-19th-century Germans and early-20th-century Japanese were, on average, not as organized, rational, disciplined, etc. as the citizens of the successful countries of the time or, for that matter, as people are in today’s Germany or Japan. But the question is whether we can really describe the origins of those ‘negative’ forms of behaviour as ‘cultural’ in the sense that they are rooted in beliefs, values and outlooks that have been passed on through generations and are, therefore, very difficult, if not necessarily impossible, to change.

My short answer is no. Let us consider ‘laziness’ again. It is true that there are a lot more people ‘lazing around’ in poor countries. But is it because those people culturally prefer lounging about to working hard? Usually not. It is mainly because poor countries have a lot of people who are unemployed or underemployed (i.e., people may have jobs but do not have enough work to occupy them fully). This is the result of economic conditions rather than culture. The fact that immigrants from poor countries with ‘lazy’ cultures work much harder than the locals when they move to rich countries proves the point.

As for the once much-vaunted ‘dishonesty’ of the Germans in the past, when a country is poor, people often resort to unethical, or even illegal, means to make a living. Poverty also means weak law enforcement, which lets people get away with illegal behaviour, and makes breaking the law more ‘culturally’ acceptable.

How about the ‘excessive emotions’ of the Japanese and the Germans? Rational thinking, whose absence is often manifested as excessive emotion, develops largely as a result of economic development. Modern economies require a rational organization of activity, which then changes people’s understanding of the world.

‘Living for today’ or being ‘easy-going’ – words that many people associate with Africa and Latin America nowadays – are also the consequences of economic conditions. In a slowly changing economy, there is not much need to plan for the future; people plan for the future only when they anticipate new opportunities (e.g., new careers) or unexpected shocks (e.g., a sudden inflow of new imports). Moreover, poor economies offer few devices with which people can plan for the future (e.g., credit, insurance, contracts).

In other words, many of the ‘negative’ forms of behaviour of the Japanese and Germans in the past were largely the outcomes of economic conditions common to all economically underdeveloped countries, rather than of their specific cultures. This is why the Germans and the Japanese in the past were ‘culturally’ far more similar to people in today’s developing countries than to the Germans and the Japanese of today.

Many of these apparently unchangeable ‘habits of national heritage’ can be, and have been, transformed quite quickly by changes in economic conditions. This is what some observers actually witnessed in late-19th- century Germany and early-20th-century Japan. Sidney Gulick, the American missionary whom I cited previously, observed that ‘the Japanese give the double impression of being industrious and diligent on the one hand and, on the other, of being lazy and utterly indifferent to the passage of time’.[25] If you looked at the workers in the new factories, they looked very industrious. But if you looked at under-employed farmers and carpenters, they looked ‘lazy’. With economic development, people would also develop an ‘industrial’ sense of time very quickly.My country, Korea, offers an interesting example in this regard. Twenty, maybe even 15, years ago, we used to have the expression, ‘Korean time’. It described the widespread practice whereby people could be an hour or two late for an appointment and not even feel sorry about it. Nowadays, with the pace of life far more organized and faster, such behaviour has almost disappeared, and with it the expression itself.

In other words, culture changes with economic development.* That is why the Japanese and the German cultures of today are so different from those of their ancestors. 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.

Many culturalists accept, in theory, that cultures change. But in practice most of them treat culture as pretty immutable. This is why, despite endless contemporary accounts to the contrary, culturalists today describe the Japanese on the cusp of economic development in the most flattering light. David Landes, a leading proponent of the cultural theory of economic development, says: ‘The Japanese went about modernization with characteristic intensity and system. They were ready for it by virtue of a tradition (recollection) of effective government, by their high levels of literacy, by their tight family structure, by their work ethic and self-discipline, by their sense of national intensity and inherent superiority’.[26] Despite the frequent contemporary observation that the Japanese were lazy, Fukuyama claims in his book, Trust, that there was ‘the Japanese counterpart to the Protestant work ethic, formulated at around the same time’.[27] When he classifies Germany as an inherently ‘high-trust’ society, he is also oblivious to the fact that, before they became rich, many foreigners thought the Germans were cheating others all the time and unable to co-operate with one another.

A good cultural argument should be able to admit that the Germans and the Japanese were a pretty hopeless bunch in the past and still be able to explain how they developed their economies.But most cultural-ists, blinded by their conviction that only countries with the ‘right’ value systems can develop, re-interpret German or Japanese histories so as to ‘explain’ their subsequent economic success.

The fact that culture changes far more quickly than the culturalists assume should give us hope. Negative behavioural traits, like laziness or lack of creativity, do hamper economic development. If these traits are fully, or even predominantly, culturally determined, we would need a ‘cultural revolution’ in order to get rid of them and start economic development.[28] If we need a cultural revolution before we can develop the economy, economic development would be next to impossible, since cultural revolutions rarely, if ever, succeed. The failure of the Chinese Cultural Revolution, albeit launched for other reasons than economic development, should serve as a salutary warning.

Fortunately, we do not need a cultural revolution before economic development can happen. A lot of behavioural traits that are meant to be good for economic development will follow from, rather than be prerequisites for, economic development. Countries can get development going through means other than a cultural revolution, as I explained in the preceding chapters. Once economic development gets going, it will change people’s behaviour and even the beliefs underlying it (namely, culture) in ways that help economic development. A ‘virtuous circle’ of economic development and cultural values can be created.

This is, essentially, what happened in Japan and Germany. And it is what will happen in all future economic success stories. Given India’s recent economic success, I am sure we will soon see books that say how Hindu culture – once considered the source of sluggish growth in India (recall the once-popular expression, ‘Hindu rate of growth’[29]) – is helping India grow. If my Mozambique fantasy in the Prologue comes true in the 2060s, we will then be reading books discussing how Mozambique has had a culture uniquely suited to economic development all along.

Changing culture

So far, I have argued that culture is not immutable and changes as a result of economic development. However, this is not to say that we can change culture only through changing the underlying economic conditions. Culture can be changed deliberately through persuasion. This is a point rightly emphasized by those culturalists who are not fatalists (for the fatalists, culture is almost impossible to change, so it is destiny).

The problem is that those culturalists tend to believe that cultural changes require only ‘activities that promote progressive values and attitudes’, in the words of Lawrence Harrison, the author of Underdevelopment is a State of Mind.[30]But