David Cosandey
The Secret of the West
The first 4 sections of a paper by Peer H.H. Vries, professor of History at Leiden University, Netherland. The author is convinced that smarter culture and institutions were the cause for the rise of the West. Still, he quotes Le Secret de l'Occident for its refutation of the religious hypothesis (shortcut).
P. Vries: "The role of culture and institutions in economic history. Can economics be of any help?", NEHA-Jaarboek 64 (2001) 28-60.
Safety copy Jul 03. Original document.

II The role of culture and institutions in economic history: can economics be of any help?*
Page 1
The role of culture and institutions in economic
history: can economics be of any help?*
“… economists are notoriously uninterested in how people actually think or feel.”
Paul Krugman, Development, geography, and economic theory (Cambridge, Mass.
1995) 74.
1. Introduction
In 1996 The Economist published an article in which it was claimed that Goering,
who supposedly reached for his gun every time he heard the word culture, would
have an aching hand today.
The Economist, as usual, was right. References to
culture have indeed become en vogue even amongst economists. Of course they
have not taken over mainstream economics, but in many analyses so-called prox-
imate causes, like presence and nature of the forces of production, and technology,
have been losing pre-eminence to ultimate causes like culture and institutions. It is
too early yet to talk of a cultural turn in economics but there clearly are signs of
The theme of this conference, the place of culture in economic history,
therefore, is well chosen. But personally I think there is no harm in broadening the
subject and include economic and political institutions. I do not mean to say that
I thank Nathalie Duval for her comments
The Economist, “Cultural explanations. The man in the Baghdad caf(c)”, November 9th
1996, 25-32.
For literature see R. Klump, ed., Wirtschaftskultur, Wirtschaftsstil und Wirtschaftsord-
nung. Methoden und Ergebnisse der Wirtschaftskulturforschung (Marburg 1996); V. Kunz,
“Kulturelle Variablen, organisatorische Netzwerke und demokratische Staatsstrukturen als
Determinanten der wirtschaftlichen Entwicklung im internationalen Vergleich”, Kölner
Zeitschrift f1/4r Soziologie und Sozialpsychologie 52 (2000) 194-225 and H. Siegenthaler,

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these are a direct and unequivocal reflection of culture.
On the contrary, I think
that this is hardly ever the case. But mostly culture and institutions are so strongly
intertwined that it is extremely difficult, as well as not very enlightening, to try and
disentangle them. Institutions do have dynamics and logics of their own that can-
not directly be reduced to the culture of the individual participants involved, but
on the other hand, they simply cannot be understood nor explained without refer-
ence to that culture. In a sense culture can be regarded as the software of institu-
tional arrangements that, in turn, play a big part in determining culture.
awkward this may be for the theoretician: we are discussing a tight and dialectical
relationship between elements that are almost impossible to keep apart. Institu-
tions as structures and culture as their software in the end are two sides to the same
I will come back to this point repeatedly.
This article will be fairly idiosyncratic. In the end it is the result of my search, as
an historian writing a book on the rise of the West, for general information about
the role of culture and institutions in promoting or hindering economic growth. In
my reading on the rise of the West I found numerous references to the role of
culture and institutions. It does not always, however, become clear how exactly to
interpret, assess, and combine them. So I thought that throwing a glance at the
literature on these themes by economists or theoretically-informed economic his-
torians might be of some avail. The more so as these topics are vigorously debated
by them. This article in no way pretends to be exhaustive. Nor does its author
pretend to be an expert in economics. I just want to shed some light on some
problems involved in trying to integrate culture and institutions in studying a spe-
cific question in economic history: why was the Western world the first region in
the world to have modern economic growth? I believe my remarks have a wider
application than only this specific topic. In this article the following topics will be
discussed in this order: Culture and institutions in current economics and econom-
ic history; The role of culture, institutions and the state in explanations of ‘the rise
of the West(tm); The role of culture in explanations of the rise of the West: some
methodological comments; Economics on the role of culture; Economics and in-
stitutions; Institutions and the explanation of “the rise of the West”; Institutional
economics; Institutional economics, economic history and “the rise of the West”;
“Geschichte und -konomie nach der Kulturalistischen Wende”, Geschichte und Gesells-
chaft 25 (1999) 276-301.
As North, for example, suggests in D.C. North, Structure and change in economic
history (New York 1981) 59"60 and in D.C. North, Institutions, institutional change and
economic performance (Cambridge 1990) 137 and as does Landes in his discussion with
me in Itinerario. European Journal of Overseas History 23 (1999) 8-16, 8.
A recent and very interesting analysis of the effects of economics on culture can be
found in R. Sennett, The corrosion of character. The personal consequences of work in the
new capitalism (New York and London 1998).

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An effort to integrate culture, institutions and the state in economics. At the end of
the article I will present some concluding remarks.
2. Culture and institutions in current economics and economic history
It does not take much effort to show that culture and institutions are on the rise in
economics and economic history. Economics has increasingly been plagued by
unease with the so-called “mainstream approach” that many feel has turned into a
kind of higher cryptology, with a sophistication in methods that is only matched by
a lack of realism in presuppositions. An increasing number of critics is claiming
that economists do not have the slightest idea what is going on in the real world,
and that economics, purportedly a social science, has nothing informative to say
on that world.
With the bluntness that has become characteristic of current schol-
arly debates the end of economic man and of economics has been proclaimed and
talk about a crisis of economics is rife. By paying more attention to culture and
institutions one hopes to mitigate this crisis. So-called “institutional economics”,
in its old as well as in its new variety, has played a major role in this development.
The best-known exponent of this approach undoubtedly is North, who won a No-
bel prize for his work. But I could also refer to Coase, another winner of the Nobel
prize, whose article on the nature of the firm already dates from 1937, and to
Williamson. Two other people who spring to mind, as they, like North, have a very
direct influence in economic history, are Chandler and the political scientist Ol-
Not surprisingly the primary focus of the work of all these authors has al-
ways been on the role of institutions in economic life, in the case of Olson prima-
F. Fukuyama, Trust; The social virtues and the creation of prosperity (New York and
London 1995) 34: “…values and ideas shape concrete social relationships and vice ver-
For the claim that something is fundamentally wrong with economics see, for exam-
ple, G.P. Brockway, The end of economic man (New York and London; 3e edition 1995);
E. Engelen, De mythe van de markt. Waarheid en leugen in de economie (Amsterdam
1995); R. Heilbroner and W. Milberg, The crisis of vision in modern economic thought
(Cambridge 1995); T.W. Hutchinson, Knowledge and ignorance in economics (Oxford
1977); A. Klamer and D. Colander, The making of an economist (Boulder 1990) and P.
Ormerod, The death of economics (London 1994).
7 For introductory information on the new institutional economy see J.S. Cohen, “Institu-
tions and economic analysis” in: Th.G. Rawski, ed., Economics and the historian (Berke-
ley 1996) 60-84; J.N. Drobak and J.V.C. Nye, eds., The frontiers of the new institutional
economics (San Diego and London 1997); B. Gustafsson, ed., Power and economic insti-
tutions. Reinterpretations in economic history (Aldershot and Brookfield 1991); Th. van
de Klundert, Groei en instituties. Over de oorzaken van economische ontwikkeling (Tilburg
1997); J. Maloney, What(tm)s new in economics? (Manchester 1992); North, Structure and

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rily on the state. But they also have been instrumental in introducing culture into
economics. That is especially the case with North, who increasingly stresses the
significance of culture, or as he prefers to say “ideology.”
But these scholars are
part of a wider trend. Temin is right on target when he claims that in economics it
has become kosher to talk about culture.
Concepts like “business culture”, “cor-
porate culture”, “identity” or “synergy” have become stock in trade in discussions
about modern economic life. Fields like economic anthropology or economic psy-
chology have come into existence. In the Netherlands, one of the most corporatist
countries in the world and the homeland of the “poldermodel,” thinking about
economics has always been heavily institutional and impregnated by cultural con-
siderations. But matters have become even “worse”: the Dutch economist who
was cited most, by far, last year is Hofstede, famous for his publications on cultur-
al differences and their impact on economic organisation.
This shift toward cultural and institutional explanations is even more blatant in
general discussions on economic development. I just mention the debates on “Asian
values,” “Japan Incorporated”, the economic order and policy of the Newly Indus-
trialising Countries, the Anglo-Saxon model and the Rhineland model, or trust as
a source of economic progress. Even a hard-nosed economist like Alan Greenspan
maintains that capitalism is a matter of culture, not of human nature.
The Amer-
ican scholar Lawrence Harrison has probably found the smallest nutshell when he
simply states: “Underdevelopment is a state of mind”.
The most influential works
in this field have not always been written by top professional economists. But
then, how many professional economists nowadays write for a wider audience and
play any role in public intellectual debate? Publications like those by Fukuyama,
Putnam, Huntington, and, most recently, Harrison and Huntington, however, are
change; North, Institutions, institutional change and economic performance; M.C. Olson,
The logic of collective action (Cambridge 1965); M.C. Olson, The rise and decline of
nations (New Haven 1982); M.C. Olson and S. Kähkönen, eds., A not-so-dismal science.
A broader view of economies and societies (Oxford 2000); W. Plumpe, “Gustav von
Schmoller und der Institutionalismus. Zur Bedeutung der historischen Schule der Nation-
alökonomie fur die moderne Wirtschaftsgeschichtsschreibung”, Geschichte und Gesell-
schaft 25 (1999) 252-275; J.J. Vromen, Economic evolution. An enquiry into the founda-
tions of new institutional economics (London and New York 1995) and Cl. Wischermann,
“Der property-rights Ansatz und die “neue” Wirtschaftsgeschichte”, Geschichte und Ges-
ellschaft 19 (1993) 239-258.
See North, Structure and change and Institutions, institutional change, and economic
performance, in the index.
P. Temin, “Is it kosher to talk about culture?”, The Journal of Economic History 57
(1997) 267-287. For that wider trend see the literature referred to in note 2.
10 G. Hofstede, Culture(tm)s consequences. International differences in work-related values
(Beverly Hills and London 1980) and G. Hofstede, Cultures and organizations: software
of the mind (Maidenhead, Berkshire England 1991).

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widely read and extremely influential.
Mainstream classical economics is far
from dead and one can also find scholars who, instead of turning to culture or
institutions, think economics could profit from paying more attention to geogra-
phy, ecology or demography.
The new approaches have not taken over the disci-
pline, but they surely are making important inroads.
Undeniably economic history too is witnessing an increasing sensitivity to cul-
tural and institutional matters. Expressions like “institution”, “transaction costs”,
“property rights”, “interest group”, “logic of collective action”, “visible hand”,
“human capital”, “social capital”, and “trust” pop up in almost every text in the
field. The situation in the Netherlands is no exception to this rule, as shows in
work of, for example, Davids, Noordegraaf, De Vries and Van der Woude, Van
Zanden and Van Riel.
In this article references to economic history will be con-
fined to literature addressing the question of what made “the West” grow rich,
while “the rest” stayed so much poorer. In debates on this problem the role of
culture and institutions has always been prominent, and it still is. Again, that does
not mean they monopolise current explanations. Materialism still has its staunch
defenders in scholars like Blaut, Frank and Snooks.
Explanations that emphasise
geography and ecology, are presented by, to name a few, Diamond, Pomeranz and
11 L.E. Harrison and S. P. Huntington, eds., Culture matters: How values shape human
progress (New York 2000).
12 L.E. Harrison, Underdevelopment is a state of mind (Cambridge Mass. 1985).
13 Fukuyama, Trust; R. Putnam, with R. Leonardi and S.Y. Nanetti, Making democracy
work. Civic traditions in modern Italy (Princeton 1993); S. Huntington, The clash of
civilisations and the remaking of world order (New York 1996) and Harrison and Hunt-
ington, Culture matters.
14 See for example P. Krugman, Development, geography and economic theory (Cam-
bridge Mass. and London 1995) and J. Sachs, “Notes on a new sociology of economic
development” in: Harrison and Huntington, Culture matters, 29-43.
15 C.A. Davids, De macht der gewoonte? Economische ontwikkeling en institutionele
context in Nederland op de lange termijn (Amsterdam 1995); L. Noordegraaf, Overmoed
uit onbehagen. Positivisme en hermeneutiek in de economische en sociale geschiedenis
(Amsterdam 1991); J. de Vries and A. van der Woude, The first modern economy: success,
failure and perseverance of the Dutch economy, 1500-1815 (Cambridge 1997) and J.L.
van Zanden and A. van Riel, Nederland 1780-1914. Staat, instituties en economische
ontwikkeling (Uitgeverij Balans 2000).
16 J.M. Blaut, Eight eurocentric historians (New York 2000); A.G. Frank, ReOrient.
Global economy in the Asian Age (Berkeley 1998); G.D. Snooks, The dynamic society.
Exploring the sources of global change (London and New York 1996); idem, The laws of
history (London and New York 1998). In J.R. Goody, The East in the West (Cambridge
1996) and E.L.Jones, Growth recurring. Economic change in world history (Cambridge
1988) as well a more materialist approach is favoured, or in any case one in which not too
much is made off culture.

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Demography plays a big role in the analysis of, for instance, Macfar-
lane and North and Thomas.
3. The role of culture, institutions and the state in explanations of “the rise of
the West”
As indicated, as an explanation for the rise of the West, culture has always been
popular. Landes is his book " of which, I am afraid, more copies were sold during
the last two years than of all other books on economic history together " flatly
claims that “the Weber thesis” is correct and that culture makes all the differ-
Fukuyama refers to Weber approvingly on various occasions and has writ-
ten an entire book on trust and social virtues in the creation of prosperity.
has already published three best-selling volumes in which cultural factors receive
prime coverage when it comes to explaining prosperity.
A similar focus can be
found in Fromkin(tm)s work.
Jay presented a series on BBC TV, now just appearing
in print, that also focuses on culture and institutions as the explanation for the
Western road to riches.
In France Peyrefitte wrote two books on economic de-
velopment in which culture, or as he prefers to say “mentalit(c)” appears as the
major explanatory factor for Western prosperity.
The Indian economist Deepak
Lal wrote a complex book on the impact of factor endowments, culture, and poli-
tics on long-run economic performance. And the list could go on. Apparently there
17 J. Diamond, Guns, germs and steel. A short history of everybody for the last 13.000
years (London 1998); K. Pomeranz, The great divergence. China, Europe, and the making
of the modern world (Princeton 2000) and St.K. Sanderson, Social transformations. A
general theory of historical development (Oxford and Cambridge 1995).
18 A. Macfarlane, The savage wars of peace. England, Japan and the Malthusian trap
(Oxford 1997) and D.C. North and R. Thomas, The rise of the Western world. A new
economic history (Cambridge 1973).
19 D.S. Landes, The wealth and poverty of nations. Why some are so rich and some so
poor (New York 1998) 516.
20 Fukuyama, Trust. I want to emphasise that Weber is much less of an idealist than most
of his followers make him. See R. Collins, Weberian sociological theory (Cambridge 1986).
21 Th. Sowell, Race and culture; Migrations and cultures; Conquest and cultures (New
York 1994, 1996 and 1998).
22 D. Fromkin, The way of the world (New York 1998).
23 P. Jay, Road to riches or The wealth of man (London 2000).
24 A. Peyrefitte, Du miracle en (c)conomie. Leçons au Collège de France (Paris 1995) and
A. Peyrefitte, La soci(c)t(c) de confiance. Essai sur les origines et la nature du d(c)veloppe-
ment (Paris 1995).

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is a wide range of cultural features that count as distinctively Western.
maybe not all of these authors count as the crème de la crème of serious scholar-
ship, but their works sell. And they are not alone: respected scholars like Gold-
stone, Hall, Jacob, Mann, and the late Gellner, are not loathe to enthusiastically
voice their opinion that there is something special to Western culture that is good
for Western economy.
Similar claims have been made for Western institutions. It will not come as a
surprise that North claims that the rise of the West was caused by its more efficient
economic institutions.
Notwithstanding their idiosyncrasies, he and Thomas, can
be included in the large group of scholars who believe that the rise of the West
basically was the rise of capitalism, and who tend to identify this with the rise of
“the market.”
Overall capitalism can be defined by the presence of private prop-
erty, private enterprise, commodification, the allocation of goods and services via
a market, and a drive for capital accumulation. Some kind of political backing,
obviously, is a necessary precondition for this mode of production, as it is for any
other. In (early) modern capitalism that backing increasingly tended to be provid-
ed by the state that defined and protected property. As economists strongly influ-
enced by neo-classical thinking, North and Thomas and a large group of kindred
spirits tend to identify capitalism with a specific kind of market economy, to wit,
one that is characterised by perfect and free competition and all that implies, like
fully defined property rights, the presence of a large number of individual actors,
market clearing and price-taking. Of course its markets were never operating per-
fectly and completely unhampered, but the West came closest, and in its rise ever
closer to this ideal. This view is shared by many scholars in the field. Landes is
only one of the most recent and most outspoken among them.
On the other hand
25 Deepak Lal, Unintended consequences. The impact of factor endowments, culture,
and politics on long-run economic performance (Cambridge 1998).
26 E. Gellner, Plough, sword and book. The structure of human history (Glasgow 1988);
J.A. Goldstone, “Cultural orthodoxy, risk, and innovation: the divergence of East and
West in the early modern world”, Sociological Theory 5 (1987) 119-135; J.A. Goldstone,
Revolution and rebellion in the early modern world (Berkeley 1991); J.A. Hall, Power &
liberties. The causes and consequences of the rise of the West (Oxford 1985); M.C. Jacob,
Scientific culture and the making of the industrial West (New York and Oxford 1997) and
M. Mann, The sources of social power. Vol I. The history of power from the beginning to
A.D. 1760 (Cambridge 1986).
27 For North(tm)s claim that institutions explain the great divergence see his Institutions,
institutional change and economic performance, 3-10 and Rise of the Western world, chapter
28 North and Thomas, Rise of the Western World.
29 Landes, Wealth and poverty; Fromkin, Way of the world; Jay, Road to riches; E.L.
Jones, The European miracle. Environments, economies and geopolitics in the history of
Europe and Asia (second edition; Cambridge University Press 1987) and Growth recur-

Page 8
there are a lot of opponents to this identifying of the rise of the West with the rise
of perfect and free competition. They too tend to blame or praise “capitalism” for
Western economic supremacy and prosperity, but for them this capitalism is not
tantamount to ideal market economy that is so dear to mainstream economists.
One could think of scholars like Wallerstein, Braudel, Pomeranz, and various
Marxist authors.
Widely differing as these interpretations of the political econo-
my of the West may be, they all put heavy emphasis on the fact that institutionally
the West was unique and that this was fundamental in its rise.
In line with the “Smithian” view of capitalism, there are authors who connect the
rise of the West to the presence of free competition in all walks of life, not just in
the sphere of economics. As Mann puts it, in the various Western countries that
were heirs to the last European empire, that of the Romans, the sources of social
power " political, ideological, economic, and military " were not monopolised.
This is supposed to have promoted a specific, Western dynamism and individual-
ism, strengthened by a family structure in which already at the beginning of the
early modern period nuclear families were the rule. In this perspective Western
society was socially and geographically more mobile and open than other major
societies in the world. The diffusion of social power is also thought to have caused,
and been caused by, the existence of a so-called “civil society”, another popular
topic in discussing the uniqueness of the West. There society had countervailing
power against government. Despotism and under-government were thereby ruled
out, with all the beneficial effects that it is supposed to have had for development
and growth. In such conditions, with a network of mutual arrangements and a gov-
ernment that was held in check, trust could arise, which could also enhance oppor-
tunities for growth.
It will be obvious that scholars who do not buy the story of
the West as the home ground of perfect and free competition, will have their doubts
about all this talk about mobility, dynamism and voluntary co-operation as well.
Discussing institutions inevitably leads to discussing the state, the super- and
supra-institution in the Western world. Two features are mentioned in almost eve-
ring; J.P. Powelson, Centuries of economic endeavor. Parallel paths in Japan and Europe
and their contrast with the third world (University of Michigan Press 1994) and N. Rosen-
berg en L.E. Birdzell, How the West grew rich: the economic transformation of the indus-
trial world (New York 1986).
30 F.Braudel, Civilisation mat(c)rielle, (c)conomie et capitalisme, XVe-XVIIIe siècle (Paris
1979); Pomeranz, Great divergence and I.M. Wallerstein, The modern world-system I.
Capitalist agriculture and the origins of the European world economy in the sixteenth
century (New York 1974). For a classic Marxist approach see for example the work of M.
Dobb. His ideas are discussed in Gustafsson, Power and economic institutions, 38-40.
31 Mann, Sources of social power, 22-33.
32 P.H.H. Vries, “Governing growth: a comparative analysis of the role of the state in the
rise of the West”. To be published in Journal of World History.

Page 9
ry analysis of the question to what extent it could have helped the West in acquir-
ing its leading position. The first one is its state system, the second one the nature
of the individual states. Again, overall, two lines of interpretation can be distin-
guished. One in which the Western state is regarded primarily as lean and clean
and gravitating towards laissez-faire, and one in which emphasis is laid on its
strength and its tendency to interfere in the economy. So we are confronted with
literature in which “weak” governments and “strong” governments, laissez-faire
and mercantilism, fight for prominence in explaining the rise of the West.
These few examples more than suffice to show that references to culture and insti-
tutions abound in analyses that try to explain the economic phenomenon called the
rise of the West. They also suffice to show that these references are anything but
unproblematic. A closer look is needed at what is meant by culture and institutions
and how they are supposed to influence the economy. In trying to answer the last
question we obviously will take a look at economics to see whether this discipline
can be of any help to historians.
4. The role of culture in explanations of “the rise of the West”: methodolog-
ical comments
Culture has become a buzz-word among social scientists and historians. It is not
that long ago that it was still rejected as a notoriously vague category that serious
scholars had better avoid. I will not bother to try and answer the question " that is
unanswerable anyhow " what culture really is and just start from the definitions I
encountered in the literature. Landes, who makes extremely far-reaching claims
for the role of culture in economic history in saying that it makes all the difference,
puts surprisingly little effort into defining it. To him in the end it amounts to “the
inner values and attitudes that guide a population.”
Huntington, who together
with Harrison wrote a manifesto Culture matters: how values shape human progress,
describes culture as “values, attitudes, beliefs, and underlying assumptions preva-
lent among people in a society.”
Fukuyama defines it as “inherited ethical hab-
North seems to prefer the expression “ideology”, by which he means “the
subjective perceptions (models, theories) all people possess to explain the world
around them.”
Olson distinguishes between two kinds of culture: marketable
33 See for an analysis of both these points of view, ibidem.
34 Landes, Wealth and poverty, 516.
35 Huntington in Harrison and Huntington, Culture matters, XV.
36 Fukuyama, Trust, 34.
37 North, Institutions, institutional change and economic performance, 23.

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human capital or personal culture, and public-good human capital, that is knowl-
edge about what public policy should be.
For the sake of convenience and to
exclude no interpretation that I have come across, I opted for an extremely broad
definition, to wit the socially acquired set of dispositions of a group of people with
regard to describing, interpreting and valuing the social and natural world.
Those who fear that introducing culture into debates on economic development
is a sure recipe for vagueness, can find ample confirmation in texts that deal with
the emergence of modern economic growth in the West. Unclear interpretations of
the concept abound. Its precise meaning is often left unspecified, distinctions ac-
cording to place and time are often lacking. Authors do not hesitate " as Hunting-
ton does for the contemporary world
" to call civilisations “Christian”, “Confu-
cianist” or “Muslim”, and then take this to have extremely far " reaching
consequences for their economic performance. It would have been very surprising
indeed if no author would have tried to see some connection between Christianity
and the specific economic feats of the Western, Christian world. And indeed many
did. Some to emphasise that in the Christian conception the world is regarded as
something that may be used and changed. Others to emphasise it functioned as a
basis for trust among co-religionists.
That Protestantism, and especially Calvin-
ism, has been credited with special effects in the realm of the economy needs no
further comment. Neither does the topos that Confucianism in China, Islam in the
Muslim world, and Hinduism in India, were bad things from an economic point of
As Japan industrialised relatively early, its culture almost had to be a kind
of exception to the Asian rule, and indeed positive interpretations of it are not
Fortunately, I am tempted to say, reference to culture does not always hover at so
lofty heights. Going through the literature one can collect a whole list of more
specific and concrete cultural traits that are supposed to have played a leading role
in creating economic growth in the West. To begin with those features that are
summarised under the concept of a (good) work ethic: frugality and industrious-
ness, thrift, tenacity, patience.
Then there is of course “rationality”, a word with
38 M.C. Olson, “Big bills left on the sidewalk: why some nations are rich and others
poor” in: Olson and Kähkönen, A not-so-dismal science, 37-60, p 52.
39 Huntington, Clash of civilisations.
40 See for Christianity as a provider of, among other things, trust Hall, Power and liber-
ties and Mann, Sources of social power. For its supposedly different attitude towards na-
ture see Landes, Wealth and poverty, 58-59. For a fierce critic of the idea that Christianity
would in any way have been conducive to economic growth, see D. Cosandey, Le secret de
l'Occident. Du miracle passé au marasme présent (Paris 1997) 23-32.
41 I only refer to Landes, Wealth and poverty, the chapters on the history of China and the
Muslim world, and his remarks on India and the Weber-thesis.
42 Ibidem, chapter 22 on Japan(tm)s industrialisation.
43 See for example Landes, Wealth and poverty, chapter 29 and M. Egnal, Divergent

Page 11
a very wide meaning. For Weber, in whose work it is a central concept and whose
work has been immensely influential " and for mainstream economists! " it means
thinking in terms of the methodical, calculable and the predictable.
Its highest
materialisation in early modern Europe appears to have been double-entry book-
keeping, but it was expressed in an overall inclination to “measure” reality.
meaning of the word “rationality” often, I think incorrectly, tends to be widened to
comprise the whole gamut of characteristics expected of an entrepreneur. Here
Schumpeter(tm)s characterisation of the entrepreneur, especially in capitalism, as the
creative destructor comes to mind.
It then also encloses “risk taking” and a feel
for innovation. Jay claims that “risk” is a Western word and that Western society
was a society of risk-taking entrepreneurs.
There are, however, other scholars
who think that it was risk-avoidance and manipulation of the economy that laid the
ground for Western wealth.
Other traits I have come across " all smacking heav-
ily of the American way of life " are competitiveness and individualism, accept-
ance of success and consumption, a positive attitude toward change, dynamism
and mobility. To end this list that has no pretence of being exhaustive but just
hopes to present the most important items, I want to mention trust and confidence,
cultural capital, literacy and scientific culture.
The big “civilisational” concepts, exemplified par excellence in religions or
belief-systems, also reflect par excellence the vagueness that cultural interpreta-
tions are accused of. They are (too) large, diffuse, under-specified. When it comes
to categories like Christianity, Protestantism, Calvinism, Hinduism, Confucianism
et cetera, the question simply cannot be suppressed what exactly it is that makes
them assets, or liabilities, for an economy. How exactly to connect lofty things like
religious beliefs to such prosaic matters like production? Not surprisingly opin-
ions differ widely on how to interpret the putative connections and to show that
they really exist. Interpretations of the supposed effects of Christianity on eco-
nomic development vary immensely, from those who think it was one of the most
paths: how culture and institutions have shaped North American economic growth (Ox-
ford 1996) “Preface” and “A concluding note.”
44 Collins, Weberian sociology, chapter 2.
45 A.W. Crosby, The measure of reality. Quantification and Western society, 1250-1600
(New York 1997).
46 J.A. Schumpeter, Capitalism, socialism and democracy (New York 1942).
47 Jay, Road to riches, TV broadcast.
48 See for this thesis for example the way Braudel defines capitalism in his Civilisation
mat(c)rielle and Pomeranz, Great divergence, chapter 4.
49 For literature on the rise of the West, apart from that mentioned in this article, see
P.H.H. Vries, “The rise of the West in economisch perspectief “, Theoretische Geschiedenis
25 (1998) 291-321. The shortest overview of the role that culture is supposed to have
played in the rise of the West is provided by the reviews of Blaut in his Eight eurocentric

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important assets of the West, to those who see no connection at all, to those who
think the effects were much more often negative than positive.
Opinions are not
so extremely diverse when it comes to the debate on Calvinism and capitalism, but
here too scholars are torn on the question of the connection " if any " and its exact
nature, as the immense literature on the Weber-thesis proves. The same applies to
the relationship between Confucianism and economy.
This is not the place to solve these riddles. What is clear, however, is that in this
context the easy macro descriptions should at least be disaggregated and trans-
formed into manageable categories that can be defined in a empirically meaning-
ful sense. Cultures are very diffuse and comprise various sub-cultures. They change
and interact with what is going on in the world. Much more attention should be
paid to looking for good, empirical indicators. What should concern us here are
their implications for practical life, not their spiritual principles. This not only
applies to religion but also to the many references to Western rationality and the
scientific inclinations of the Westerner. Giving an operational definition of the
small “traits” at first sight might seem to be easier. Although on second thought
appearances may be very deceptive. How do you determine empirically that one
culture has a better work ethic than another one? How do you measure thrift on a
society-wide scale, or mobility? Fundamental categories like trust, are also hard to
pin down precisely. Where measuring is so extremely difficult, it is not clear how
authors can be so adamant in their claims that the West had so much of these good
things that it, and not any other advanced region in the world, would be the first
one with modern economic growth. Especially as so little systematic comparative
research has been undertaken.
Moreover, it is far from obvious how the various traits that are supposed to have
set the West on its specific trajectory, can be combined in one consistent story-
line. I will restrict myself to just a few examples. How exactly to combine the
thesis that the virtues of the bookkeeping petit bourgeois (being frugal and indus-
trious, thinking in terms of the calculable and the predictable, avoiding risks) are
conducive to economic growth, with the thesis that it is entrepreneurial virtues
(like a willingness to take risks, deal with uncertainty and look for innovation) that
have this effect? The bookkeeper can easily become the enemy par excellence of
the entrepreneur, although Sombart thought they both were part of the history of
Der Bourgeois.
Taking risks and venturing into the unknown can be very sensi-
50 In case anybody would want to know, I think the last group has history on its side. See
note 40.
51 I only refer to Harrison and Huntington, Culture matters chapters 16 to 20.
52 One can harbour serious doubts whether it will ever be possible for historians to con-
duct the kind of empirical research that is done by those who research contemporary rela-
tions between economics and culture. See for example Klump, “Witschaftskultur” and
Kunz, “Kulturelle Variablen”.
53 W. Sombart, Der Bourgeois: zur Geistesgeschichte des modernen Wirtschaftsmen-

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ble in that this is the only way to keep abreast in a competitive environment. Per-
sonally, however, I would not call it rational. You simply cannot calculate and
predict that what you are about to do is the right thing to do. Risk, according to the
prevailing definition, might be measured, in the sense that ideally one could insure
oneself to make it less risky, but uncertainty can not, and innovating is by defini-
tion uncertain.
To give but one, final, example of conflicting interpretations:
traits like competitiveness, individualism, mobility and dynamism, are not always
easy to combine with trust and confidence. Institutional economists have not by
accident focused on the question how co-operation of economic actors can be
accomplished where it might, at least in the short run, often be more rational to be
a free rider.
These (apparent?) inconsistencies form an additional, but forceful reason to
try and figure out the exact mechanisms that are supposed to make all these cultur-
al traits into explanatory variables in a story about economic growth. Many of
them tend to be regarded as good because they are considered good from a moral
point of view " somehow we like people to work hard, to save, to be individualis-
tic, et cetera " and we tend to think that behaviour of that kind ought to be reward-
ed. But that does not necessarily mean that these private, moral virtues would be
public, economic virtues too. Individuals usually work for personal net income,
however defined, not for gross national product. Normally they do not really both-
er about GNP. If they do, that, by the way, might be a very forceful cultural factor
in explaining why some countries have had such high growth rates.
that are economically rational from a personal point of view and increase or even
maximise a private income, can be socially inefficient. Smith(tm)s optimistic inter-
pretation of the working of the invisible hand, is simplistically over-optimistic,
even in the best of all markets. Individual behaviour can very well be rational from
the perspective of personal self-interest but irrational from the perspective of eco-
nomic development.
schen (M1/4nchen 1913). Compare the remarks in R. Grassby, The idea of capitalism be-
fore the industrial revolution (Lanham and Oxford 1999) 47-59.
54 For the “irrationality” of risk taking and especially acting in a context of uncertainty
see R. Brenner, History. The human gamble (Chicago and London 1983) and Goldstone,
“Cultural orthodoxy, risk, and innovation.” For the current definition of risk and uncer-
tainty see also H. Pellikaan and W. Hout, eds, Economische modellen en politieke besluit-
vorming. Inleiding in de rationele"keuzetheorie (Bussum 1998) 56-60.
55 One might think for example of Japan(tm)s industrialisation, the German “Wirt-
schaftswunder” after World War Two, and the economic recovery of the Netherlands dur-
ing that same era.
56 Maloney, What(tm)s new in economics, 104.

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It does not take an awful lot of imagination or technical economic schooling to
think of situations in which one or more of the character traits mentioned above
indeed might foster economic growth. But, and that is the problem, it does not take
much imagination either to think of circumstances in which they would not. Hard
work can delay mechanisation and economic innovation. It can, by the way, be-
come irrational, as Weber already knew. There is nothing rational, in an economic
sense, for people who have accumulated more than they can ever spend, to contin-
ue working. Any entrepreneur faces the problem that he can never maximise profit
and utility both at the same time. But, why does Bill Gates continue working? His
time must be scarcer than his money. What we call thrift today may be under-
consumption tomorrow. Becoming a mafioso definitely is a risky enterprise, but
would Schumpeter endorse it? Being rational and calculating can be a brake on
innovation. Individualism and a thoroughly rational approach can lead to a lack of
trust or co-operation. National economic mobilisation can create growth, but it
can also create havoc, for example when it turns into fierce nationalism and war.
What could be more rational when one is confronted with predicaments like
these than to turn to economics? Might one not expect that this most prestigious of
all social sciences could help us and tell what cultural traits are beneficial to growth,
and in what circumstances? After all explaining economic growth ought to be its
major field of interest.