Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Businessweek Archives

Is Culture The Key To Growth?




Why Some Are So Rich and Some So Poor

By David S. Landes

Norton 650pp $30

It is perhaps the most fundamental and important question in the study of economics: What makes nations grow? If economics is to have any relevance at all in our lives, it must provide some answers and give people and governments a few pointers. The great economists of yore--from Adam Smith to Alfred Marshall and John Maynard Keynes--always kept the big picture in mind and attempted to address it in their various writings. In recent times, though, few economists have examined the growth issue head-on, preferring to focus on narrow, often irrelevant topics.

But the wrenching changes wrought by technological advances and globalization have made the growth question fashionable again, and economists are gamely trying to meet the challenge. Theoretical economists are examining the components and nature of growth, while empiricists are totting up results and making national comparisons. A fertile area of research is the past, which provides countless examples of what worked to promote growth and what didn't. Yet a paucity of reliable data often prompts analysts to settle for slippery sociocultural explanations.

David S. Landes, an economic historian at Harvard University, bravely searches for clues to why some societies are economic successes and others economic failures in his new book, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor. The book is by turns familiar, fascinating, and irritating. Familiar, because others have described the particulars of, say, Britain's Industrial Revolution equally well. Fascinating, because Landes picks and chooses excellent illustrative details and offers interesting takes on Spain, China, Japan, Egypt, and other countries. And irritating because of Landes' opinionated and crotchety style, which is particularly on display as he drags the reader into academe's culture wars through gratuitous and repeated jousts with other scholars. It's possible to learn a great deal from this book, but the reader will have to shoulder the dross along with the gold.

Landes, the author of numerous widely cited and highly regarded books, has undertaken nothing less than an economic history of the world. Although he ranges widely in his choice of locales, the emeritus professor is admittedly and unabashedly Eurocentric: "As the historical record shows, for the last thousand years, Europe (the West) has been the prime mover of development and modernity."

Landes credits the West's economic success to a few key variables: the ability to use, adapt, and invent new technologies; the encouragement of literacy and learning; the relative openness and flexibility of political systems and social institutions. Innovations that spurred growth in the West included the essential--eyeglasses, whose widespread adoption in 15th century Florence and Venice had a phenomenal effect on productivity--and the serendipitous--the discovery of dyes, which led to the development of the German chemical industry.

Landes' concern is not with the technologies per se but rather with the conditions under which growth flourished. Thus, he explains that the French lagged behind the British in steel production and the adoption of new steel technologies in the early 18th century chiefly because the French refused to use anything but French iron ore for reasons of national pride. The British had no such obsession with local content and were satisfied to use imported iron. He shows how the rulers of two very dissimilar nations--Catholic Spain and Confucian China--followed similar paths in restraining learning and the dissemination of knowledge and thereby condemned their societies to slower growth. And he describes a work ethic and commitment to learning among Buddhist monks in 16th century Japan which Landes argues carried over to society at large: "One does not have to be a Weberian Protestant to behave like one," he concludes.

Landes manages to convey a great deal of information and in so doing, draws useful parallels between past and current events. It's impossible, for instance, to read his description of the importance of hydraulics as a symbol of political power to the despots of ancient China without thinking of the building of the massive Three Gorges Dam in today's China. Likewise, it is difficult to consider the benefits of the flexibility that medieval Europe's political fragmentation encouraged without considering how present-day Europe's ongoing economic union might diminish growth.

But for all its value as a rich source of information, The Wealth and Poverty of Nations falls short of its ultimate aim: to explain just why some are so rich and some so poor. Landes contends that culture, by which he means inner values and attitudes that guide a population, "makes all the difference." He rightly notes that culture is not a concept economists like, because it is inherently unquantifiable. And he says it frightens scholars because of its "sulfuric odor of race and inheritance." But then, he seems to contradict himself when he admits that culture adapts, and that culture alone does not determine outcomes.

In the end, Landes can do little more than extol an open, optimistic approach to growth, development, and indeed to life. It's a homiletic--and disappointing--conclusion to a fascinating and vexing study of economic history.BY KAREN PENNARReturn to top

blog comments powered by Disqus