The simple explanation doesn't explain the thing that it's supposed to explain. A dialog:
Simplicio: Why are some people rich and others poor?
Leftso Marxson: Well, the rich people are bad and stole all the wealth from the poor.
Simplicio: Ah, ok, that makes sense. But let's hear an alternative opinion.
Progress Guy: Sure! Inequality is because everyone in a state of nature is dirt poor.
Simplicio: Ok, that makes sense, but that doesn't explain why some people are rich now?
Progress Guy: Well, inequality cannot be eliminated without destroying prosperity and individual rights.
Simplicio: That sounds more like a response to the leftist than an answer to the original question.
Progress Guy: Long-term economic growth (progress) benefits the working class more than government intervention.
Simplicio: Once again, that sounds more like a response to the leftist. What about the original question?
Progress Guy: Ok sorry, let me try again. The fact that some people benefit more from progress than others does not invalidate the benefits of long-term economic growth.
Simplicio: That's still just a response to the leftist.
Progress Guy: Rather than Equality, we should be aiming for Progress and Upward Mobility.
Simplicio: Well, if you can't explain why some are rich and some are poor I guess I'll go with Lefto.
[Slow fade out while society goes down the drain.]
Interesting. You are correct that my explanation is mainly a response to the Leftist explanation because I believe that it is the most commonly believed in the Western world:
Do you think the sophisticated longer version of this article would convince Simplicio?
If yes, what is the minimum amount of the longer version that needs to be added to the simple explanation?
Perhaps add more to Point #1 so it reads:
"Poverty, inequality, ignorance, and war are the natural state of humans. It is not because bad people did bad things to good people. It is because humans are biological organisms that evolved from other animals that had similar natural states."
I think the longer version is better but that 7 still has the glaring hole. If I try to simplify your story to a paragraph: "First everyone was poor. By accident, commercial societies invented human material progress sometime after 1200. They were able to do so because of unique geographical and political conditions that were not inevitable. Progress then spreads very unequally across the globe and within societies."
And the glaring hole is "why?" for the last part. Why did progress spread unequally? Why don't poor people just copy what the rich people do and become rich? (Note that the Leftist explanation slots in nicely here, so your story so far is just a possible preamble to the Leftist explanation.)
(Also, arguably there's another explanation that's as popular as the Leftist explanation, but less often stated out loud. Let's call it the bootstraps version: "The poor are poor because they are bad and deserve it".)
You are getting at a key tension in my perspective. I think it largely comes about because I am trying to answer many differing questions, not just poverty and inequality. I am actually most concerned about how societies move from poverty to progress. In general, I regard poverty and inequality as a given, but I explain why in this article.
In answering your questions: Progress spreads unequally because it is an evolutionary process (just like the creation of a new biological species). It originates in one place and then very slowly spreads to different people and societies. And, yes, poor people do it by copying rich people.
I am currently writing an entire series of articles on the topic:
I do not think the bootstrap argument takes you very far unless you focus on one very small slice of time in one society. Poor people have been working incredibly hard for thousands of years with no hope of becoming affluent.
And it is not credible for an entire society to jump from poverty to progress in one generation because they are suddenly "less bad" or they start working harder.
Jumping in, it seems to me that this post talks around the issues of inequality and poverty rather than addressing them head on. I would respectfully suggest MM start over from scratch.
My cocktail napkin attempt to start the topic on the issue of within-society inequality ….
1 Prosperity requires producing solutions to each others’ problems via complex patterns of positive sum actions and interactions.
2. Culture is this term for the knowledge that is accumulated over time within societies.
3. Every society differs in the exact mix of technological, behavioral, epistemological and institutional knowledge, and these can change and evolve over time.
4. About 250 years ago, a set of European states and their recent colonies created a cultural kit which enabled them to solve problems at a pace so fast that they experienced (previously unattainable) sustained economic growth at a pace which wildly exceeded the natural headwinds of Malthus and of basic human exploitation and interference. Every generation started to be better off than the preceding.
5. However, the model or cultural kit required decentralized human coordination involving both cooperation and competition. The learning and discovery process requires experimentation, failure and feedback.
6. For this feedback to be effective, it was essential that success and failure be rewarded and penalized enough to constantly incentivize adaptation and change.
7. However to make the process as fair and open as possible, the institutional requirements rewarded equality of opportunity and consistency and fairness of rules.
8. The process stresses fairness and equality of opportunity even as it necessitates that some people will succeed and fail relative to others.
9. Thus inequality of outcome is not just a possibility, it is intrinsically baked into the efficacy of the process. Markets, science, democracy and technological advance requires competition and creative destruction. Failure to do so leads to atrophy and a return to the stagnation and sclerosis of the natural state.
10. However, excessive inequality of outcome also leads to negative externalities and threats to the system, thus the system is supplemented with redistribution and various safety nets. These need to be finely balanced to not undermine the system.
In summary, combined with the immense variation in human potential, we see vast differences in outcomes and prosperity. Billions pay to listen to the Beatles, but nobody pays to hear me sing. Thus the Beatles were rewarded to produce music which improves our lives. I am incentivized to do something else.
Sorry for the late comment. You are welcome to present your own alternative theory, but I do not find cultural explanations to be compelling.
I find the term "culture" being used as a causal mechanism for economic development is much too vague to be useful. You mention many concepts that are within the concept of "culture" without identifying which are most important and how they interact.
Nor is it clear how cultures change in one direction or another.
For example, what causes the initial differences in step #3, and how did European states create the right cultural kit in step #4?
I am using the term culture basically as "socially transmitted knowledge." As in a third type of knowledge distinct from biological/genetic evolution and individual behavioral learning. I certainly agree that using "culture" as an explanation for progress without any further clarification is as useful (ie useless) as using "genes" as an explanation for giraffe necks. Excuse me if something I wrote implied something different.
My point is that societies have distinct cultural kits of ideas, values, knowledge, technology and institutional arrangements. These have to work together for society to function effectively and as such some cultural knowledge is easier to transmit between societies than others. Smart phones and library books and calculus don’t add much value in a hunter gatherer society. Steel blade axes can be transmitted easier, but only their use, not necessarily their manufacture, let alone their initial design.
The relevant cultural institutions which I referenced in both original posts included those of free commercial markets, representative governments and the scientific method. A more thorough answer would include fossil fuels, the rule of law, equal rights, advanced mathematics, clocks, gunpowder, money, printing and a host of other necessary conditions (not as important to the discussion at hand as outlined below). I can explain in rough detail how these were discovered/invented and improved over time, but my answer would probably be really similar to yours. I’ve read your books and pretty much agree with your take on most issues.
The relevant cultural issue relating to the issue of inequality between societies is that some societies did develop commercial free markets, representative governments with rule of law, and the scientific method. Most did not. Once these institutions were created, they were not just cultural end points, but the beginning of a set of never ending systems of learning, discovery and improvement. They are, in brief, complex adaptive learning systems. They are institutional learning systems.
One sticky problem with inequality between societies is that these three complex adaptive institutions themselves depend upon many other complex values and beliefs within society. Things like the rule of law, property rights, the value of truth over conformity, the value of empirical evidence over prescribed authority and so on and so on. It is easy to send steel axes to most cultures. It is a bit tougher to import electrical grids and televisions. But it is extremely hard to transmit complex institutional systems which are alien and in some cases directly contrary to the way that the receiving society has worked.
As such, it can be extremely difficult to transmit effective institutions between incompatible societies. Hence continued inequality between societies. Over time, many societies outside of Western Europe have been able to either import these as is, or at least modify them as needed to fit reasonably well. Others have not. Hence massive inequality between nations as some can only import the technologies developed elsewhere rather than the operating system to do so themselves.
1. The recipe for prosperity involves a mix of importing solutions developed elsewhere (usually by the leaders) and creating institutional and organizational solutions to the issues of human coordination.
2. The eureka recipe involves the liberal mix of rule of law, representative government, free markets and the scientific method as discovered/created in Western Europe and its spin offs.
3. Other nations, with similar cultural backgrounds, copied the winning recipe, adding various touches of their own, some of which proved to be improvements which were similarly copied and improved upon.
4. Thus the institutional recipe for progress improved over time, at least for those able to adopt it.
5. Some societies, however, had cultures and values which were incompatible with this liberal institutional recipe. Russia is one obvious example, as are most nations in the Middle East and Africa.
6. Thus large segments of the population of earth are poorly equipped to absorb the liberal institutions necessary for long term prosperity. At best they draft on technology and science invented elsewhere, and at worst, they lag behind, with what little prosperity they do produce being captured by exploitative forces and elites.
Thus we continue to see massive differences between societies and states in terms of prosperity, freedom and even health. The basic problem is that they are still caught at around the Malthusian level dominating history because the recipe for prosperity is not amenable to their cultural traditions, values and history.
As is typical in most cultural explanations, you start in the middle of the story. If culture is the cause of progress, then what causes the right culture to come into being?
And if you identify a previous culture, then where did they get it from?
And if culture is the cause, why are so many nations able to suddenly jump from poverty to progress in one generation? It is hard to believe that their culture was terraformed. And if so, what caused the terraforming?
I believe that culture can be useful as an intermediary causal variable, but not as an ultimate cause. Something must be causing cultures to change, so what is it?
Your first question is like asking where "good genes" come from in biology. The answer is basically random mutation combined with differential selection and replication. IOW lots of variation and intense (natural) pruning.
So where do successful cultural adaptations and institutions come from?
In Europe they came from 15 centuries of intense competition between hundreds of independent statelets. During that time countless independent institutions and cultures emerged, as cultures and institutions tend to do (details available upon request, but you are familiar with my sources). Some of these were more successful than others. Some lasted longer while their rivals were pruned away (often violently). What emerged were cultures which had the values and the institutions which supported free markets, science and representative governments.
And it is these three institutions which have been the catalysts of the sustained progress of the last 250 years. These, along with fossil fuels and technology which allowed just another efflorescence to become a self amplifying process which we see as progress.
As to your second question, the answer is that places with cultural values and traditions amenable to these liberal institutions were able to adopt them. In other cases, the institutions and culture were forced or exported, such as in some colonies in the New World. Thus we see democracy, free markets and scientific rationalism spreading first through Britain and France and the US, then Western Europe, then Japan and so on.
Another important issue is that it is incalculably easier to be a fast follower than an innovator, and the cultures and institutions for the two are quite distinct. IOW, a few places can establish the cultures of innovation, discovery and creative destruction. The majority of dogs just need to follow the lead husky.
Finally, this explains why some places have had no luck whatsoever with liberal institutions and values. Russia, the Middle East and Africa for example. They are just too alien to import, at least easily, even if they are just importing ideas which they were incapable of discovering at their own with their history. These can still import at least a pale version of the science and technology and institutions developed elsewhere.
Now for your final question, the cause of cultural change is almost irrelevant, at least for argument's sake. The point is that cultures do change and do evolve, and some are radically more successful in some ways than others. Property rights supported by representative governments with the rule of law was one such winning combination, leading to the explosion of finance, capital, corporations, investment, and so on which increased living standards by 30X in 200 years.
The simple explanation doesn't explain the thing that it's supposed to explain. A dialog:
Simplicio: Why are some people rich and others poor?
Leftso Marxson: Well, the rich people are bad and stole all the wealth from the poor.
Simplicio: Ah, ok, that makes sense. But let's hear an alternative opinion.
Progress Guy: Sure! Inequality is because everyone in a state of nature is dirt poor.
Simplicio: Ok, that makes sense, but that doesn't explain why some people are rich now?
Progress Guy: Well, inequality cannot be eliminated without destroying prosperity and individual rights.
Simplicio: That sounds more like a response to the leftist than an answer to the original question.
Progress Guy: Long-term economic growth (progress) benefits the working class more than government intervention.
Simplicio: Once again, that sounds more like a response to the leftist. What about the original question?
Progress Guy: Ok sorry, let me try again. The fact that some people benefit more from progress than others does not invalidate the benefits of long-term economic growth.
Simplicio: That's still just a response to the leftist.
Progress Guy: Rather than Equality, we should be aiming for Progress and Upward Mobility.
Simplicio: Well, if you can't explain why some are rich and some are poor I guess I'll go with Lefto.
[Slow fade out while society goes down the drain.]
Interesting. You are correct that my explanation is mainly a response to the Leftist explanation because I believe that it is the most commonly believed in the Western world:
https://frompovertytoprogress.substack.com/p/why-the-left-endures
Do you think the sophisticated longer version of this article would convince Simplicio?
If yes, what is the minimum amount of the longer version that needs to be added to the simple explanation?
Perhaps add more to Point #1 so it reads:
"Poverty, inequality, ignorance, and war are the natural state of humans. It is not because bad people did bad things to good people. It is because humans are biological organisms that evolved from other animals that had similar natural states."
I think the longer version is better but that 7 still has the glaring hole. If I try to simplify your story to a paragraph: "First everyone was poor. By accident, commercial societies invented human material progress sometime after 1200. They were able to do so because of unique geographical and political conditions that were not inevitable. Progress then spreads very unequally across the globe and within societies."
And the glaring hole is "why?" for the last part. Why did progress spread unequally? Why don't poor people just copy what the rich people do and become rich? (Note that the Leftist explanation slots in nicely here, so your story so far is just a possible preamble to the Leftist explanation.)
(Also, arguably there's another explanation that's as popular as the Leftist explanation, but less often stated out loud. Let's call it the bootstraps version: "The poor are poor because they are bad and deserve it".)
You are getting at a key tension in my perspective. I think it largely comes about because I am trying to answer many differing questions, not just poverty and inequality. I am actually most concerned about how societies move from poverty to progress. In general, I regard poverty and inequality as a given, but I explain why in this article.
In answering your questions: Progress spreads unequally because it is an evolutionary process (just like the creation of a new biological species). It originates in one place and then very slowly spreads to different people and societies. And, yes, poor people do it by copying rich people.
I am currently writing an entire series of articles on the topic:
https://frompovertytoprogress.substack.com/t/how-progress-spread-across-the-globe
I do not think the bootstrap argument takes you very far unless you focus on one very small slice of time in one society. Poor people have been working incredibly hard for thousands of years with no hope of becoming affluent.
And it is not credible for an entire society to jump from poverty to progress in one generation because they are suddenly "less bad" or they start working harder.
https://frompovertytoprogress.substack.com/p/nations-that-experienced-transformative
Jumping in, it seems to me that this post talks around the issues of inequality and poverty rather than addressing them head on. I would respectfully suggest MM start over from scratch.
My cocktail napkin attempt to start the topic on the issue of within-society inequality ….
1 Prosperity requires producing solutions to each others’ problems via complex patterns of positive sum actions and interactions.
2. Culture is this term for the knowledge that is accumulated over time within societies.
3. Every society differs in the exact mix of technological, behavioral, epistemological and institutional knowledge, and these can change and evolve over time.
4. About 250 years ago, a set of European states and their recent colonies created a cultural kit which enabled them to solve problems at a pace so fast that they experienced (previously unattainable) sustained economic growth at a pace which wildly exceeded the natural headwinds of Malthus and of basic human exploitation and interference. Every generation started to be better off than the preceding.
5. However, the model or cultural kit required decentralized human coordination involving both cooperation and competition. The learning and discovery process requires experimentation, failure and feedback.
6. For this feedback to be effective, it was essential that success and failure be rewarded and penalized enough to constantly incentivize adaptation and change.
7. However to make the process as fair and open as possible, the institutional requirements rewarded equality of opportunity and consistency and fairness of rules.
8. The process stresses fairness and equality of opportunity even as it necessitates that some people will succeed and fail relative to others.
9. Thus inequality of outcome is not just a possibility, it is intrinsically baked into the efficacy of the process. Markets, science, democracy and technological advance requires competition and creative destruction. Failure to do so leads to atrophy and a return to the stagnation and sclerosis of the natural state.
10. However, excessive inequality of outcome also leads to negative externalities and threats to the system, thus the system is supplemented with redistribution and various safety nets. These need to be finely balanced to not undermine the system.
In summary, combined with the immense variation in human potential, we see vast differences in outcomes and prosperity. Billions pay to listen to the Beatles, but nobody pays to hear me sing. Thus the Beatles were rewarded to produce music which improves our lives. I am incentivized to do something else.
Sorry for the late comment. You are welcome to present your own alternative theory, but I do not find cultural explanations to be compelling.
I find the term "culture" being used as a causal mechanism for economic development is much too vague to be useful. You mention many concepts that are within the concept of "culture" without identifying which are most important and how they interact.
Nor is it clear how cultures change in one direction or another.
For example, what causes the initial differences in step #3, and how did European states create the right cultural kit in step #4?
I am using the term culture basically as "socially transmitted knowledge." As in a third type of knowledge distinct from biological/genetic evolution and individual behavioral learning. I certainly agree that using "culture" as an explanation for progress without any further clarification is as useful (ie useless) as using "genes" as an explanation for giraffe necks. Excuse me if something I wrote implied something different.
My point is that societies have distinct cultural kits of ideas, values, knowledge, technology and institutional arrangements. These have to work together for society to function effectively and as such some cultural knowledge is easier to transmit between societies than others. Smart phones and library books and calculus don’t add much value in a hunter gatherer society. Steel blade axes can be transmitted easier, but only their use, not necessarily their manufacture, let alone their initial design.
The relevant cultural institutions which I referenced in both original posts included those of free commercial markets, representative governments and the scientific method. A more thorough answer would include fossil fuels, the rule of law, equal rights, advanced mathematics, clocks, gunpowder, money, printing and a host of other necessary conditions (not as important to the discussion at hand as outlined below). I can explain in rough detail how these were discovered/invented and improved over time, but my answer would probably be really similar to yours. I’ve read your books and pretty much agree with your take on most issues.
The relevant cultural issue relating to the issue of inequality between societies is that some societies did develop commercial free markets, representative governments with rule of law, and the scientific method. Most did not. Once these institutions were created, they were not just cultural end points, but the beginning of a set of never ending systems of learning, discovery and improvement. They are, in brief, complex adaptive learning systems. They are institutional learning systems.
One sticky problem with inequality between societies is that these three complex adaptive institutions themselves depend upon many other complex values and beliefs within society. Things like the rule of law, property rights, the value of truth over conformity, the value of empirical evidence over prescribed authority and so on and so on. It is easy to send steel axes to most cultures. It is a bit tougher to import electrical grids and televisions. But it is extremely hard to transmit complex institutional systems which are alien and in some cases directly contrary to the way that the receiving society has worked.
As such, it can be extremely difficult to transmit effective institutions between incompatible societies. Hence continued inequality between societies. Over time, many societies outside of Western Europe have been able to either import these as is, or at least modify them as needed to fit reasonably well. Others have not. Hence massive inequality between nations as some can only import the technologies developed elsewhere rather than the operating system to do so themselves.
As for the issue of inequality among societies…
1. The recipe for prosperity involves a mix of importing solutions developed elsewhere (usually by the leaders) and creating institutional and organizational solutions to the issues of human coordination.
2. The eureka recipe involves the liberal mix of rule of law, representative government, free markets and the scientific method as discovered/created in Western Europe and its spin offs.
3. Other nations, with similar cultural backgrounds, copied the winning recipe, adding various touches of their own, some of which proved to be improvements which were similarly copied and improved upon.
4. Thus the institutional recipe for progress improved over time, at least for those able to adopt it.
5. Some societies, however, had cultures and values which were incompatible with this liberal institutional recipe. Russia is one obvious example, as are most nations in the Middle East and Africa.
6. Thus large segments of the population of earth are poorly equipped to absorb the liberal institutions necessary for long term prosperity. At best they draft on technology and science invented elsewhere, and at worst, they lag behind, with what little prosperity they do produce being captured by exploitative forces and elites.
Thus we continue to see massive differences between societies and states in terms of prosperity, freedom and even health. The basic problem is that they are still caught at around the Malthusian level dominating history because the recipe for prosperity is not amenable to their cultural traditions, values and history.
So where did the "eureka recipe" in #2 come from?
As is typical in most cultural explanations, you start in the middle of the story. If culture is the cause of progress, then what causes the right culture to come into being?
And if you identify a previous culture, then where did they get it from?
And if culture is the cause, why are so many nations able to suddenly jump from poverty to progress in one generation? It is hard to believe that their culture was terraformed. And if so, what caused the terraforming?
I believe that culture can be useful as an intermediary causal variable, but not as an ultimate cause. Something must be causing cultures to change, so what is it?
Great questions. Thanks for asking.
Your first question is like asking where "good genes" come from in biology. The answer is basically random mutation combined with differential selection and replication. IOW lots of variation and intense (natural) pruning.
So where do successful cultural adaptations and institutions come from?
In Europe they came from 15 centuries of intense competition between hundreds of independent statelets. During that time countless independent institutions and cultures emerged, as cultures and institutions tend to do (details available upon request, but you are familiar with my sources). Some of these were more successful than others. Some lasted longer while their rivals were pruned away (often violently). What emerged were cultures which had the values and the institutions which supported free markets, science and representative governments.
And it is these three institutions which have been the catalysts of the sustained progress of the last 250 years. These, along with fossil fuels and technology which allowed just another efflorescence to become a self amplifying process which we see as progress.
As to your second question, the answer is that places with cultural values and traditions amenable to these liberal institutions were able to adopt them. In other cases, the institutions and culture were forced or exported, such as in some colonies in the New World. Thus we see democracy, free markets and scientific rationalism spreading first through Britain and France and the US, then Western Europe, then Japan and so on.
Another important issue is that it is incalculably easier to be a fast follower than an innovator, and the cultures and institutions for the two are quite distinct. IOW, a few places can establish the cultures of innovation, discovery and creative destruction. The majority of dogs just need to follow the lead husky.
Finally, this explains why some places have had no luck whatsoever with liberal institutions and values. Russia, the Middle East and Africa for example. They are just too alien to import, at least easily, even if they are just importing ideas which they were incapable of discovering at their own with their history. These can still import at least a pale version of the science and technology and institutions developed elsewhere.
Now for your final question, the cause of cultural change is almost irrelevant, at least for argument's sake. The point is that cultures do change and do evolve, and some are radically more successful in some ways than others. Property rights supported by representative governments with the rule of law was one such winning combination, leading to the explosion of finance, capital, corporations, investment, and so on which increased living standards by 30X in 200 years.
This is a compelling exploration of this topic and the framing around it.