Re: BOOK: The Mystery of Capital

From: Anders Sandberg (
Date: Fri Oct 19 2001 - 16:44:14 MDT

On Fri, Oct 19, 2001 at 02:14:10PM -0500, Randy Smith wrote:
> The same happens everywhere!
> But it did not happen in Europe or Japan after WW2 b/c the "rebuilding" of
> those countries took place under the auspices of the relatively uncorrupt US
> military.

Another factor (which I think was far more significant) that made Europe
and Japan rebound fairly quickly was the presence of a large civil
society with working institutions that just needed a bit of flushing.
The courts worked in most of Europe, and hence property rights and
contracts could be upheld and the economic and social bootstraping
process could get into gear.

The problem with a country like China is that if the institutions are
corrupt you won't get any trust building with the government, and the
government cannot help build any trust between individuals and groups
(which it can in a land with working contract law). Hence you get
low-trust societies where a lot of necessary services are provided by
relatively local, informal or unaccountable institutions - which doesn't
promote the emergence of trust outside the group and the formation of
the larger structures necessary for a modern capitalist society (or any
other workable large scale peaceful society).

Culture can help and hinder; it seems that societies with high levels of
power distance are generally poorer than societies with lower power
distance, but this is apparently something that slowly changes as a
society becomes more modern (if I read my Hofstede right) - but power
distance also helps corrupt institutions to remain unaccountable and
hence slows the development. I wonder how Confucian Dynamics affect
China in this respect; to me it seems like something that creates a
local optimum of a fairly resilient society but hinders the development
into a modern society - but this could be my western libertarian bias.
Greg might have a better idea here.

Anders Sandberg                                      Towards Ascension!                  
GCS/M/S/O d++ -p+ c++++ !l u+ e++ m++ s+/+ n--- h+/* f+ g+ w++ t+ r+ !y

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