Why Cultures Succeed for Fail:
Communal Order versus Market Prosperity
by Roger Sandall
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Not all cultures are equal. Like it or not, some cultures are better able to provide law, security, order, prosperity, freedom and institutional pluralism that people in the year 2000 expect.

The contrast between the wealth-producing cultures of western Europe and the traditional poverty-producing cultures of the pre-industrial world elsewhere goes back for centuries.

The break with communal arrangements was the essential first step forward. Ernest Gellner writes that in most communally organised social systems a man Ôcan sometimes escape the tyranny of kings, but only at the cost of falling under the tyranny of cousins, and of ritualÕ (1997: 7). But new rules which kept cousins in their place, separated ritual from economic life, guaranteed private property in land against the demands of relatives, gave rights to transfer family property to non-family members, and enabled men and women to think their own thoughts however suffocating the idŽes fixes of the tribeÑall this goes back in England hundreds of years (Macfarlane 1978).

After studying 16th century England Alan Macfarlane went to Nepal to do fieldwork in a Himalayan village. What he found surprised him:

Two things especially struck me when comparing it to England in the past. The first was the very great difference in per capita wealth in the two societies. Historians kept talking about England in the pre-industrial period as a ÔsubsistenceÕ economy, with people on the verge of starvation, technologically backward, economically unsophisticated.

But when I compared the technology, the inventories of possessions and the budgets of a contemporary Asian society with those for English sixteenth-century villagers, I found that there was already an enormous gap. The English were, on the whole, an immeasurably wealthier people, with a far higher investment in tools and other productive forces. To think of India or China in the early twentieth century as directly comparable to England just before the industrial revolution [in the years when Adam Smith was gathering material for his book] appeared to be a serious mistake. (1978: 3-4)

This mistake was spectacularly made by Karl Polanyi. The Great Transformation claimed that a vast change had taken place in England after the 16th century which saw a non-market economy destroyed.

What is absolutely clear, wrote Alan Macfarlane, contradicting Polanyi, Ôis that one of the major theories of economic anthropology is incorrect, namely the idea that we witness in England between the sixteenth and nineteenth centuries the ÒGreat TransformationÓ from a non-market, peasant society where economics is ÒembeddedÓ in social relations, to a modern market, capitalist, system where economy and society have been split apartÕ (1978: 199).

In MacfarlaneÕs view the split was ancient. EnglandÕs evolution in the direction of a market economy had gone on for centuries, and what Adam Smith was laughed at for inventingÑHomo economicusÑappeared to be little more than a truthful depiction of the world around him.

According to Polanyi, such a man had only just emerged, stripped of his ritual, political and social needs. The implication of the present argument, however, is that it was Adam Smith who was right and Karl Polanyi who was wrong, at least in relation to England. ÔHomo economicusÕ and the market society had been present in England for centuries before Smith wrote (1978: 199).

The main argument of Adam SmithÕs 1776 The Wealth of Nations was straightforward. Specialisation and division of labour were essential to economic success. So was a growing population which obtained millions of new jobs, and so was capital accumulation and the private investment of capital in productive ways.

In a modern economy we all benefit from the work of millions of anonymous people we never meet. Yet instead of being a handicap this uncommunal impersonality is a very good thing. Each contribution, coordinated by market signals alone, adds to the wealth of the whole. As Smith says at the end of his first chapter:

. . . if we examine, I say, all these things, and consider what a variety of labour is employed about each of them, we shall be sensible that without the assistance and cooperation of many thousands, the very meanest person in a civilized country could not be provided, even according to what we very falsely imagine the easy and simple manner in which he is commonly accommodated. Compared, indeed, with the more extravagant luxury of the great, his accommodation must no doubt appear extremely simple and easy; and yet it may be true, perhaps, that the accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages. ([1776] 1997: 117)

England versus Russia

What about Russia? Can its unending misery and backwardness be due merely to bad luck and bad weatherÑor do unmistakable historical factors explain the situation there too? Three dates make an interesting comparison with England. First the year 1215. Second the year 1649. Third the year 1728, when Daniel DefoeÕs paean to EnglandÕs middle classes and their culture of commercial success was written.

In England the year 1215 was the year of Magna Carta, and of the limits this charter placed on royal power. The word ÔconsentÕ now entered the relations between the English king and his subjects, and it is usually seen as part of the nationÕs political history. But Richard Pipes (1999: 127) says that Magna CartaÕs economic consequences were just as importantÑif not more. Fiscal matters were central: the year 1215 decisively marked the end of Ruler Takes All in the British Isles. When King John agreed not to levy taxes without Ôthe consent of the realmÕ this meant that the king was prevented from robbing his subjects of their private wealth and assets whenever some ill-advised military campaign went astray.

In 1297 this agreement was incorporated into the Confirmation of Charters which Ôrestated the principle that the king had no authority to impose nonfeudal levies without a parliamentary grant.Õ The effect was to provide Ôfundamental guarantees of the security of private property in EnglandÕ (Pipes 1999: 127). Kings could no longer freely wage war and pay for it by seizing the wealth of their subjects later. Unless the people consented to a special levy, the king would have to pay for his military adventures himself. Pipes says that England, guided by Magna Carta, represented a classic illustration of how private wealth restrained public authority (1999: 123).

Now for Russia in 1215. This was when Genghis Khan and his Mongols were overrunning the land. They had no interest in occupation; instead the Mongols forced RussiaÕs princes to pay tribute to them, turning them into servile tax-collectors for three hundred years. Just as the princes were wholly at the mercy of their Mongol overlords, the peasants were at the mercy of their Russian ÔownersÕ. Peasants were merely chattels, and consent had nothing whatever to do with their helpless acceptance of aristocratic authority.

But it is the upshot of this system that matters, for its effects lasted right up until 1989ÑRussian Rulers Take All. The prince or king or czar was always regarded as the sovereign in his domain: private property was never secure and was always held conditionally. Civil society could not develop, and institutional pluralism was something the country never knew. The private sphere was entirely dependent on royal favour. Where such favour was lackingÑand it was lacking throughout most of Russian history, and conspicuously under Ivan the Terrible and Peter the GreatÑa private sphere did not exist. This blocked the rise of civil society, and it became impossible for Russia to cross the divide separating traditional societies from the modern world.

The next date is 1649. In this year serfdom was confirmed by law in Russia. Throughout Russian history peasants had neither property nor legal rightsÑand nor for that matter did their masters. All of them together, nobles and gentry, peasants and slave-like serfs, were legally Ôservants of the stateÕ (Pipes 1999: 185). Because state confiscation was always possible, they had no incentive to try new farming methods, or better housing, or improved farm buildings, or do anything else which might have given superior levels of comfort a permanent base. Here was yet another recipe for cultural failure.

Compare the situation in England. The year 1649 saw the merchants, free farmers, and the commercial and professional middle classes in general dramatically asserting their rights against central power and royal privilege. After his exactions became intolerable, a free and independent property-owning citizenry arose in anger to cut off King CharlesÕ head.

Pipes compares the rural situation in western Europe and in Russia as follows: Ôin respect to the farming population, as in respect to landed property, the evolution of Russia proceeded in a direction opposite to that of the West. In the West at the close of the Middle Ages, serfs became freemen; in Russia freemen turned into serfsÕ (1999: 186).

Which brings us to 1728, only a short time after the death of Peter the Great. Peter cut off the BoyarsÕ prodigious beards, and by forcibly educating the aristocracy and making them adopt western dress he superficially civilised the Russian elite. But economic life was never more insecure. Under Peter, Russian land, assets, factories, and all their products, were continually threatened with state seizure. By 1729 the stateÕs property-grabbing had been so insatiable that a special division of government was set up to handle the accumulating estatesÑthe Chancery of ConfiscationsÑÔan office that may well be unique in the annals of government institutionsÕ (Pipes 1999: 188).

In England in 1728 one found the contrasting economic spectacle vividly depicted by Daniel Defoe. A freely enterprising citizenry was building and buying and making and sellingÑand then buying and selling again. Living without fear of confiscations, an independent middle class was flourishing, while more and more people lived in towns, free of both the lords in the countryside and the oppressive authority of king and court. The institutions of government and commerce were pluralistic, not unitary. Here was a culture of success, not failure. The divide between traditional and modern society had been well and truly crossed.

Black markets and white

For hundreds of years the private sector was a barely tolerated semi-legal presence cowering in the shadow of the Russian state. In the absence of established and enforceable private property law and a legal structure securely protecting trade and commerce, that is pretty much the way it remains.

But ordinary Russians stubbornly pursued a better life regardless. Although Peter the Great imposed the death penalty in 1703 for cutting down a single oak tree without permission, people still cut down oaks. In 1932 Stalin imposed the death penalty for private trading in grain, but people still bought and sold grain. In 1961 the death penalty for Ôeconomic crimesÕ was reintroduced under the Soviet regime as an attempt to control the Ôblack marketÕ. But nothing could stop the Ôblack marketÕÑwhich is of course merely what the police call the market in goods and services which spontaneously arises, as a result of absurd policies, when the state makes goods and services legally impossible to obtain.

Nothing was ever seen like RussiaÕs communist economy before, and nothing is likely to be seen like it again. Under the Soviet system an entire Ôcounter-economyÕ came into existence with several namesÑthough na levo, translated as Ôon the sideÕ or Ôunder the tableÕ, was the most common. Before 1989 virtually all retail items had a ÔblackÕ component. There was the price a customer paid to the shop, and then there was the under-the-counter extra price paid to the shop employeeÑthe total being up to twice the advertised price.

State employees spent half their time privately dealing in public property. As numerous Russians told Hedrick Smith in the 1970s: Ô[e]veryone in the retail trade is a thief and you canÕt put them all in jailÕ (1972: 132). By banning every sensible human transaction the state made all its citizens criminals. The effect on public morals leaves it an open question whether Russian life will ever be the same again. The universal distrust produced under Soviet rule was a recipe for cultural and economic failure on a titanic scale.

Countless security police were employed and countless informers worked for the police day and night, but nothing could stop what was going on because most of it was accepted by ordinary Russians. What the formal economy was unable to provide, the counter-economy provided on the side. Despite continual threats, fulminations, prosecutions, and denials by the Communist Party that things were as bad as they seemed, glimpses of the underlying reality did occasionally appear in the official controlled party press: Ô[o]ne venturesome newspaper commentary in Komsomolskaya Pravda in October 1974 dared to imply that the system is at fault for not meeting the basic needs of consumersÕ (Smith 1972: 131 [emphasis added])

Peruvian problems

Although nothing as perverse as the Soviet system has been found anywhere else, we do find almost exactly the same words being used to describe the Peruvian economy more recently. The writer is the novelist Mario Vargas Llosa. ÔIn countries like PeruÕ, he wrote in 1989 in the preface to a book by Hernando de Soto, Ôthe problem is not the black market but the state itself. The informal economy is the peopleÕs spontaneous and creative response to the stateÕs incapacity to satisfy the basic needs of the impoverished massesÕ (in de Soto 1989: xiv [emphasis added]).

A few pages later de Soto himself tells us that when migrants coming from country districts poured into PeruÕs cities they found the barriers of a corrupt legal system raised high against them:

Thus it was, that in order to survive, the migrants became informalsÕ [ÔinformalsÕ being the term used by the author to distinguish the ÔillegalsÕ working in the so-called black market from those in the ÔformalÕ economy]. If they were to live, trade, manufacture, transport, or even consume, the citiesÕ new inhabitants had to do so illegally. Such illegality was not antisocial in intent, like trafficking in drugs, theft, or abduction, but was designed to achieve such essentially legal objectives as building a house, providing a service, or developing a business . . .Ê We can say that informal activities burgeon when the legal system imposes rules which exceed the socially accepted frameworkÑdoes not honor the expectations, choices, and preferences of those whom it does not admit within its framework. . .(de Soto 1989)

In contrast to Russia, PeruÕs laws and formal economy bore a superficial resemblance to those of western Europe, the USA, and other developed countries. But this was misleading. The names of its institutions Ôwere mere facades; Latinate separation of powers, political parties, Treasury Departments and Reserve Banks that mimicked their North American counterparts. Mechanisms such as news media scrutiny and public rule making, encouraging accountability in the United States, barely existed at all. A vast corruption enabled a privileged few to dismember and privatize foreign investmentÕ (Bethell 1998: 196).

Hernando de SotoÕs research took him into LimaÕs shanty towns, and there he found something strange but revealing. There was a district where on the two sides of a river, both occupied by Peruvian Indian migrants who had arrived in the city equally penniless, there were two utterly different communities. As Tom Bethell tells the story, each community covered about three acres and had about 500 people. ÔOn one side were crude huts of mud-brick or cardboard; on the other, brick homes with shops, neat gardens, sidewalks, and merchants living above their businesses. Both were founded by Indians who had come from the same part of Peru (1998: 197). So how was the difference between cardboard and brick to be explained?

From a retired employee in the Housing Ministry de Soto learnt the history. The difference between the two sides of the river was the same as the difference that separated the English farmer and the Russian serfÑsecurity of title to property, a desire to improve whatever property one has, and freedom to act. Both Indian communities had settled on vacant land as squatters. Both wanted secure title. But in Lima there was no easy way to do this. ÔTitling and registration was the preserve of the ruling class . . . Over the decades the ruling class had made access to these registers so expensive that most people did withoutÕ (Bethell 1998: 197).

The two settlements developed differently Ôbecause the leader of the more prosperous one had persevered with LimaÕs officials for six full years until his residents finally received legal titles; across the river, such protection had not been extended. Owners on one side felt secure that the fruits of their labor would be protected; squatters on the other had no such reassuranceÕ (Bethell 1998: 197).

De Soto next simulated the setting up of a small garment factory. This revealed the burden of bureaucratic costs weighing on every legitimate small business. It took ten months to get permission, there were ten demands for bribes, and the cost of the whole procedure was $1,231, which was 32 times the minimum monthly wage in Peru.

In a parallel test conducted in Tampa, Florida, Ôcomplete legal certification of the same business took less than four hours (Bethell 1998: 197). A study of the costs of access to housing showed 83 months were needed to secure permission for a community housing development to proceed, and each member of the association wishing to build would have to pay $2,156. ÔIn other wordsÕ, writes de Soto, Ôsomeone who at the time was earning the monthly minimum living wage would have to pay out his or her entire income for four years and eight monthsÕ (1989: 139). The customary procedures of Peruvian law provided a built-in institutional recipe for economic failure.

African agonies

ÔWhy has East Asia emerged as the model for economic success,Õ writes Keith Richburg, Ôwhile Africa has seen mostly poverty, hunger, and economies propped up by foreign aid? Why are East Asians now expanding their telecommunications capabilities when in most of Africa itÕs still hard to make a phone call? Why are East Asian airlines upgrading their long-haul fleets, while bankrupt African carriers let planes rust on weed-strewn runways because they canÕt afford fuel and repair costs? Why are the leaders of South-east Asia negotiating ways to ease trade barriers and create a free-trade zone, while Africans still levy some of the most prohibitive tariffs on earth, even for interregional trade?Õ (1998: 170).

Richburg claims there was nothing inevitable about Asian success and African failure. In 1956 NkrumahÕs Ghana had a higher GNP than South Korea, and Korea was recovering from a four-year war. Today South Korea is recognized as one of AsiaÕs ÔdragonsÕ, an economic powerhouse expanding into new markets throughout the region and the world. Ghana, meanwhile, has slid backward. Its gross national product today is lower than it was at independence (Richburg 1998: 170-171).

Is there some flaw in African culture?, asks Richburg. The answer being yes indeedÑand not just one but many. At a reportorial level they can be viewed in the pages of his book Out of America: A Black Man Confronts Africa. Based in Kenya, Richburg was the chief correspondent on the continent for the Washington Post from 1991 to 1994 when events in Rwanda, Somalia and Liberia were at their worst.

At a more theoretical level they can be studied in the three chapters about Africa in John P. PowelsonÕs economic history, Centuries of Economic Endeavor. According to Powelson it is the all-powerful state with its all-powerful Big Man which is AfricaÕs main problem. For as long as anyone knows Ôthe state was governor, producer, trader, executive officer, and judge, with no separation of powersÕ (1994: 98). Another case of Ruler Takes All.

The list of African liabilities is long. Tribal rules meant that there was no way to transfer land from less efficient to more efficient uses. No independent labour market developed. ÔSlavery and marriage were employed to move labor from areas of its abundance to those where it would be more productive. Neither is an efficient means of allocating laborÕ (Powelson 1994: 103).

There was no easy way of telling if consumer preferences changed. Traders did not write contracts, and trade was conducted in an atmosphere of general mistrust. Not enough independent groups were able to challenge the authorities or compete with them. This left them inexperienced at compromise. And if you donÕt compromise what do you do? You go to war, and war becomes the regular outcome of disputes.

ÔFundamentally it was endemic war, waged for millennia in all parts of the African continent, that set the norm of the territorial state. War and preparation for war summed up the purpose of the masculine lifeÕ (Bozeman quoted in Powelson 1994: 108). Violence governed both external and internal relations: ÔViolent force was the weapon of choice to gain labor (by enslavement) and capital (cattle). While peaceful transactions may have taken hold in some places after independence in the 1960s, in others the tradition of legitimate violence returnedÕ (Powelson 1994: 108).

If Powelson is correct, then war and violence as routine procedures for settling differences are the deep foundation of the chaos we see today. But to understand the African leaders who emerged after independence back in the 1960s we need to glance at their education too. Schooling had made huge strides in British West Africa by the time independence came in 1960. Literacy had advanced from the near-zero levels of the 1880s to a point where hundreds of men and women were sent to universities overseas. But what did this Ôhigher educationÕ consist of?

Thomas Sowell warns that Ôhuman capital must not be confused with formal education, which is just one facet of it, and still less with the growth of an intelligentsiaÕ (1998: 349). The very opposite may be true. Intellectuals trained in politics and nothing else can be a serious handicap. Much depends on their attitude to the productive classes in societyÑwhich in Ghana meant their attitude toward the tens of thousands of peasant farmers on whom rural production rests. Would orators like Kwame Nkrumah who held peasants and small traders in contempt be the right men to run the new African states?

The militant new leaders were recruited almost entirely from humanistic intellectuals, and intellectuals from a small range of fields. ÔFew nationalist militants were engineers, or economists or professional administrators.Õ Nkrumah made a name for himself as a political activist with a line in incendiary prose. Jomo Kenyatta of Kenya was trained in anthropology. LŽopold Senghor of Senegal was a poet.

A leading characteristic of such people is that they take economic productivity for granted. Confident that the wealth of nations is entirely unproblematic, they assume that governance is just a matter of sharing the cash that comes pouring in. Once colonialism had been overthrown there was sure to be lots of spending money. This was not a recipe for successÑit was evidence of incomprehension and incapacity.

ÔCorruption is the cancer eating at the heart of the African stateÕ, writes Richburg. ÔIt is what sustains AfricaÕs strongmen in power, and the money they pilfer, when spread generously throughout the system, is what allows them to continue to command allegiance long after their last shreds of legitimacy are goneÕ (1998: 173).

This is true. But it is important not to lose sight of an even more important point. Regardless of the problem of corruption, everywhere in sub-Saharan Africa the state is controlled by a powerful, parasitic and extremely violent politico-military Žlite largely indifferent to whatever productive classes the devastated region still retains. Production takes place not with the help of the state, or in the presence of an indifferent state. It takes place in spite of the state. Scarcely the rudiments of civil society exist.

Conclusion

Gellner says we have three choices. First is the tribal world, Ôcousin ridden and ritual riddenÕ, and although free of centralised political tyranny Ônot really free in a sense that would satisfy usÕ. Second is the world created by the arrested pseudo-tribalism of the Nazis and Communists. This involves a Ôcentralization which grinds into the dust all subsidiary social institutions or sub-communities, whether ritually stifling or notÕ.

Third, there is a world which is far removed from both, and which grew up in western Europe and America before spreading around the globe. This Ôexcludes both stifling communalism and centralized authoritarianismÕ (1997: 12). It rejects both militarism and labour camps. It is broadly democratic, and in contrast to numerous national cultures which have failed, it is highly successful. It is the civilisation we have today.

References

Bethell, Tom. 1998, The Noblest Triumph, St MartinÕs Press, New York.

Gellner, Ernest. 1997, Conditions of Liberty: Civil Society and its Rivals, Penguin Books, London.

Macfarlane, Alan. 1978, The Origins of English Individualism: The Family, Property and Social Transition, Basil Blackwell, London.

Pipes, Richard. 1999, Property and Freedom, The Harvill Press, London.

Powelson, John P. 1994, Centuries of Economic Endeavor, The University of Michigan Press, Ann Arbor.

Richburg, Keith. 1998, Out of America: A Black Man Confronts Africa, Harcourt Brace and Company, New York.

Smith, Adam. [1776] 1997, The Wealth of Nations, Penguin Books, London.

Smith, Hedrick. 1972, The Russians, Sphere Books, London.

Soto, Hernando de. 1989,The Other Path: The Invisible Revolution in the Third World, Harpers and Row, New York.

Sowell, Thomas. 1998, Conquests and Cultures, Basic Books, New York.

Author

Formerly Senior Lecturer in Anthropology at the University of Sydney, now retired, Roger Sandall is a writer who lives at Bondi Beach. This is an extract from the forthcoming book The Culture Cult: Designer Tribalism and Other Essays, to be released by Westview in early November 2000.

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