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News & ArtsTuesday, December 20, 2011
Economy Biggness and Institutional Memory
Posted by Charles Mudede on Tue, Dec 20, 2011 at 8:19 AM
Let's enter the last pages of a short essay, Hamlet without the Prince of Denmark: How development has disappeared from today’s ‘development’ discourse, by the economist Ha-Joon Chang...
Even if the total number and the capabilities of the individuals involved are the same,Memories that are scattered across a wide area of space or cyberspace have limited social benefits. It's only when memories are concentrated and systematized (a node of memory vertically and horizontally linked to other nodes) that things can really happen—passenger jets can be manufactured, dams be built, and minerals can be processed. The rich countries did not became rich because of entrepreneurial spirit but by governments institutionalizing collected, concentrated, and systematized memories. There are no individuals in this process; it's wholly social. So, when the distribution of the benefits of institutionalized memories is considerable, that is nothing but socialism; when the benefits are in the hands of a few—meaning, when the socially produced wealth is privatized—this is capitalism.
more and better ideas will be produced by individuals working together in a productive enterprise through cross-fertilization of ideas than isolated individuals running their own oneman operations. Moreover, because much of the knowledge in productive enterprises is acquired in a ‘collective’ manner in the sense that they are created in the context of a complex division of labour (rather than through the activities of isolated individuals) and deposited in the form of organizational routines and institutional memories (rather than in individuals), when the individuals are organized into productive enterprises, productivity growth stops being dependent on individuals and therefore acquires a self-sustaining dynamic that individual entrepreneurship cannot produce.To put it more graphically, 1,000 extra street food stalls or 1,000 one-man TV repair shops are not going to enhance national productive capabilities in the same way that one modern supermarket or one electronics manufacturer employing 600 workers and getting supplied by 20 small enterprises that employ 20 people each on average. Even if those 1,000 owners of the food stalls or TV repair shops all have PhDs in food technology or electronics and even if most of the 1,000 employees working in (large and small) modern enterprises
have only primary education, the former are still unlikely to enhance the country’s productive capabilities as much as the latter can.Thus seen, the emphasis on individual capabilities and entrepreneurial energy that dominates today’s mainstream development discourse is largely misplaced. To put my argument above somewhat differently, what really distinguish the US or Germany, on the one hand, and the Philippines or Nigeria, on the other hand, are their Boeings and Volkswagens, and not their economists or medical doctors (which the latter countries have in quite large quantities).
1
Good Morning Charles,
I take issue with Chang that the "Philippines or Nigeria" have large quantities of "economists and doctors". I'm very dubious of that. And, even if there were, many if not most of those same professionals would prefer to practice in the USA or Germany. Capitalism draws for better or for worse.
Many years ago I was visiting a friend in the W. African country of Niger. I shared a ride to a restaurant in the capital, Niamey with an American ex-pat physician who was teaching at that country's only medical college. He lamented that many of his students were heading to France, Canada or even the USA to study and eventually work. A great brain and talent drain was afficting this impoverished country. My friend remarked that's really bad. The teacher responded with "Can you blame them?"
I understand that Chang and you perhaps are more communitarian (vs. individual) oriented and that concurs with socialism. Fine. But, socialism has great flaws too. North Korea isn't any better because of the late Kim Jong-Il. In fact, I believe it is far worse off.
Put simply, people don't flock to North Korea or the Philippines or Nigeria. They do to the USA and Germany.
I take issue with Chang that the "Philippines or Nigeria" have large quantities of "economists and doctors". I'm very dubious of that. And, even if there were, many if not most of those same professionals would prefer to practice in the USA or Germany. Capitalism draws for better or for worse.
Many years ago I was visiting a friend in the W. African country of Niger. I shared a ride to a restaurant in the capital, Niamey with an American ex-pat physician who was teaching at that country's only medical college. He lamented that many of his students were heading to France, Canada or even the USA to study and eventually work. A great brain and talent drain was afficting this impoverished country. My friend remarked that's really bad. The teacher responded with "Can you blame them?"
I understand that Chang and you perhaps are more communitarian (vs. individual) oriented and that concurs with socialism. Fine. But, socialism has great flaws too. North Korea isn't any better because of the late Kim Jong-Il. In fact, I believe it is far worse off.
Put simply, people don't flock to North Korea or the Philippines or Nigeria. They do to the USA and Germany.
2
Here's another thing you can apply your love of "biggness" to: the brush! If you paint everything with a big enough brush you can cover over all the detail and make it look like it all suits whatever crackpot theory you've decided to embrace.
3
@1,
I don't know about economists and doctors specifically, but many developing countries do indeed have many very well-educated citizens. Those countries heavily invested in higher education, but the problem is they still lack jobs, which is why you'll see people with graduate degrees selling cigarettes on the side of the road in Mozambique and why exceptional students flee to the U.S. and Europe.
Chang is still full of shit though. Many African nations *did* invest in large-scale production shortly after independence, but you can't start an airline or a car company from scratch when no one in your country has experience running a large company, let alone one in a major industry.
He's also conveniently ignoring the myriad other obstacles to business in developing nations, namely corruption, cronyism, and rampant nepotism.
I don't know about economists and doctors specifically, but many developing countries do indeed have many very well-educated citizens. Those countries heavily invested in higher education, but the problem is they still lack jobs, which is why you'll see people with graduate degrees selling cigarettes on the side of the road in Mozambique and why exceptional students flee to the U.S. and Europe.
Chang is still full of shit though. Many African nations *did* invest in large-scale production shortly after independence, but you can't start an airline or a car company from scratch when no one in your country has experience running a large company, let alone one in a major industry.
He's also conveniently ignoring the myriad other obstacles to business in developing nations, namely corruption, cronyism, and rampant nepotism.
4
@3 Keshmeshi,
You have a point regarding "very well-educated citizens" reduced to "selling cigarettes" because of lack of job opportunities. I did encounter that first hand while on the African continent and elsewhere. My only quibble with Chang is with the word "many" that's all. I'm just not so sure it is.
You are accurate regarding your last two paragraphs. Highly educated and motivated citizens can't sustain business because of those obstacles you mentioned. It is disheartening.
However, I have read that Africa IS improving albeit at a slooow slog (pardon the pun). One day Robert Mugabe and others will no longer be around. When he is perhaps, symbolically and literally Zimbabwe and the rest of that continent (?) will be released from the shackles of oppression by autocrat(s).
You have a point regarding "very well-educated citizens" reduced to "selling cigarettes" because of lack of job opportunities. I did encounter that first hand while on the African continent and elsewhere. My only quibble with Chang is with the word "many" that's all. I'm just not so sure it is.
You are accurate regarding your last two paragraphs. Highly educated and motivated citizens can't sustain business because of those obstacles you mentioned. It is disheartening.
However, I have read that Africa IS improving albeit at a slooow slog (pardon the pun). One day Robert Mugabe and others will no longer be around. When he is perhaps, symbolically and literally Zimbabwe and the rest of that continent (?) will be released from the shackles of oppression by autocrat(s).
5
@4,
I definitely agree that many African countries are improving, and I think it stands to reason that it would take a half a century to work through the legacy of colonialism, outdated precolonial customs/practices, ethnic conflicts, and the general shackles of crushing poverty. Since Zimbabwe achieved independence relatively late, maybe it'll take another 20 years for that country to catch up.
I definitely agree that many African countries are improving, and I think it stands to reason that it would take a half a century to work through the legacy of colonialism, outdated precolonial customs/practices, ethnic conflicts, and the general shackles of crushing poverty. Since Zimbabwe achieved independence relatively late, maybe it'll take another 20 years for that country to catch up.
6
Interesting. This is fundamental to the wealth we enjoy but rarely identified as being so.
Its physical resources notwithstanding, a country only gets the largest enterprises its political and cultural homogeneity allow. This cultural homogeneousness factor - how much a nation is tied together by its common beliefs, its shared religious and national narratives - seems to explain much about national inequalities. Simply stated, shared cultural traits that improve citizens' capacity to communicate and cooperate with and to trust one other make large enterprises, be they public or private, feasible. With larger enterprises, comes greater wealth. Fine tuning wealth distribution enhances but is not necessary for the synergies, as long as people accept the the order arrived at.
In Africa many countries were the arbitrary creations of the colonial powers, the control of which then passed over to one or another of the previously established and more or less autonomous ethnic-cultural groups who happened to find themselves thrown together inside the newly declared nation-states. People with little if any history of common purpose were expected to work together as if they were one people. The result is the significant economic under performance seen today in the region.
Its physical resources notwithstanding, a country only gets the largest enterprises its political and cultural homogeneity allow. This cultural homogeneousness factor - how much a nation is tied together by its common beliefs, its shared religious and national narratives - seems to explain much about national inequalities. Simply stated, shared cultural traits that improve citizens' capacity to communicate and cooperate with and to trust one other make large enterprises, be they public or private, feasible. With larger enterprises, comes greater wealth. Fine tuning wealth distribution enhances but is not necessary for the synergies, as long as people accept the the order arrived at.
In Africa many countries were the arbitrary creations of the colonial powers, the control of which then passed over to one or another of the previously established and more or less autonomous ethnic-cultural groups who happened to find themselves thrown together inside the newly declared nation-states. People with little if any history of common purpose were expected to work together as if they were one people. The result is the significant economic under performance seen today in the region.
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