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What is driving economic growth? What is the nature and causes of the wealth of nations? Why some nations moved from poverty to prosperity while others, on the contrary, fell into miserable poverty? These are all perennial questions for scholars. How economic development is interlinked with institutions, culture, religion and history – these issues are discussed by Ian Melkumov, a GURU author, with Jean-Philippe Platteau, Emeritus Professor of Economics at the University of Namur, Belgium, and Shlomo Weber, President and Professor of Economics, New Economic School in Moscow, and Professor of Economics, Southern Methodist University, Dallas, Texas. How culture and economy can move together or get stuck together, how crises are testing the strength of institutions, how populists are using traditional values to grab power, how the Golden Horde rule over Russia affected its development and what are the roots of Russian resentment against the West – these are just a few points of their conversation.
Let's start by looking at econoic development in historical perspective – what conclusions can we draw (if any) in terms of the role of institutions (and organizations) in this process and what is the current state of research and debate on these issues? Quite obviously, the names of Douglass North and Daron Acemoglu come to mind. What is specific about the institutional approach as compared to others?
Shlomo Weber: Before we go into detail, let me make a quick comment. Usually, we talk about the role of institutions in developing economies – how they assist or hinder economic development. But what is important these days is to assess the role of institutions in developed countries, even in established democracies. Institutions are needed not only to help economic development when the countries take off, they are very important even for the mature countries. Obviously, I take an American angle – the role of institutions recently came under a very stringent debate here, so the importance of studying it can hardly be overestimated.
Jean-Philippe Platteau: Let's first look at the study of institutions and institutional economics in historical perspective. When we started thinking about the determinants of long-term economic growth and development after WW2 the focus was on production functions which means capital and labor. Capital included both the physical capital and human capital which means essentially education and health. Of course, it was not enough to explain variations of economic performance between countries. And very soon came the idea that technical progress is no less important – and then we had the Solow model. Its influence persisted for a few decades until it was found lacking. People realized that a kind of residual which could not be explained by variations in capital and labor was imputed to technical progress which became a catch-all. But it was too broad. And that was how the institutional economics started – with the idea that in this catch-all variable there is a role for institutions. The residual should be separated into smaller variables, like the role of institutions and technical progress, and they should account for the residual not explained by variations in capital and labor. Douglass North was one of the pioneers in this direction though he was not the only one. Then the next question was: what do you mean by institutions?
– And what is the difference between institutions and organizations, of course...
JPP: Exactly. All those questions came up and we now see quite a variety of answers. But to put it simply, when economists are talking about institutions, they mean primarily governance related institutions and property rights. A vast array of empirical papers has tried to discuss what is the most important of these two compacts of institutions. Different answers have been provided – some concluded that it was property rights, others, on the contrary, that it was governance, and of course it depends on how you measure it, it depends on the sample of countries you are looking at and many other things.
The second issue that came up was this: institutions are not only formal. They can be informal as well. That is true for both property rights and governance. Social norms that guide behavior – you can consider them as part of governance – are informal. So governance should not be analyzed as a formal institution only – written norms and regulations do not fully account for human behavior and here culture comes into play. And so this whole issue of informal institutions showed that the problem is much more complex than we believed initially. First, because it is much more difficult to measure them than to measure formal institutions. And second, we still have a very incomplete idea about how informal institutions interact with formal institutions. They can be substitutes for, or complementary to each other.
– Or contradictory...
JPP: Yes, but in that case you would expect that one will eventually substitute for the other. In fact, this whole domain of thinking about institutions is still a very nascent field in economics. We still have an incomplete view about this. And the same applies to property rights.
There has been this whole issue that you should establish property rights. The problem is that when you try to establish formal property rights there are already existing informal rights, so you are trying to supersede existing informal practices. The question then arises as to whether this is the right approach. You need at least some kind of cost and benefit analysis to answer that question and you also need to determine whether the substitution of formal for informal property rights is politically feasible. In other words, costs must include the risk of political instability and disorder. Those kinds of issues cropped up over the last 15-20 years and the role of culture is part of them since culture is essentially an informal institution. Thus, whether formal institutions, such as laws and official rules, can change informal practices, such as social norms or cultural habits, is a crucial question on the agenda. And it is presently quite open.
– And we can look at this issue the other way round as well: it can be stated that formal institutions, like laws, reflect more or less what is considered as just in this particular society at this particular moment in time, otherwise these laws could not exist for a long time.
JPP: This is, indeed, a possible approach, actually defended by some economists (Tim Jackson and others). But the other view, of which I have myself been a proponent, also exists: laws may be aimed at changing informal rules like feudal practices and forms of discrimination. Obviously, we need the two approaches to deal with different sorts of situations.
– True, it depends, of course, on many things, including whether the society is democratic or not. And of course this brings in the question of propaganda as well.
- But to come back to Shlomo's point about developed countries – when Donald Trump was elected president, I ventured to guess that Trump is trying to fight with American institutions but American institutions will prove stronger than one president. And the January 6th attempt to storm the Capitol just proved it. Would you agree that in this case institutions – not only the political but also the cultural ones, like patterns of political behavior – demonstrated that they are strong enough to preserve political culture and political system, no matter what a particular president – or former president in that case – may wish? Which would not be the case in less developed countries with weaker political institutions?
SW: I do hope that American institutions will survive although some doubts emerge from time to time. But there are two important things to mention. One is an outside attack on institutions, of the kind that we saw on January 6, and it was scary how close it was to succeed. But you can also attack institutions from within. Just take a look at the US Supreme Court which is now dominated by a conservative majority. You know that judges of the Supreme Court are appointed by the sitting US president (with the approval of the US Senate) at the moment when a vacancy is open. Trump has appointed two judges and now the Supreme Court is a very radical institution that goes against the will of the majority of the voters and of the society. Thus, the attack from the inside can be even more devastating for an institution than an attack from the outside.
– So institutions can be very fragile...
JPP : What you are touching upon here is the question of stability of institutions. And I would like to add something to what Shlomo has said. Institutions can have imperfections and you don't see these imperfections in normal times. But these imperfections become much more visible in crisis times. And suddenly you see that the institutions that you thought were strong are not that strong. Crises put institutions to a test. And then you discover that some institutions were not well-conceived. Taking Shlomo's example of the Supreme Court – it is obvious that the rule of appointment of its judges is not a very good rule. In normal times things resolve themselves – but not so in crisis times. And then the rules can play havoc with the institutions. Same can be said about India: its Supreme Court has become an arm of the executive power. And it was the best democratic, countervailing institution in the country – until Modi rose to power. It is the same kind of problem as in the US – the Indian Supreme Court has taken side with the current executive power. And anyone wishing to exercise some basic fundamental freedoms is denied these rights and can be arrested, and denied rights by the Supreme Court.
Another important point I would like to make: if people who are supposed to be a model of compliance with institutions violate them – then you have a problem. This is the case of the UK. Ethical norms of political behavior in the UK have just collapsed in 10 years time. Those political persons who were supposed to abide by them in fact trampled on them with devastating consequences.
– Do you mean Boris Johnson or someone else as well?
JPP: It is not only Boris Johnson but also Nigel Farage and other politicians who pushed for the drift of the Conservative party toward populism and took institutions hostage for their private political ambitions. Just think here of Liz Truss who used her position as Minister of Foreign Office to divert its agenda toward politically sensitive issues (the situaton in Ukraine and the Irish problem) that she used as springboards for her rise to prime minister’s position. There are quite a number of political figures in the populist movement. Populism has no respect for institutions, for a very simple reason. The basic message of populism is to say – we, the populist leaders, represent the people who are sovereign. And the sovereign people on whose behalf they allegedly make their statements, supersede the institutions. Because, the populist leaders say, the institutions were conceived by the elite, they are biased, unjust, unfair and so forth. In this way they erect themselves as the sovereign will of the people. This is what in essence has happened in the US but the same kind of things happened in the UK as well. In this situation an agreement is no longer an agreement. Just look at what happened between the UK and the European Union, particularly with the agreement on the Sea of Ireland. The Foreign Office just said – we don't want this agreement any more. It would have been unthinkable 10 or 20 years ago. It's a completely new situation. And it is profoundly disturbing.
– This, of course, brings to mind Germany in 1930s: Hitler was a democratically elected chancellor of Germany, although he subsequently used force and manipulation to concentrate power in his hands. There was no coup, no seizure of power. The people handed him the power and he did just exactly this: he said that the power of the people is supreme over the old corrupt institutions and ruined them. The natural question is: why at certain moments in time people behave not in a normal, civilized way? Why large numbers of people start to behave as mentally ill during certain periods of history? Why they embrace the idea of strongman and strong hand and all that goes with it? Is there any economic or political explanation for these waves of mass madness?
JPP: You will have to go back to my distinction between ordinary times and crisis times. In crisis times the normal frame of reference of ordinary people is profoundly disturbed. And any populist charismatic leader who can play upon the anxiety of the people and the loss of landmarks in the minds of the people can really demolish the institutional foundations of the society. In ordinary times this would be impossible.
SW: Speaking about crises and normal times… The time of normalcy (so called Kondratieff's cycles) is now shrinking and we are going from crisis to crisis. This may be an explanation of the phenomenon that may be best seen in the US and to some extent in Europe too – that is the unbelievable divide in the society. The US is now divided into two countries. It's not like in Belgium where two parts speak two different languages. What you have here are blue states and red states that do not even communicate with each other. The convergence that existed during the last century does not exist anymore. I live in Texas and see it with my own eyes. To some extent this is also true in Europe where the French elections demonstrated it very clearly. But it is not limited to France, of course. Populism utilizes this divide and polarization within the society, it plays on the fears of one group of population towards the other. It may be a very prolonged crisis and populists may have learned to play this game better than anybody else.
JPP: I agree that the crisis that Shlomo is referring to is rooted in the recent evolution in economic system that nobody anticipated, especially economists. We believed that globalization is a good thing, that freedom of movement of people and capital means more prosperity and thus people would accept it. In a certain sense we have been wrong. In particular, we have overlooked the need to compensate those people who have lost due to globalization. The winners were mostly highly educated people who could travel and get good work and benefited, the losers were mostly the unskilled people who had to compete with huge masses of low paid workforce of Asia and Africa. What can you do about that? You can say – they have to be better educated and to get better skills. But when it comes to poor uneducated households you cannot get them education through some magic trick. It is a very difficult challenge. And we have not picked up that challenge. Hence a divide and a situation of crisis: people decide that the system does not work or works in favor of the rich. Populist leaders emerge (if they are available) to exploit this divide and criticize existing institutions as unfair – and the circle is closed.
– This reminds me of a very old article by a British author – I think it was George Ray – in the middle of the 1980s when Margaret Thatcher was the prime minister and Thatcherism was mainstream economic thinking in the UK. He was writing about long-term economic changes and noted that “Mrs Thatcher owes a debt to non-high achievers”. That was a nice phrase that fits the line of your reasoning – there should be redistribution. And, by the way, he was also asking an interesting question: are Christian values compatible with high economic efficiency?
This seems to logically bring us to our next, related theme: cultural patterns, ethnicity and work ethics – can they explain the relative successes and/or failures of economic development in various countries? Many years ago, in mid-1980s, Jeffrey Sachs suggested a hypothesis that the principal explanation of the “Four Asian Tigers” (Hong Kong, Singapore, South Korea, and Taiwan) economic success lies in the fact that all of them share the Confucian legacy and the associated work ethics. Can this be proven (or was it)? Does it have any implications for economic development research? Social norms and fairness considerations – are they more or less similar across cultures or culture-specific? And, staying on the same page, the ideas of Lawrence Harrison and cultural capital (“Jews, Confucians and Protestants. Cultural Capital and the End of Multiculturalism”) - a source of much controversy and debate – also states that culture explains a lot of things when it comes to economic development. In particular, he states that Judaic, Protestant and Confucian cultures are the major world cultures that are conducive to economic development, as opposed to other cultures.
JPP: It's an important discussion and it is in many ways linked to what we were discussing before. Many populist leaders, as Shlomo has noted, exploit the divide in the society. They refer to values, hence to culture. And thus the whole question boils down to this: is it a problem of culture and identity or is it an economic problem, a problem of economic inequality? In many instances the reference to culture is just a veil behind which the real stake is access to, and staying in power. References can be very effective when one tries to divide the society. But what do they do afterwards? They don't bring the new consensus. Instead they try to maintain the divide and behave like autocrats which is not a satisfactory solution. Take the Hungarian leader Victor Orban: his whole discourse is about values! Listen to him: he represents Christianity, he is the carrier of Christian values that have been forgotten, etc. But if you look at what he is doing – he is embezzling funds for the profit of his friends and relatives. So his reference to values is no more than a slogan to mobilize people to his side! And what about Erdogan in Turkey? He has built an amazing palace for himself! You build more inequality and all the big posts in the government and elsewhere go to your relatives, friends and loyalists – is that the model society that you want to build? In a nutshell, much talk about values can be a delusional device to cheat the people, a propaganda instrument.
On the other hand, there are some real issues at stake here. There are elites which are educated, have widely traveled and have acquired an outlook different from the people who are anchored in rural areas or small townships. There is indeed a huge cultural difference between the two groups that cannot be denied. As Shlomo has noted, the US is a very good example of that, but you will find the same divide, say, between London and many places in England.
– Same thing in America – most people, say, in upstate New York will refer to the Big Apple – the New York City – as a big devil or something similar and will visit it only if they really need to.
JPP: And Russia fits that pattern too – people in St. Petersburg or Moscow are very different from people living somewhere in Siberia or in the countryside.
– Absolutely! There is a half-joke, half-truth: just one hundred kilometers out of Moscow – and you are in Russia!
SW: I would object to discussing culture as a religious phenomenon only. There are so many other factors as well – there is not only ethnic inequality but also economic inequality, there are historical patterns and all of these aspects have an impact on development. So Jeffrey Sachs's hypothesis can be criticized on so many fronts... But I would like to add an additional dimension to our discussion, that is entrepreneurship, which was a very important part of Schumpeter's theory of economic development. It can be very interesting to analyze patterns of entrepreneurship in Europe, Asia and in Russia. One of the challenges of Russian economic development is lack of entrepreneurship or, rather, shortage of entrepreneurs. There are quite a number of reasons, some of them historical – earlier you mentioned the 240 years of the Mongolian rule over Rus resulting in subservience of the Russian princes translated to society at large, sometimes called “the Golden Horde gene”. That explains the numerous failures to establish the rule of law, property rights and market order in the country. But we should not forget that entrepreneurship is largely a cultural phenomenon, involving historical tradition, geography, persistence of historical beliefs and many other things. Even the word entrepreneur still does not have a positive connotation in the Russian language. And language can also play a role, as argued in a number of papers: languages with strong FTR – future time reference – are associated with lower level of economic development and vice versa. To summarize, there are so many factors that impact economic development – to single out one factor is impossible.
JPP: I think that the key issue here is the causality problem – what is the cause and what is the effect. And it may never be resolved. More and more economists who are studying cultural phenomena don't have a frame of causality in mind. It's like saying – because you have this or that culture, you have low economic performance. But culture can evolve, it can adapt to economic situation. You can talk about co-evolution of culture and economy – they tend to move together or get stuck together. This can be true for entrepreneurship, as well as for religion. There are many examples of how religious interpretations have changed depending on the economic environment. For example, in Japan, when modernization started, some practices in Buddhism and Shintoism have changed to accommodate the economic changes. Same things happened in Christianity with Protestantism. Russian Orthodox church did not experience similar adaptations, and that is a very interesting question. Generally, many will agree that there is nothing in the tenets of a religion that explains economic performance. Take Islam – if you say that the culture of Islam is antagonistic to democracy, development and technological innovation then you have to explain why Islam was at the top of the world in the 11th century. And the same can be said about other religions as well. You have to recognize that it is not the matter of the substance of culture, because it can adapt and change. Getting back to Confucianism and East Asian development – I don't believe that Confucian culture is responsible for anything. The real question is – what does the Confucian doctrine tell us about how you behave in your society in very concrete situations? The real struggle in China was not between the Confucianism and some other religions, it was about the key question: to whom you must be loyal, to the central state or to the family? Confucius would say – your first loyalty is to your family and you have a right to disobey your emperor if by doing that you keep loyalty to your family. Family first, the state second. The anti-Confucian movement, most of all the Maoist movement, proclaimed that the central state is first and your greatest loyalty must be to the state. In Russia there was no such dichotomy because loyalty to the central state was also preached by the Orthodox church. So the real question lies in the practical consequences of what an ideology proclaims, and how ideological beliefs affect your attitude as a citizen.
SW: I certainly support what Jean-Philippe has said. Even some unsuccessful examples in terms of economic development, like Arab countries or Russia, had their periods of prosperity when they were doing very well. Russia was very successful economically in the beginning of the 20th century, until its tragic decision to enter World War 1. There were also periods of very successful Arab entrepreneurship too. But political constraints often did not allow these successes to develop into something more sustainable. Thus, I don't think that any religion prohibits economic development. To draw a link between religion and economic development looks too simplistic to me.
– Before we leave the current theme let me ask that perennial question about the rule of law and property rights: is there a well-established, proven link between the firm rule of law and property rights on the one hand and successful entrepreneurship – and more successful economic development as a result - on the other hand? It seems self-evident that when people are not sure that the results of their efforts will not be expropriated in some way, be it by the ruler or the invader, the entrepreneurship would be in a very poor state. Is it too simplistic to assume that some norms are beneficial for economic development and some norms are not?
JPP: I believe that the statement that you have made is indeed self-evident. If there are no incentives to take reasonable entrepreneurial risks, then of course there would be no development. Having said that, we must ask the next question: why a state allows a situation where property rights are uncertain or why does it not correct this situation? I can understand it in the case of an external aggression – there are numerous historical examples of economic chaos due to external aggression. And, once peace and order were established, trade and economic development followed. But there are many situations when there is no external aggression but still there are uncertain property rights and the state does not try to remedy the situation. It can be because of crony capitalism when those who possess state power want to use the uncertainty to expropriate the wealth of those who get rich. There is a number of countries where the political elite is best described as a mafia. Syria is ruled by a mafia, there is no other way I can describe it. But the question remains: why rulers are not thinking of the long-term consequences of what they do? Is it because of their short-term horizon? Or is it general decay? That could be an explanation an economist could give some time ago. Yet, there is another explanation. We now realize that in many instances our reasoning as economists has ignored a critical point: that political considerations can interfere with economic considerations. If I am a ruler who wants to stay in power I may take measures or follow policies that are bad for development if it helps me to stay in power. One of the key explanations for the stagnation of the Islamic world is that Islam has come to be a legitimizing device that is critical for autocrats to stay in power. They prefer to rely on religious movements even at the cost of not undertaking reforms that would bring more development because they would antagonize religious leaders who provide them with legitimacy. They accept the situation as a trade-off between political stability, seen from their own standpoint, and long-run economic development. And of course the leaders will sell that to their people not by saying “I do that to stay in power”, they would say “We need political stability”. As long as people accept that, the situation would not change and economic development would be sacrificed. This is what Acemoglu and Robinson called a political approach to economic backwardness.
– Wouldn't it be true that some cultures and institutions would support situations when the ruler can grab the power from the people and some cultures and institutions that would oppose such a move?
JPP: Institutions or political movements?
– Institutions in the sense that there are societies that would accept the power grab – the ruler has decided so, there is nothing we can do. Or societies that would say – no, we are not going to tolerate it.
JPP: You are obviously right, and here we come to what is known as path dependence. History and particularly political culture history plays an important role. In some societies, people are not citizens in the sense that they do not believe that they can influence politics as it is played out at the highest level. They are politically passive and tend to view the state as an overweening agency which is acceptable and should be left free to act on its own will, yet only as long as it does not interfere too much with their day-to-day existence. Empires or countries with a recent imperial past and with a continuous imperial history tend to fit into this model of politics. If you have no history of struggle and, importantly, successful struggle, then you are bound to say – what can we do.
SW: This brings us closer to Russia again, particularly in the context of the Golden Horde domination for some 240 years and how it impacted the DNA of Russia and some other places as well. I don't think anything can be strictly proved here. Why Russia went the path it went in terms of political development will always be subject to various interpretations. I think the country tried to find its way in the world arena and its search for a specific Eurasian way continues up to today, it's a very long and sometimes painful process. It had a long and complex history of relations with the West and the West bears some responsibility for not finding the way to accept Russia. A striking example was 30 years ago when after the collapse of communism, the expectations in Russia were very high. It was one of the windows of opportunity to accept Russia as a part of the international community. It did not happen and sociological studies in Russia show that now it is the elites that hold the most anti-Western views in the whole of the Russian society because these high expectations were dashed 30 years ago. This disappointment, Western unwillingness and lack of leadership led to tragic events today that are to some extent the direct result of what happened then. Overall, the search for identity and the proper mode of economic development in Russia has been a long struggle. Having been detached from the world for considerable periods of time did not help either. And when it seemed that the way was found, like in the beginning of the 20th century when Russia was growing faster than any other country in the world, something stopped it and Russia did not become an economic superpower as some hoped and some feared. This search for identity and proper economic and political links with the West will continue. Now it does not look good, of course, but we are still hopeful. Hope dies last, as you know.
JPP: Speaking of the importance of the Mongolian yoke and its aftermath for Russian history, there are now numerous studies that put the traditional view of that aspect under heavy fire. The way it was portrayed before was rather simplistic: an external oppressor imposing upon Russian society another, alien mode of behavior that would have lingering consequences for centuries. Modern studies show something quite different – that Russian society interacted with the Mongolian oppressors in a way that satisfied some private interest of certain leaders and princes of Russia. And Russian princes played an important role of their own in this interaction and were far from just being Mongolian puppets. This certainly does not fit a simplistic picture of an external tyrant who happens to be Mongolian. It suggests a much more complicated picture.
– I certainly agree. This nicely brings us to the final part of our conversation: what moves the cultural patterns, are they immovable or changeable over time? And how much time it takes on average? Is there any research on the time span required to move cultural patterns in a society from a steady underdeveloped state to a rapidly developing one? One immediate example would of course be Japan after the Meiji revolution but is it an isolated case? How much do we know about the transition process in terms of time patterns?
JPP: A reference model for an economist regarding this issue is a coordination game. It goes like this: I do what the others do (and expect it from me) because I am convinced that the present state will continue indefinitely and other people will behave in the same manner, so I better behave like them, otherwise my deviation from expected behavior will be more costly for me than compliance. This pattern can last for a very long time because everybody believes that everybody will continue to behave in the same way.
– Sticking to tradition – that would be the name of the game.
JPP: In a sense you are right. That is the persistence of social norms that are inimical to development. It is very much in the line of George Akerloff's work regarding cast division in India. But some micro-research that is now available points in a different direction. It shows that when there are changes in the economic, technological or demographic environment people tend to change their behavior and social rules can evolve. For instance, in northern India, in Rajasthan in many villages men could only marry women from their own village, so exogamy was prevented for a long time. But at some point, for various reasons, the number of men came to significantly exceed the number of women. So the panchayat, the local municipalities changed the rule which led to more and more men taking wives from other communities, because otherwise they would have no family, which was worse than breaking the homogamy rule. Another example – footbinding practice in China. Tying small girls' feet at a very early age to prevent their mobility was practiced in China for over 1000 years. It was a very cruel and oppressive practice, much like female genital mutilation in Africa and the Middle East, which were all intended to constrain female mobility. But footbinding, having existed in China for 1000 years, suddenly disappeared in the 20th century, between the two world wars. There have been ample discussions about why it happened: was it the emergence of a strong feminist movement or something else that led to its demise? Now there is an emerging consensus on the basis of new empirical studies that the basic engine of change has been the rise of the textile industries in the areas where it was practiced. It provided employment opportunities for women – and thus income opportunities for their families. In order to be employed by the new industries women needed to move out of their houses – and the norms of footbinding had to give way. New income opportunities turned out to be more important for the people than sticking to the old norms.
– So there was a purely economic reason for ending this old norm.
JPP: Exactly. In terms of game theory, once you change the payoffs, the equilibrium (or the equilibria) are likely to change. Thus it is much better for a state to try to change the economic environment than to directly confront the norms. Because if you confront the norms people react. They say – you are attacking our culture, our identity, our ancestors always behaved like that. Then, the state is posited against the people. Which is what happened in Kemalist Turkey under Ataturk – people in the Anatolian countryside felt dominated and contemptuously treated by the elite people living in Ankara and Istanbul. It is much better to act more indirectly by bringing economic opportunities to those areas and let norms gradually change, driven by the people themselves as their culture evolves. To say that culture does not change is absurd, and you have to act on a proper level to induce gradual change initiated by the people themselves.
SW: To continue what Jean-Philippe is saying, one of the main devices is education. Education and mobility are the two things that are needed to open up peoples' eyes. And I am not talking about education simply as a means to grow technological capacity, it is not about increasing the number of engineers. You need to educate people in social sciences, about the way you live in the society, about how the country is run. It requires investment. Some countries invested heavily in education and became more successful than those who did not. But you also need to allow people to see the world, to see the best practices elsewhere. China did it for many years, although at much slower pace now. I remember some years when about 90% of PhD students in economic programs were Chinese, now it is much less, of course. Kazakhstan has run quite successful similar programs when Kazakh students spent some time in universities abroad and then came back. Opening the peoples' eyes is essential. So both geographic and social mobility is important, and they often go side by side. Give people a chance to go up the social ladder – and then amazing things can happen.
– How many generations do you think it may take to change some fundamental norms? Is there any historical evidence?
JPP: Sometimes it can go very quickly. One piece of evidence that I like is a Norwegian development research project somewhere in Africa, where the marriage age for girls was very low. The Norwegians set up two educational programs for schoolgirls. In one program girls were educated along the lines of women’s emancipation – how important it is for women to have more autonomy, to live their own lives, to have gender equality and stuff like that. The second program was teaching schoolgirls how to start their own business after they complete school. Then the researchers watched the participants in these two programs for several years, with special attention to what they did when they reached the age of marriage. The results were very clear: those girls that were taught business got married much later than the girls in the emancipation program, because many of them started their businesses and did not want to start a family life until their business was on a solid footing. That proves my point: when the set of economic opportunities is enlarged, values can change very quickly.
– Very impressive! So you mean that norms can change within one generation?
JPP: Sometimes it can happen within 10 years. One should not overgeneralize or simplify, of course, but yes, it is possible. In the examples that I mentioned about footbinding in China – the change occurred in a decade or two. After 1000 years of stability or apparent cultural immutability!
