Streetwise Professor

January 3, 2011

Doing the Same Thing Repeatedly, and Expecting Different Results

Filed under: Economics,History,Politics,Russia — The Professor @ 7:59 pm

My post on the Khodorkovsky verdict elicited a very nice comment from Deirdre McCloskey, whose “Bourgeois Dignity” hypothesis I had applied to Russia and its prospects for change.  The comment was–is–greatly appreciated, and in responding, another connection came to mind that deserves mention in a separate post.

McCloskey argues that the revolution in thought and attitude that laid the foundation for the miracle of modern economic growth began with the Dutch in the 17th century.  She notes that the “revaluation” of commercial and entrepreneurial activity began in the United Provinces, and that this elevation in the social status of merchants and entrepreneurs led to a flowering of technological and organizational innovations that was the real source of the explosion in incomes that occurred first in the West, and then worldwide.  Her arrow of causation is: beliefs/values/rhetoric=>innovation.  The former is a necessary condition for the latter.

In thinking about this in the context of Russia, what came to mind was that Peter I traveled (incognito) to Holland early in his reign and was astounded by the technology.  He attempted to bring as much of it back to Russia–a nation he considered backwards–as he could, in the hopes of wrenching the country into modernity.

But if McCloskey is right, Peter saw the results of a deeper underlying cause, but missed that cause altogether.  He saw the material technology, but missed entirely the social and intellectual and rhetorical and spiritual revolution that spawned it.  What was innovative about Holland was not its ships or its manufactures.  Instead, what was innovative–revolutionary–about Holland was its beliefs and bourgeois ideology.  Those created the conditions in which innovation flourished.

But Peter completely missed that.  He saw the superficial but missed the essential, and tried to make Russia modern using methods that were inimical to the Bourgeois Virtues (as McCloskey calls them).  Bringing Dutch technology to Russia, but deepening and intensifying Russian autocratic, anti-bourgeois institutions and values did not result in a self-sustaining modernization as was experienced in Holland, and later elsewhere in Europe.  That is consistent with McCloskey’s hypothesis: in her story, it is the beliefs and rhetoric that give free rein to human creativity that generate the innovation.  By failing to understand that, Peter failed to make Russia truly modern, and a center of self-sustaining innovation.

This is not a matter merely of historical curiosity.  For Peter’s attempt to achieve technological modernization while maintaining patrimonial institutions has been repeated throughout Russian history.  Indeed, yet another attempt is in progress today, with Skolkovo as the exemplar.  Elements in the Russian state want technological modernization, but don’t want social and political and intellectual freedoms (which they identify with “chaos”) that are the source of technological progress.  Again, McCloskey’s hypothesis would imply that this is a fool’s errand, and will turn out badly, as it has repeatedly throughout Russian history.  Which brings to mind Einstein’s definition of insanity which is the title to this post.

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10 Comments »

  1. They truly think they can pull a China.

    Comment by LL — January 3, 2011 @ 8:05 pm

  2. No, it’s worse than that. They think they’re better than China.

    Comment by So? — January 3, 2011 @ 10:12 pm

  3. Is there anything better than China? Should every other nation just copy China’s communism?
    I remeber Professor have written about China’s success already.

    Comment by a.russian — January 4, 2011 @ 6:25 am

  4. I admire the Chinese state. It’s a bit too paranoid, authoritarian, and ecologically-insensitive for my liking, but it gets most things right.

    Comment by Sublime Oblivion — January 4, 2011 @ 6:36 am

  5. If anyone has any ideas how to lift a billion people out of poverty, I’d like to hear them. As their neighbours across the mountains have amply demonstrated, democracy isn’t of much use to illiterate paupers. Maslow’s hierarchy of needs and all that…

    Comment by So? — January 4, 2011 @ 7:28 am

  6. @So?-

    So far the model I have seen for lifting a billion people relies on supressing human rights and maintaining totalitarian rule. Expectations of that model continuing to be successful fly in the face of the post by The Professor. As it stands today, 60 million Americans (the combined populations of the states of Texas and California) generate more economic activity than 1.3 billion Chinese. I’d have to say the real model for lifting a billion people out of poverty has to start with promoting democracy, human rights and allowing a free society.

    Comment by Charles — January 4, 2011 @ 8:21 am

  7. The question is nit just how to lift a billion people out of poverty, the question is how to lift a billion people out of poverty and not to treat them like dirt.

    Comment by LL — January 4, 2011 @ 3:19 pm

  8. India is free and democratic (Freedom House says so!). Yet they can’t even build a wall that’ll stay up. Living standards determine consciousness. First you get a pair of pants, then you write pamphlets. No-one is going to take your bare ass seriously.

    Comment by So? — January 5, 2011 @ 12:50 am

  9. “So far the model I have seen for lifting a billion people relies on supressing human rights and maintaining totalitarian rule. Expectations of that model continuing to be successful fly in the face of the post by The Professor.”

    I expect they’ll continue flying then. The hostile opinions of SWP hasn’t stopped Russia. “The dogs bark. The caravan passes.”

    “As it stands today, 60 million Americans (the combined populations of the states of Texas and California) generate more economic activity than 1.3 billion Chinese.”

    Wow! A couple decades ago it was just one of those States. China’s coming up in the world!

    “I’d have to say the real model for lifting a billion people out of poverty has to start with promoting democracy, human rights and allowing a free society.”

    Oh, the model that’s plunging Latvians into poverty at a staggering rate! Yeah, that’ll work for China.

    Not.

    Comment by rkka — January 5, 2011 @ 5:12 am

  10. As it stands today, 60 million Americans (the combined populations of the states of Texas and California) generate more economic activity than 1.3 billion Chinese.

    2009
    California GDP – $1.9tn
    Texas GDP – $1.1tn
    China GDP – $5.0tn

    And that’s just nominal GDP which is distorted by currency differences; in real terms, China is already at 70-100% of US GDP.

    Meanwhile, India’s $1.3tn nominal GDP is in fact rather similar to just Texas without California. And it doesn’t seem to be that great at “promoting democracy, human rights and allowing a free society” either.

    Comment by Sublime Oblivion — January 5, 2011 @ 2:25 pm

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