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Responses to Rothman: Constitutional Erosion Caused Capitalist Decay
| Article
# : |
19574 |
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Section : |
MODERN THOUGHT
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| Issue
Date : |
11 / 1991 |
941 Words |
| Author
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Peter J. Boettke
Peter J. Boettke is assistant professor of economics at New
York University. He is the author of The Political Economy of
Soviet Socialism: The Formative Years, 1918-1928 (Kluwer,
1990). His next book, Why Perestroika Failed, will be
published in 1992. |
Undoubtedly, historical traditions and cultural factors play a significant role in political and economic development, but they should not be overestimated. Social development is largely a consequence of the "rules" governing human intercourse. These rules can be tacit traditional values or codified law, but as binding constraints on action they govern human affairs for good or bad, and as they change, so will the course of social development.
An examination, for example, of post-World War II development of mainland China, Taiwan, and Hong Kong--three jurisdictions with a common cultural heritage--suggests that economic progress depends far more on economic institutions than the cultural traits of the populace or the availability of natural resources. The institutional rules that govern economic activity either promote or discourage economic development. Understanding social progress requires an examination of the structural rules and other constrains--both tacit and explicit--that govern that society. Focus on rules, not human personality, will improve our understanding.
Professor Rothman raises several interesting points concerning the decay of liberal capitalism. Unfortunately, while I found his exposition of the way the movement from old to new liberalism was aided by the growing class of intellectual elites to be telling, he does not address adequately, to my mind, why the elites turned their backs on traditional values and classical liberalism. Is it really just the death of God that undermined traditional values? And is it the case that our current economic problems are a result of the decline in traditional values as represented in the personalities of our elites?
While there is no doubt that the decline of traditional religious values affected certain largely tacit constraints that had been in operation, an examination of the erosion of constitutional constraints that protected our economic liberties provides a better basis for understanding our decline as an industrial power.
The growth of government involvement in our economic system that was spurred by the erosion of constitutional constraints produces an entrepreneurial environment that does not reward the kind of workmanship, and so forth, that Professor Rothman detects as missing from the current and future crop of business elites, as compared to their predecessors. In addition, the now unconstrained vision of democracy puts increasing pressures on the political establishment to satisfy the demands of various constituents. This, in turn, simply fuels the
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