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Development of Developed Nations: Europe, the United States and Japan

Umair Kazi

SS 2317 Political Economy of Development & Underdevelopment

13th November 2008


Compare and contrast the development models of the United States, Western Europe and Japan. Which do you find the most compelling, if any?


Historical development is a complex phenomenon. It cannot be traced down to specific policies, environmental conditions, or cultural roots; it has almost always been an interplay between numerous socio-economic factors. The different developmental experiences of the three regions in question cannot easily be compared along similar lines. They were each highly nuanced responses to the distribution of factors in their position within their respective time frames. Each of the three regions had a different starting point and ended up with their own peculiar mix of development ideology. This paper tries to make some connections between the socio-political conditions and responses of each and aims to arrive at a rudimentary commentary on which is the most compelling course of action.


Western Europe: Workshop of the World


Most scholars would agree that the glory days of European development were those that hosted the Industrial Revolution. There is also no argument that England was at the forefront of this revolution, and it was from here that the effects of industry spread throughout the continent. The English nation, followed by the Europeans as a whole, were the earliest examples of the paradigm of economic development as we see today. For the purposes of this paper we will not solely concentrate on England, but regardless there is no denying that the United States, and later Japan, are in a way descendants of the original industrial states in the British territories.


The developmental age of the entire European nation was a logical following of the English advancements in industry. This society was, economically speaking, a primitive society much like others in its time. Contemporary developmental gurus would have considered it a stagnant society, where markets were severely limited and aspirations were kept in check.


The Industrial Revolution changed all that. This point in time is a very crucial turn in the history of ideas, when man abandoned his ancient tendencies[1], and embarked upon the challenge of strife. It is here that the shift to accumulative goals was first exhibited. Around mid 1700s, the arrival of the steam engine, coupled with the development of the spinning jenny, demonstrated to the people for first time that machines were able to boost productivity substantially. The significance of this moment is that finally an appropriate agent of capital was introduced into the mix of production.

The machines "robbed" them of this lifestyle and the race for efficiency "forced" them to work in increasingly mechanized urban centers[2]. With man's realization of the power to subdue and manipulate nature came the information age. Economics, as we know it today, was born. The English society had a new vision, and it was progressive.

English farmers, with the dutch close at their heels, started this revolution. The initial productive push showed that more can be attained from less if only the right tools are used, thus making way for a primitive form of research and development, mainly experimental inventions. As machines and fertilizers were discovered and improved, Industry emerged from the womb of agriculture technology and proceeded to completely overshadow it.


One wonders why this happened in the sporadic states of England alone, as compared to their counterparts in the rest of Europe. Was the birth of this knowledge based efficiency accidental? Discounting grand genetic theories, sociological evidence suggests otherwise. This occurrence could be attributed to the fact that English society was more liberal than their European counterparts. The English farmer had the liberty to move about and experiment with entrepreneurial spirit. The French farmer, for example, had restrictions and obligations to the ruler. The claimants to the German state were at the end of the 30 years war. The English also had a financial and banking system in place that aided the industrial movement in its infancy.


N. F. R. Crafts and C. Knick Harley[3] are of the opinion that as productivity kicked in, lower prices meant that the English society could now switch their income from subsistence needs to relatively higher end manufactured goods. What followed is a complex mix of institutional and societal factors that marked doom for agricultural and opened a window of opportunities for the budding industry. The English farmers didn't always have the freedom that was mentioned earlier. Before the 17th century, Briton farmers relied on villages to decide what was to be produced because of the structure of farms that required everybody to follow the same rules. Productivity was hindered by this arrangement and legal changes were made to support enclosure of land. This in turn led to an initial boost in productivity, thus allowing a greater population to live on the same land. But soon enough, since the peasant farmers were deprived of their lands, there came a severe crisis in the agricultural sector. This struck a decisive blow to the already weakening agrarian society, and these displaced peasant farmers looked to the booming industry in urban areas for work. Town after town, the workshops grew to factories, and the factories grew to industries. This shift of workforce, coupled with the decline of agriculture and the boost of population and productivity, practically forced England into the age of industrialization.


T.S. Ashton and David S. Landes challenge this explanation[4]. Even with the advantage of hindsight, one cannot conclusively rule out the alternate explanation that perhaps agency played a greater role in this scheme of things, that perhaps advancement was not as accidental as it seems. Did the British people have an inherent risk-taking gene? Was this the manifestation of the Protestant social philosophy, as Max Weber put it? Its true that the prevailing thought would make the British a little more eager to make wealth, with their mercantilist mindsets. But all of this is a product of, and shapes, the zeitgeist. The relationship between opportunities and people's reactions is not one-sided. The complexity of the matter does not allow us to draw any such conclusions. The source of Ashton's "inventors, contrivers, industrialists, and entrepreneurs" cannot be held responsible for the revolution independent of the socio-political conditions they were living in. It seems absurd to pin it on all the psychology of the Brits, and think that their European counterparts lagged behind in such intelligence.


The rest is, as the popular expression goes, history. The State had a prominent role in supporting the Industrial Revolution. The English Empire put its military and logistical might behind this revolution actuated by the innovative private individuals. From that point onward it was merely a question of propagating the industrial-economic paradigm and creating new opportunities in the form of markets for the budding industries back in industrial hubs like Manchester and Nottingham.


The United States: Free-market Façade

Looking at it from a sociological viewpoint, the real transformation in the United States of America can be gauged by the socio-economic evolution of class. Herman Kross pins it on increases "..in the quantity, the variety, and… quality of the goods that make up the level of living." This translates into the people's behaviour a manifestation of the progressive capitalist model. The American dream is constantly evolving into grander and greater proportions. The accumulative philosophy that the Americans imported from the pioneering Europeans changes remarkably in the American continent. Everybody expects to go from rags to riches, and everybody is forever in the pursuit of bigger and better things for himself. This fundamental principle of growth has always been behind every action of an American agent and every policy of an American government.

There were differences in patterns of living throughout the colonial times, but growth blurred them out. By mid 19th century there was little outward difference noticeably in the attire of a rich tycoon than a poor peasant[5]. The differences began to shift to quantitative proportions. This consumption-based society thrived on the diversity and development of consumer taste. Successive generations of Americans put in lesser hours of work and expected less physical energy to earn a much larger income.

A variety of factors interacted to bring economic prowess to the continent, including but not limited to the physical geographical potential of America, the European industrial heritage, the social and political organization systems, the institutional frameworks, the evolving culture and value system customized by the American people, and of course, a set of features operating within the economy itself. The land itself had advantageous agricultural conditions, and was rich in natural mineral resources. But that wasn't it, America also had the advantage of being a late starter. It simply built upon Old World contributions and developed a cultural background and an institutional framework that brought forth a less conservative, less restrictive, and less limited version of economic growth than that experienced by the nations from which they had taken their roots. The Americans simply picked the best of the European influences, and fused it with liberal, harsher version of free-market philosophy. Without European capital and technological know-how, it would have been hard for this new nation to achieve anything substantial.

Americans had a peculiar set of political and social organization structures and economic institutions. A seemingly self-contradictory form of economic philosophy was promoted. Individualism was encouraged, as was the pursuit for wealth and business profits. Contrary to popular belief, though, the American State never really surrendered regulatory control of its population to the infamous "invisible hand". Successive American government made sure that while non-interference was promoted at the societal level, institutionally the State was to have their back. Whether by political maneuvering or economic restructuring, the government has always had a hand in the running of the American economy.

The American mindset can be considered to be a highly mutated form of the European character. On the individual level though, the state promoted lessons of material prosperity. Nothing in the fabric of American values stood higher than the achievement of economic success. The American dream emphasized such economic success over political, intellectual or military pursuits. This instilled a fiercely competitive spirit in the American population. This spirit, aided by the increasingly powerful state, helped propagate business and find greater markets internationally. In retrospect, one can only speculate how the Americans superseded their European counterparts and emerged as the dominant economic force in the world. Apart from all these factors, the historical World Wars have great significance. Western Europe was caught in a series of devastating wars, and it did not help their economy much, despite maintaining colonies to support these endeavors. The American continent, relatively secluded from the battleground, gained precious time and used it to its full benefit. While the European industrialist lay dazed from the war, the Americans developed their own mix of capitalism and gained ground on the world economy. This is probably why they supported The Bretton Woods agreement. They needed to insure that the system continued, so they pumped in money into the continental governments and continued to establish themselves firmly in the world political economy, whether the Europeans liked it or not.

JAPAN: Catch-up to Leap-Frog

There are glaring misconceptions about the Japanese. They are polite, but also insolent and overbearing. They are incomparably rigid in their behavior, but also they adapt themselves readily to extreme innovations. They are submissive, but they are not easily amenable to control from above. They are loyal and generous, but at times also treacherous and spiteful. Though they devote themselves with passion to western learning, they remain committed to their conservatism[6].

The Japanese nation has certain characteristics. Unlike the Europeans, they are politically pluralist; for over a thousand years authority is divided in complex arrangements. Despite this, the Japanese are exceedingly authoritarian. The system does rely on authority to right the wrongs at every rung of society, but this does not necessarily mean a rule of totalitarianism or dictatorship.

In Japan, there is a great value attached to community. In all activities, the Japanese tend to think of themselves as a group. Even after the surrender to American influence post-WW2, the Japanese never internalized the individualism of the Western world. They might have adopted the capitalist values, but skillfully dodged the individualistic tradition. That being said, these people are nationally egoistic. They have always prided themselves over their status as the inhabitants of Japan, as being part of a group that has special importance as compared to everybody else. This does not in any way hinder their ability to experiment and adopt, as is observable from their great technological advancements. The society in Japan is highly hierarchical.

What appeals most to the contemporary economist about the characteristics of the Japanese nation is their competence towards perfection of technology and their purposive attitude towards history. The Japanese have a strong legacy of getting the most out of technology. Although the Europeans can be considered to be the pioneers of industry, Japan has never really been far behind. The character of Japan is such that they do not necessarily engage in technological races just for the sake of it. Japanese technology is first targeted towards the Japanese user. They are exceedingly capable of copying and improving on technology to make it better, at least for their own purposes. This means that Japan serves as a great market to Japanese technology producers. This in turn means that products are highly evolved within the Japanese market, and their internal economy remains strong. Even today, gadgets available in Japan and not the rest of the world are a common occurrence. The Japanese create, and use, technology far more than other peoples. They don't need to tone down their rate of technological advancement to suit the needs of the world economy, they have enough of a market at home[7].

History is closely tied to destiny in Japanese culture. This allows them to insulate themselves form the negative effects of historical failures and keep a positive belief, even if its not based on reality. At the back of their heads, therefore, they are always insured against shortfalls. If something bad happens, it was bound to happen. This gives them an ability to get up and go again, as was the case by the end of World War 2. The Japanese stood to sustain huge losses, both in human and economical terms. They had no choice but to submit to American interference and work around it. Their culture taught them to take what they have and make the best of it, so they did. They adopted the capitalist model with full fervor, and used to their advantage. They secured political patronage with the established hegemon, gained preferential access to its markets, and went to work building up heavy industry and technological-based products to gain worldwide specialization. In other words, they have beaten their capitalist masters at their own game. Just like the Americans used the cover of World Wars to establish themselves atop the global order, Japan used America's preoccupation with the cold war to gain important economic and technological ground.


The Japanese model, in my opinion, is the most compelling form of development. Empirical evidence supports this claim. The Japanese started off at a more disadvantaged point than did the Europeans or the Americans, and yet have managed to climb atop the global economic ladder. Japan's growth in the last half-century is unsurpassed in the history of economics. In 1950, Japan was only 3% the size of the American economy, by the end of century it was over 68%[8]. By comparison, the United States took over a century to achieve a similar income gain against the previous hegemon, Britain. The Japanese are actually working lesser hours and being more productive than their American counterparts[9]. From all angles, the Japanese are poised for economic success. They have achieved all of this within the system, and have not resorted to drastic political restructuring as did the European colonialists or the American neo-imperialists. The Japanese model is simply an improvement over the previous two models; it results in consistent real economic growth with maximum efficiency.

[1] Plato in "Laws" speaks of life's purpose to be the greater good of society, symbolized by a life of contemplation.

[2] Engels, The condition of the working class in England, pp 10-11

[3] Peter Timin, Two views of the British Industrial Revolution, pp 13,42

[4] Ashton, Industrial Revolution and Landes, Prometheus Unbound, pp 41, 105

[5] Krooss, American Economic Development, pg. 52-53

[6] Ruth Benedict, The Chrysanthemum and the Sword

[7] Herman Kahn, The Emerging Japanese Superstate, pp. 19-26

[8] Eamon Fingleton, Blindsight, pp 8-10

[9] Juliet B Schor. The Overworked American