Review: Lessons for the poor from English history

October 5, 2012

By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It took England centuries to develop a successful industrial economy. Poor countries today want to recapitulate the process in a few decades. In “The Political Economy of Nation Building” development consultant Mack Ott draws some lessons from the English experience.

The basic one is that a liberal nation-state is required to nurture economic development. Ott provides a list of key characteristics. It includes the rule of law, private property and a substantial middle class, religious tolerance and the separation of legislative and executive powers, which permits the development of sound fiscal and monetary policies. Ott argues that these factors, first developed in England between the Norman Conquest and around 1700, explain the country’s economic takeoff and should be the model for today’s developing countries.

The first part of the book is a fairly lengthy analysis (111 pages) of England’s political and economic transition, focusing on the emergence of institutions and practices that contributed to economic development. Ott’s survey of English emergence is generally sound, although he is excessively fond of the 1688 Revolution and William III, and insufficiently appreciative of the earlier professionalization of public service under Charles II, the later rationalization of public debt management under Walpole and Pelham, and the even later application of enlightenment economics to public finance under Pitt and Liverpool.

The book then applies the lessons of English history to more recent history. For example, Ott explains that Vladimir Putin’s nationalization of the oil company Yukos gave the executive freedom from parliamentary control of its finances, in much the same way as did Henry VIII’s dissolution of the monasteries.

Next comes an examination of four pairs of countries in relation to particular reform policies. The difficulty of this sort of analysis is made clear by one of Ott’s examples. Pakistan is portrayed favorably for replacing a military dictator with democracy while Thailand went in the opposite direction. Since the time of writing, Thailand has moved back to democracy while Pakistan’s democracy looks distinctly shaky.

Ott’s final section looks in detail at the factors facilitating economic development. He sees all of them, paralleling English developments, as necessary and argues that backsliding on one or another is both frequent and regrettable. By now, that institutional approach is fairly mainstream in development economics. His enthusiasm for free markets and hostility to global government – “Nations remain a bulwark against injustice so long as there are many of them” – are more unusual.

Ott demonstrates satisfactorily both the origins of his chosen development requirements in England, and their centrality for countries wishing to become rich. Still, his belief that contemporary democracy with universal suffrage is necessary for economic emergence is hard to reconcile with his clear sympathy for the pre-democratic oligarchy of Augustan Britain, or with the popular election of economically retrogressive authoritarians such as Putin and Venezuela’s Hugo Chavez. Ott is on stronger ground with his claim that authoritarians, even economically fairly sensible ones like Hosni Mubarak and Augusto Pinochet, leave a destructive legacy unless they arrange a satisfactory democratic transition.

The book reflects the verdict of a lifetime of development work. He makes the case well that the English model translates to global development, with cultural factors properly causing adaptation of the model rather than its replacement. Developing countries need a (William of) Orange Revolution of their own.

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