🚀 go-pugleaf

(I'm re-posting this because of formatting difficulties with the 
original posting)

Before I begin with my comments, I would like to express my extreme 
disappointment.  Instead of an intelligent discussion over Francis 
Fukuyama's latest contribution to social science (*Trust*, Free Press, 
1995), what we have here is a mere exchange of insults.  This is too 
bad, because a reasoned debate over the merits of Fukuyama's book and 
the growing field of socioeconomics could have been extremely edifying.
Is there a more temperate soul out there who has some thoughts about 
Fukuyama's ideas on socioeconomics from an economist's standpoint? 

In article <4647rj$ch4@news.acns.nwu.edu>, @casbah.acns.nwu.edu (Mark 
Witte) wrote:


>My reading of the book was that Fukuyama is trying to explain the 
>levels and growth rates of economic output across nations...
>
>He does give lip service to neoclassical determinants of these but then 
>he very oddly ignores their explanatory power.


As I have said before, you obviously haven't read his book (You even 
admitted as much in a previous posting, saying that you only glanced at 
it while you were at the bookstore.  Browsing does not an expert make). 
 You simply read one book review by Robert Solow and think you know 
exactly what Fukuyama is saying.  Well, you do not.

For example, you go on and on and on again about growth.  Although 
Fukuyama makes some references to growth, the main point of his book is 
not to show how neoclassical models of growth are inadequate and how 
adding cultural factors will improve the accuracy of its models.  Still
unclear about that?  It's not about models or their predictive ability.
Fukuyama readily admits that these models to a pretty good job already.

But neoclassical economics and its rational-actor component does not do 
a good job explaining *all* economic behavior. 

On this point, Fukuyama says that economists might want to pay a little 
more attention to what is going on in the field of socioeconomics, 
because some of the theories emerging from this new field have 
explanatory power in their own right (Developing some impressive 
theories himself, Fukuyama contributes a great deal to this growing 
field). See the relatively recent scholarship by James Coleman, or the
work of Mark Granovetter on embeddedness if you doubt me on this point. 
I say "relatively" because the field of socioeconomics is not new. Max 
Weber's *The Protestant Ethic and the Spirit of Capitalism*, written 
many, many years ago is considered to be the pioneering work in the 
field.

What kind of questions can socioeconomics help us explain?  For 
starters, why are Chinese firms, on average, smaller than their Japanese 
or American counterparts?  Neoclassical economics doesn't do a very good 
job of explaining this. Socioeconomics, on the other hand, does.  
Fukuyama says that Chinese firms are smaller than others because of 
Confucian values that prevent outsiders from assuming control of the 
family business. As an example of this, Fukuyama shows how An Wang, the 
CEO of Wang Laboratories, in traditional Chinese fashion turned the 
massive corporation over to his incompetent son.  Thus, Fukuyama is 
arguing that in trying to explain Chinese industrial composition (lots 
of small family firms, very few large ones), we might have to look 
outside of neoclassical economics.

As you can see, much of Fukuyama's discussion is at the "micro" level, 
removed from discussions concerning the intricacies of GNP growth rates.
But this does not mean that a "micro" discussion has little relevance in
the current debates over policy.  In our discussions of the trade 
deficit with Japan, for example, wouldn't it help to understand the 
Japanese Keiretsu?  (the large networks composed of numerous firms 
spanning several Japanese industrial sectors).  It seems as if the very 
existence of a Keiretsu is a "non-tariff barrier" to free-trade in 
itself.  Again, neo-classical economics can tell us very little about 
this.
  

>Having had a chance with both the book and the review, I am in some way 
>worse off than someone who seems utterly unfamiliar with the work of 
>Robert Solow?


I am not unfamiliar with the work of Solow.  Furthermore, I never 
referred to one of Solow's books as a "waste of perfectly good paper".
You on the otherhand, made such a comment with regard to Fukuyama's 
book.  Furthermore, you made this comment after having only read Solow's 
review and not the book itself (although now you are telling us that you
browsed through it in the book store).  But as your comments in this 
thread show, you have no idea what Fukuyama actually said in his book.


>
>>>And how *you* could continue to deny that the most basic facts about 
>>>a society (such as its religion or its culture) might have even a 
>>>small effect upon a nation's economic performance is beyond me.
>
>Whew! I am glad you ephamsized "you" there...
>


You accuse *me* of denying something, I accuse *you* of not reading his 
book and unfairly insulting Fukuyama -- ya see how that works?  Wow, I 
didn't think that *emphasis* was such a *hard* concept to *understand*.


>let me repeat that I have never suggested rejecting institutional >explanations for growth out-of-hand. Call me unimaginitive, but =
I think >we should begin with well understood economic factors, before we look >elsewhere.


Again, the main point of his book is not to explain GNP growth rates. 
And again, neoclassical economics can't explain the Japanese Keiretsu, 
the Chinese family firm, nor the Korean chaebol.  Historical, Political,
and Cultural factors go a long way in explaining these phenomena.  

However, this is not to say that cultural factors have no bearing on 
economic growth.  You want an exact measure of their contribution (nay, 
you want an exact measure of the *other* factors before you measure the 
cultural and political ones), and you think this is where scholars 
should start.

I disagree.

The first step lies in convincing the discipline of economics to realize
that *some* aspects of economic life might be better explained with 
socioeconomic theories.  Given your insults and hostility, it looks like 
we have a ways to go.


>You should probably read or re-read the sections where he does attempt 
>to classify, in an ordinal sense, countries according to these 
>variables.  It would seem to me that he feels he can quantify these 
>factors.


First of all, the discussion of the "social capital" in various 
countries makes up about 80% of Fukuyama's book.  This comment only 
reinforces the notion that you are thoroughly unfamiliar with his work.

And as your statistics teacher failed to teach you, ordinal data can't
be plugged into macroeconomic models as you suggest.  They merely imply 
the notion of "greater" or "lesser".  True to the concept of "ordinal 
data" Fukuyama categorized countries into two groups: those that had 
little or no Trust and those that had a great deal of Trust in their 
economic behavior.  The differences between the Chinese, who 
traditionally don't allow outsiders to run the family business, and the 
Japanese, who not only allow outsiders to run the business but adopt 
outsiders into their own bloodline, fits well into this category.


>As for pity, I hope your interest in Fukuyama is purely personal. I
>would feel awful if someone paid you for this quality of analysis.


I'll leave the newsgroup with the above selection to remind them of how 
this thread started -- with one of Mark's insults.  Instead of 
responding to his immature insults, I once again ask: Is there anyone 
out there you would care to have a reasoned, mature discussion on the 
emerging field of socioeocnomics and in particular, Fukuyama's book?


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  | Chris Swenson                                        |
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