Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance.

• Author: POWELSON, JOHN P.
• Position: Review

Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance

By Deepak Lal

Cambridge, Mass.: MIT Press, 1998. Pp. x, 287.

An expanded version of the Ohlin Memorial Lectures at the Stockholm School of Economics in 1995, Unintended Consequences reads like a book-length recipe. In the first chapter the ingredients are set forth, in the main body of the book they are mysteriously mixed, and at the end, out comes the cake. Just as the oven hides the baking process of the cake, most readers will not quite know how the book's conclusions were reached.

The author begins by setting forth the building blocks of a theory of long-run economic performance, without explicitly stating that theory. Although the lectures supply delightful reading on differences among civilizations the world over, comparing East and West, they lack a coherent theoretical underpinning. In the appendix, the author declares that "four theoretical models underlie the argument of these lectures: the Boserup model [of growth based on population], the model of the predatory state from Lal (1968), the model of dual preferences from Kuran (1995), and the model of an economy where land is abundant and labor scarce (due to Domar 1970)." The multiplicity of the models is both the strength and the weakness of the book: its strength because the author can build on all of them; its weakness because he does not knit them together adequately to form a coherent theory of economic development. The lectures ramble from one topic to another, each one fascinating in its own right, but without much integration.

In the first chapter (lecture), Lal sets forth two main building blocks of long-run economic performance: relative factor endowments and culture. He first defines culture by quoting others: "A culture is a distinct way of doing things that characterizes a community" (Ernest Gellner), and "culture underpins the `rules of the game' in any society, and provides the informal constraints on human interaction" (Douglass C. North) (p. 6). He then quotes Frank Hahn in describing "an equilibrium state as one where self-seeking agents learn nothing new so that their behavior is routinized" (p. 7). But if the environment changes, human agents will have to adapt. Lal distinguishes two major sorts of human beliefs concerning the environment: the material culture, or the beliefs related to making a living, and the cosmological culture, or the beliefs...