The Roots Of Sustained Economic Development Rest On A State Of Mind – Only Those Who Can Conceive Positive Change Will Be Able To Embrace Development – Part 1

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By Paolo von Schirach

July 18, 2012

WASHINGTON – Let’s start with a basic notion: economic development is a new phenomenon in human history. This makes it very difficult to understand it; let alone produce it at will. Furthermore, Enlightenment driven intellectual biases based on the fundamental rationality of the human being, rationality that would make him “naturally” predisposed to maximize economic advantage, contributed to intellectual confusion as to what really causes and or makes development possible.

For the longest part of their history humans did not know development

Let us not forget that for tens of thousands of years humans lived on earth pretty much like the other creatures. They came into the world. They were engaged in looking for and finding food. They devised ways to fend off predators, sometimes successfully sometimes not. They reproduced when possible, often fell prey of disease, and usually they died young because of hunger, disease or violence visited upon them by predators or other humans. For tens of thousands of years there was no such thing as “development” as we understand it today.

Growth is New

Both the notion and the reality of “economic growth” –especially the fast paced economic growth that has been more the norm, rather than the exception, in the western world in the last fifty years– are new. Although for many Westerners “growth” seems to have become self-evident as a reality and thus achievable as a goal, it should be emphasized that this phenomenon represents a “revolutionary” shift vis-à-vis anything that mankind had known until relatively recent times. The only known “reality” that both shaped and conditioned the worldview of millions for tens of thousands of years was that the only possible result of human activity is (at best) to reproduce what already exists.

Change is new

The idea that it is indeed both desirable and possible to improve material conditions through human planning, the invention of new tools and methods and the organization of productive activities, and that the outcome of all this would be to increase the quantity, the variety and the quality of what is available, is new. The idea that one can devise and then apply new techniques, power sources and tools to activities such as handicrafts or manufacturing that would augment both total output and its quality; or that it is possible to improve upon the techniques related to the old ones (agriculture and animal husbandry) is new.

Indeed, the very notion that through human ingenuity and applied creativity it is possible to systematically produce and create something “more” than what already exists, if looked at against the backdrop of the long history of mankind, is truly “revolutionary”. But how did all this happen, and why? And, by the same token, given the reality of development somewhere, how can we bring it elsewhere, where it has not occurred yet?

How did all this happen?

As such a crucial transformation did not occur as a clear, discreet experience, we have a major difficulty in spelling out the ingredients, the dynamics and the environment that gave life in past instances –and that can give life today– to sustainable economic development or progress.

For the longest time, most theories were shaped by a basic assumption. There is a dominant rational trait within the human psyche that will lead humans to actions aimed at maximizing utility. But empirical evidence shows that this is not true; at least not all the time, as millennia with little or no development show us. What is true instead is that notions that are conducive to development can be learnt, while the known technologies that enable it can be adopted and/or improved upon.

Still, the fact that new ideas leading to development can be learnt does not mean that they will be easily embraced, as soon as people are exposed to them.

For such an assimilation to take place, a significant transformation of the human psyche was and is a necessary precondition. First and foremost, we need a transformation that allows the psyche to begin to conceive, in the abstract, something that does not yet exist in the material, tangible reality. And this because development is about giving life to a new idea, not yet in the here and now.

Role of intangible factors overlooked

However, because the role of the psychological, “intangible” psychological factors necessary to trigger an approach consistent with development were overlooked and thus not properly considered, the students of economics concentrated a disproportionate amount of attention on the tangible and material factors, the building blocks of development, attributing thus economic development to a change in material circumstances. This is a bit like saying that in order to be a great painter, an individual does indeed need canvass, various paints and brushes. Of course, he does. But the availability of these tools do not guarantee his success as a painter.

This narrow approach has created distortions that have had a significant impact in shaping policies aimed at fostering growth in developed but especially in underdeveloped countries. By overemphasizing the need to improve material circumstances, (this is of course a necessary precondition), we have somehow lost the point that the main agent of change is the human psyche. For it is the psyche that provides the sense of need, the orientation and the direction of sustained intellectual energies that can be mobilized materially toward this or that pursuit. If people do not believe in development before they have created, it will not happen.

End of Part 1

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