by Amitai Etzioni However, this principle is not desirable from

by Amitai Etzioni
«Is it alright to cast one Christian to the lions, if it will provide
considerable pleasure to many Romans?» was a question posed to a
seminar. Students were reassured that if they sense that there were not
enough Romans in the Coliseum to justify the «trade-off », they could
assume the Christian/lions confrontation was broadcasted on television.
Those who subscribe to the utilitarian notion that distribution of resources
should aim at generating the greatest happiness for the greatest number, will
be hard put to provide a principle that would suggestwhy such a trade-off is
unacceptable 1. The principle ofPareto-Optimality is sometimes brought to
bear
to argue
that one
ought to increase everybody's
diminish
anybody
else's.
' happiness as it does not
However, this principle is not desirable from utilitarian ethics: why not
reduce, to some extent, the happiness of one person, if this increasesthe
happinessof many considerably?In addition, there seemto be insurmountable difficulties in operationalizingthe Paretoconcept.And, there is alsothe
question of whosehappiness(or preference)is to be takeninto account: only
that of this generation? Future generations? How far into the Future?
Minors? Mental patients?Criminals? Aliens? Members of other nations?2.
That is, whatever is deemed« optimal » reflectsone'svaluejudgments asto
whom one choosesto embracein one's community, rather than an objective
criterion. Yet the students in the seminar, and probably most readersare
Amitai Etzioni: George Washington University, Washington, D.C.
.This article draws on several previous publications by the ~uthor.
I In effect, much cost-benefit analysis is based on such a calculus of gains and sacrifices. See
S. KELMAN, «Cost-Benefit Analysis: An Ethical Critique», Regulation, Jan/Feb. 1981, pp.
33-40.
2 In this connection, seeD. WHITTINGTON-D,MACRAE,«The Issue of Standing on Cost-Benefit Analysis », Journal ofPolicy Analysis and Management, 1986, Vol. 5, pp. 665-682.
587
searchingfor a principled reasonto opposethe sacrifice of a single human
life for the sheerpleasureof many. The reasonsare to be found in another
ethics, deontology, which recognizes,at least in its Kantian version, ultimate (absolute)values, categoricalimperatives and the claim that people
should treat one another as ends and not just as means. The discussion
proceedsby briefly reviewing the deontologicalposition before its potential
for a new paradigm for economics,and more generallyfor socialscience,is
indicated. The article closeswith a discussionof the implications of the new
paradigm for economic development.
-Moderate Deontology
Deontological ethics is often comparedwith utilitarian ~thics;the first
focuseson intentions, the secondon consequences.
(The ethical trouble with
castinga personto the lions stems directly not from the loss of human life,
a distressingbut very common occurrence,but from the deliberate,intended nature of the act). However, there is reason to view the two ethical
philosophies as if they were partially reconcilable. Moderate deontology
recognizesintentions -as a secondaryconsideration. While an extreme
deontologistmayarguethat it is ethicalto donateblood (if the sole intention
was to help anotherperson), even if the patient soondied and the donation
had no direct beneficial consequence.At the same time, most would file
with moderate deontologistswho might argue that if the donor had known
aheadof time that the donation would be futile, it would be more ethical to
donateblood to thosewho are likely to benefit rather than to thosewho are
not. From here on this moderate version of deontology,not too remote from
moderateutilitarianism, is applied.
While it is common to identify deontologyas an ethics of intentions,
usually the focus is on moral intentions rather than on the larger universal
of all possible intentions. This is indicated in the term deontology itself,
which is derived from the Greek term Deon,meaning« binding duty». The
fact that one may recognizeintentions but not identify those as amoral in
source or form stands out when one follows Frankfurt 3,who asked: what
distinguishesa person from other beings that have mental capacitiesand
corporeal characteristics?He finds the answer in their ability to form
« second-order desires », to want to be different than they are, including
changing their first-order desires.
.J See H.G. FRANKFURT« Freedom of the Will and the Concept of the Person », Journal of
Philosophy, 1971, Vol. 68, pp. 5-20.
588
Hirschman 4,who directly draws on Frankfurt, refers to the second-order desires as meta-preferences.He stressesthat there is a continuous
conflict betweenpreferencesand metapreferences.If the preferencesprevailed all the time, the meta-preferenceswould have little meaning; they
would reflect a kind of lip .service paid to values, of little importance.
Similarly, if the meta-preferencesprevailed all the time, there would be little
point in drawing the distinction; urgeswould have little or no role; values
would dominate.
Sen5, uses the term commitment in a similar manner. «Commitment », not formally defined, is contrasted with concernfor others when it
is based on one's own welfare. Sengives the following example. If you see
another person being tortured and it makes you sick, you act out of
sympathy. But if you think such action is wrong, you act out of« commitment ». « Commitment is, of course,closelyconnectedwith one's morals »,
Senexplains 6. The significance of the concept of commitment, he elaborates, is that it points to a source of preference,or value, other than being
« better off ».
Note, though, that none of the three authorities identifies their concept
with moral duties or values. For Frankfurt, the second-orderfaculty is akin
to the first order one; both are « desires». Hirschman's meta-preferences
could be based on aesthetic considerations, or enlightened (longer run)
self-interest. Sen's commitments come close but are not outright moral
derivatives. Indeed, there is no reasonto doubt that second-orderconsiderations may be derived from many sources,and may be justified on many
grounds. However, we suggestthat moral commitments are a major, if not
the major, source of second-orderjudgments, and a major way they are
evaluated.
Deontological ethics, with its preoccupationwith intentions and their
ethical standing,is particularly suited to explore the sourceand standingof
thesemoral commitments. Above all, we suggest,adding the dimension of
moral intentions, moral commitments, and duties to one's paradigmenrichesthe foundations of social sciencesin generaland of developmenteconomics in particular, as we shall attempt to shownext.
(Deontological ethics encompassesmany positions on other issues.
Theseare not explored here becauseone can draw on the basic perspective,
as just outlined, without necessarilysubscribingto those other positions.
.See A.O. HIRSCHMAN,« Against Parsimony: Three Easy Ways of Complicating Some
Categories of Economic Discourse », Bulletin: The American Academy of Arts and Sciences,
1984, Vol. 37, pp. 11-28.
5SeeA.K. SEN,« Rational Fools », Philosophyand Public Affairs, 1977, Vol. 6, pp. 317-344.
.Ibidem, p. 329.
589
For example, one can be a deontologist
only the noumenal self has a free will).
without
accepting Kant's view that
2. -The Significance for Human Nature and Social Order.
At the core of most social scienceparadigms is an explicit or implicit
conceptof human nature and of socialorder. We explore first the conceptof
human nature. The major social science paradigm in the West is the
neoclassicalone, which is utilitarian both in origin and in much of its
contemporarycontent. At the core of the neoclassicalparadigm, sharedby
neoclassicaleconomics, «exchange» sociology, Public Choice political
science,and severalother socialsciencetheories,is the conceptof a unitary
person,a well ordered bundle of self-directedurges,expressedin the actot's
preferences.The actor is viewed as an autonomousindividual, acting on his
or her own, the well known homoeconomicus.
What concept of human nature emerges from the deontological position? First of all, a view of the person as a divided self The person is in
perpetual conflict between two or more internal forces. Kant distinguishes
between two « men », found within each of us. One is instrumental, seeking
efficient means, directly observable. The other is the seat of free-will and
values, the world of « reason », which leads to recognition of moral imperatives. The first «man» acts out inclinations; the second -in pursuit of what
is right. The first is determined by nature, the second is free. Freud's
distinction between an id and super-ego capture the conflict between urges
and socially introduced morality. (Internalized, and individually honed,
morality is placed in the ego itself). Schelling 7collected numerous examples
of individuals who find themselves simultaneously subjected to conflicting
preferences. Elster 8 provides an excellent overview of various theories
about the nature and dynamics of the divided self.
The question raisesitself, if both urgesand moral commitments reflect
to a significant extent socialforces (socializationand socialcontrol), and to
some extent one's individual development, why do they tend to diverge?
Why are the urges not « socialized» to the point they conform to morallyprescrib
behavior? The observed fact is that urges and moral commit-ments
are often in conflict 9.Indeed, most moral duties and commitments
7 See T. SCHELLING,« Self-Command in Practice, in Policy and in a Theory of Rational
Choice », American Economic Review, 1984, Vol. 74, pp. I-II.
s See J.B. ELSTER,(edited by), The Multiple Self, Cambridge, 1985.
9 In this connection, see A. ETZIONI,The Moral Dimension: Toward a New Economics, New
York, 1988.
590
591
are expressedin terms of prohibiting acts individuals would be otherwise
inclined to engage in (e.g. adultery, theft) or require acts they would
otherwise not perform (e.g. giving to charity). Among the possibleexplanations is that urgesare closerto the biological baseof human behavior than
morality, i.e., reflect a lesserextent of socialization and internal development. Another possible explanation is that they reflect different stagesof
socialization (urges precede moral education, in that sense, are more
infantile).
Aside from being of generalinterest, the conceptof the divided selfhas
significant implications for the understanding of economic behavior. It
helps explain why all items (commodities,resources,transactions)havetwo
valuations: their economic value and their moral standing. For instance,a
stolen product canbe usedlike one that has beenlegitimately acquired, but
its moral standing is hardly equivalent. It has been suggestedthat this
distinction does not hold for most, mundane, purchases. But a moral
dimension is often readily discernible and always present. It affects all
purchasesthat are considered« sinful » but not illegal, for example alcohol
and cigarettes(asreflected, for instance,in specialtaxesimposed on them);
it is evident in illegal work (in the undergroundeconomy)and trade (e.g. in
controlled substances);it is reflected in preferencefor American vs. « foreign » products; it can be discerned in the condemnation of « junk » food,
food high in calories, salt, and cholesterol(consideredirresponsibletoward
self); in the production of products that are environmentally dubious; in
marketing via persuasive advertising; and in the propensity to save, to
conserveenergy,to pay taxes,to work hard and so on 1°.
In still other areas,moral commitmentsgo beyond influencing transactions -they taboo exchangebehavior and market orientations. Various
philosophers have identified numerous areas in which exchangesare
« blocked» 11,for example those covered by constitutional rights. Thus,
First Amendment rights cannot be sold or bought and contracts to enslave
are not enforceable.The recentcourt battle over the questionwhetheror not
contracts to « sell » babiesconceivedby surrogatemothers are enforceable
is, in effect, on the question where the market zone ends and blocked
exchangesbegin.
Next to drawing on a concept of human nature, social science
paradigmsbuild on a related concept,that of a socialorder, on the waysthe
individuals -given their nature -combine into sustainablewholes.Indeed,
historians of sciencesuggestthat the social sciencesevolved once religious
-10For evidence, see A. ETZIONI" op. cit..
II See A. OKUN, Equality and Efficiency: The Big Trade-off, Washington, D.C., 1975;
M. WALZER,Spheres of Justice, New York, 1983.
592
conceptions of social order broke down and the quest began for secular
accountsof order in society.
At the heart of the question what accounts for order, is the question
whether order must be introduced, sayby force, by a powerful authority, or
-does it arise naturally? Deontological socialsciencesfind the answer,first
and foremost, in the moral order. Individuals' interestsare not assumedto
be naturally harmonious, i.e. mutually supportive and compatible, or made
to be so by an invisiblehand. Nor is there a reasonto assumeorder must be
imposed on individuals who are, in Hobbes' term, wolf to one another.The
social realm and its order are based on the assumptionsthat individuals
have acquired a setof sharedmoral commitments that legitimate the social
order that lead them to treat others the way they seek to be treated
themselves.
The logical next stepfor a deontologicalsocialscienceis to dealwith the
question: what are the sourcesof the moral commitment?This is a question
utilitarian social scientistsneed not deal with becausethey take individual
preferencesas their starting point (e.g., in the conceptof consumersovereignty). The deontological answer is a dual one: in part, the sourcesof
individual commitments are moral values shared by the community of
which individuals are members;in part, they are the resultof internal moral
individual developments.
Regarding communities' values, the main point is that individuals
internalize those and make them part of their inner self; they are turned
from constraints (matters the community demands, one more external
condition the actors take into account in their deliberation) into meta-preferencesand preferences(criteria the actors useto judge the courseof action
or form, in part, their decision in the first place). In contrast, utilitarians, to
the extent they recognize community values at all, see them as external
factors. For example, according to utilitarian social psychology, an actor
who faces group pressuresto conform, say to donate blood, will calculate
whether or not the costs of disregardingthese moral expectations,or not
conforming, exceedsthe benefits (let's say of being socially accepted).
Deontologists recognizethat valuesare treated that way on someoccasions,
but also recognizethat on other occasions,following internalization, individuals either seethe donation of blood as the right thing to do from their
viewpoint or somethingthey are compelledto do. That is, one cannotargue
from the existence ofexpedient morality that authentic moral commitments
do not exist, or are insignificant. Moreover, to deny that internalization
occurs is, in effect, to deny the existence of education. It leaves the
neoclassicists with the odd implicit assumption that persons are born
biologically and psychologicallymature, roughly at the ageof 18to 21 if not
older.
While the community often accountsfor a significant part of a person's
moral commitments, in part these moral commitments are internally
developed.One important sourcefor suchindividualization, is the fact that
in many societies individuals are frequently subject to conflicting societal
593
demands (often from different social groups, suchas immigrant, kin, and
ethnic groupsvs. the encompassingcommunity). This leavesthe individuals
freer to choosewhich moral code to follow. Also moral socialization and
social control are often far from complete, leaving room for individuals to
develop their own position (often more in the extent of adherence,than in
content). Finally, exceptionalindividuals rise, who fashion their own codes
and -affect that of the community (e.g.,Luther). Still, all these individual
developmentsare beststudied againstthe backdrop of sharedsocialvalues,
and the examination of the societalstructuresthat encourageor discourage
individualization, becausethey account for most of the vari~nce.
What are the implications of these divergent views of moral codesfor
the specific views of social order? Utilitarians see individuals as autonomous, psychologically self-sufficient, as « under-socialized» 12.They
see the social order as arising out of either a deliberate contract among
free-standingindividuals, or as a natural result of eachpursuing his:or her
self-interest.Groups and communities are either ignored, or deemedto have
no attributes of their own and « reduced» to aggregationsof individual
choices.
In contrast, deontologicalsocial scientistsrecognizethat becauseindividuals have a debasedelement, a « lower» self, they may be prone to war
with one another, and hence there is a need to foster a social order. The
question is: how and to what extent is this achieved?The notion that order
may be imposed by a government, is found to be unsatisfactory because
coercion leads to alienation and rebellion, and becauseof practicallimitations on the ability to govern thoseopposed.There are never enoughpolice
to control a community whosemembersare actively opposedto an authority, and -who shall police the police? are familiar arguments that apply
here. That is, only a governmentthat is viewedaslegitimate by a significant
part of the community, and -to a significant extent of the total scopeof
action, canprovide a social order. Legitimacy, in turn, rests on being in line
with acceptedmoral values.Hence, ultimately the social order rests on the
moral community, not on the government.
The moral community benefits from social bonds that tie people to one
another. Individuals, as psychic entities, are not self-sufficient but require
one another, are in part intertwined in ways they do not use to relate to
objects. Their sense of identity and direction, their ability to function as
12See M. GRANOVE1TER,
«Economic Action and Social Structure: A Theory of Embeded-ness
», American Journal oj Sociology, 1985, Vol. 91, pp. 481-510.
individuals, their senseof inner stability and self-esteem,are all anchored in
other personsand in groups. They are eachother's keepers.Thesebonds of
mutuality, are the sociologicalbasesof their treating one another as ends
and not merely as means,on which the moral, and in turn the social order,
build.
3. -Opening the PreferencesCan Be Operationalized
The position outlined so far has a major methodologicalimplication:
we need to study the sourcesof individual preferences.Neoclassiciststake
thesepreferencesas given and as stable, that is, a person'sdesiresare taken
asfixed. The extentto which a personis ableto act on his or her preferences,
is able to realize them, the factors that account for differences in actual
behavior, are seenas due to differences in constraints (given a particular
level of income). For example, a person who desires to «buy» higher
education, is viewed as likely to buy less(givenhis or her income)the higher
the price, the more requirementsare imposed for obtaining eachdegree,the
longer the commute to college,the fewer child care facilities are available
and so on.
Neoclassicists have opposed «opening uP» the preferences,to see
whether behavior may also change over time becausepreferenceshave
changed, say becausethe valuations individuals accord to what they are
buying, higher education,havechanged.One reasongivento this opposition
is that neoclassicistsarguethat the factors that modify preferencescannotbe
studied empirically becausethey are irrational (such as value changes,
impulses, eruption of social movements). Our responseis that one should
not confuse the irrationality of the subjects (or the actors), or their value
commitments, with those of the observers.That is, we can studyscientifically, non-rational and even irrational behavior. Thus, we may examine the
effects of bright colors on people shopping, without being swayedto buy a
single item ourself. We may observethat once the lead lemmingjumps off a
cliff others will follow, while we still remain standing at the top.
Neoclassicistsalso argue that values «cannot » be measured,or, that
statementsabout them are basedon « ephemeral» data, data about statesof
mind rather than observablebehavior, for example, attitudes and survey
data. This criticism is, in part correct. These data, do not provide reliable
predictors of behavior, althoughpredictions basedon economic data often
do not fare better. However, there is no reasonin principle that the same
behavioral data, of the kind used by economists,cannot be used to determine the effects of values.We needto go into this matter here in somedetail
becausethe charge of «cannot be operationalized» is a serious one. It is
tantamount to stating that to studythe sourcesand dynamicsof preferences,
one must leave the realm of science.
594
To highlight the ways economic behavioral data can be used to study
values, we draw on Lancaster's idea of disaggregatingthe attributes of
consumer goods, as long as we have repeated observations over time.
Lancaster13points out that if we have numerous observations about the
price people are paying for a product, sayautos, that vary in severalways,
suchas color, design,and size, we can establishhow much thesepeople are
willing to pay for eachattribute, sayred color, four vs. two door, acceleration to 55 miles per hour in lessthan six seconds,and so on. We suggestthat
moral and other social valuations can be treated as one or more such
attributes. For example in the post World War II era, it was considered
unpatriotic to buy foreign cars; in some parts of America there were
speciallystrong anti-Japaneseand anti-German valuations. This should be
reflected and be measurablein the price like any other attribute of a car.
Furthermore, a comparison of the price of similar American and foreign
carsover time would allow us to testthe hypothesisthat valueswere at work,
becausewe know that over the years betweensay, 1955and 1970,anti-German and anti-Japanesevaluations have declined significantly. (Further
validation could be achieved by another form of disaggregation,by comparing groups within the U.S.A.. For example, Jewish groups were in some
years slower to acceptGerman cars than other ethnic groups).
Some neoclassicistsargue that values are reflected, like many other
factors, in the preferences,and there is henceno reasonto single them out.
They treat, as Mike McPhersonput it, a « taste » for peanut butter and the
« taste » for God as interchangeable.I provided elsewheresomearguments
why it seemsproductive to distinguish betweenthe utility of consumption
and that of the affirmation of moral values; deontologicalethics provides
additional reasons for the distinction as we already outlined. Here a
methodologicalreasoncomesinto focus: to developa satisfactorytheory of
economicbehavior, indeed of behavior in general,one needsto know, what
« drives » preferencesrather than take them asGod sentor « given ». Values
turn out to be a major factor shapingand reshapingpreferences.The next
stepis to ask what accounts for value changes?Here the role of education,
leadership,the massmedia and socialmovements,all macro -not intro-individual but collective, historical, institutional factors -come to the forefront. Without a systematic understanding of these,the dynamic study of
behavior is deeplylacking.
'3 See K. LANCASTER,« A New Approach to Consumer Theory », Journal
Economy, 1966, Vol. 74, pp. 132-157.
of Political
595
596
4. -Relevance to Development:Developmentfor What?
Neoclassicaleconomistsassumethat all people are basically the same
and that their preferencesare revealed in their behavior. Practically this
meansthat all peopleare assumedto seekconsumergoodsand services-the
« Western» life-style. Recently,developmentsin EasternEurope and mainland China seemto lend confirmation to this viewpoint. We, in turn, argue
that while peole all do have the samebasic humanneeds,(theseinclude need
for affection, self-respectand self-actualization)to some extent suchneeds
complement, and to some extent compete with consumeristic tastes and
values.This requires someelaboration.
The fact that many people in very different cultures seemto want the
samebasic goods 14,does not necessarilyindicate that this is all that people
are after. This holds for the recentdevelopmentsin EasternEurope which
showthat when peopleare deprived of basiccreaturecomforts or have great
difficulties in ensuring a steadyflow of them (as in Soviet shopping), they
grant them high priority. One would though expect, as the experience of
Scandinavia,the U.S. and affluent classesin other affluent societiesshows,
that once these needs are satiated to. a significant extent, and securely
provided for, people will shift their priorities to other concerns.The well
known findings that the proportion of people satisfied at higher levels of
income and developmentdoes not grow, atteststo this point 15.
While human needs,we hold for reasonsspelled out elsewhere16are
universal, their cultural modesof fulfillment are not. Thus, while all people
seekself-respect,what they consider respectfulis affected by sets of values
incorporated into their culture and sub-culture, which in turn are internalized to varying degrees,and then further honed by individual development.
When it comesto economicdevelopment,all people may well aspire to
a securesupplyof creaturecomforts and seekever higherlevels of consumption (however with less intensity, more willing to trade these off for other
achievements).
14See A. INKELES-D.H.SMITH, Becoming Modern: Individual Change in Six Developing
Countries. Cambridge, Harvard University Press, 1974.
ISSeeR.A. EASTERLIN,
« Does Economic Growth Improve the Human Lot? Some Empirical
Evidence », in Nations and Households in Economic Growth. Essays in Honor of Moses
Abramowitz. (edited by) P.A. David and M. Reder, New York, Academic Press, 1974, pp.
89-125. .
16See A. ETZIONI, «Basic Human Needs, Alienation and Inauthenticity», American
Sociological Review. 1968, Vol. 33, No.6, pp. 870-884.
All this would suggestthat what people want is what has beencalled an
American, Western, or affluent way of life. Many do, but as will become
increasingly evident in "the next years in EasternEurope, and as we have
already seenelsewhere,they may not necessarilybe willing to pay for them
in the coin of hard work and the other costs capitalism exacts.(We have
already seenin Yugoslavia that local workers quit in droves in McDonald's
hamburgeroutlets becausethey rejectedthe American pace of work). There
is no necessaryconnection betweenaspiringto a high standardof living and
a willingness to sweatfor it.
Neoclassicaleconomistsassumethat people can be motivated by their
consumergoals to work strenuously. Actually many people socialized in
non-Westerncultures (and quite a few socialized in severalsub-culturesin
the West),would much rather have the consumergoodswithout hard labor
(via welfare, foreign aid, drug running among others). (Note that many
people are on welfare due to others' fault, that countries need foreign aid
becausethey were previously or recently exploited, and so on. The result regardlessof who is to blame -is still a preferencefor income over strenuous
work).
More is entailed than disinclination to work strenuously.There is at
leastan equally strong opposition to facethe discipline of the market, above
all the anxieties and indignities involved. Particularly feared and resented
and opposedis the entailed loss in job security, in previously communist
societiesthe fear of losing one's constitutional right to have a job, and with
it a positively identified social role (an answerto the question by strangers,
family and self -who are you?), with a right to residence,to stay in business
(in the caseof shop or factory owners)and so on.
There is no way a country can have in the longer run an ever higher
standard of living for the massesand relatively lax work habits and
little market discipline. In effect all these developing countries are
seekingtheir own balance,determining how much of one they will trade off
for the other, while paying largely lip serviceto the merits of the Western
ways.
The intellectual, social and cultural needs to make such a choice
is further reinforced by the great difficulties in attaining a Western standard
of living. That is, even if a people would choose to work their back off
and readily subject themselves to the dislocations and anxieties the market
entails; they still would not be able to achieve a Western standard of
living anytime in the foreseeable future. This is the case for several
reasons, in particular lack of infrastructure and capital needed for stable
economic growth. These factors are almost universally present but
best examined in the context of a specific country, in this case Poland (not
a very underdeveloped country at all, but nevertheless, very much a case in
point).
597
5. -Infrastructure
Poland la-cksmuch of the infrastructure necessaryfor a rapid shift to a
free market economy.While statebanksexist, there is no systemfor clearing
checksand most businessis done on a cashbasis,a typically precapitalist
condition.
Furthermore, the radical changecalled for in the work-mix will entail
major shifts in population. In the U.S., when the auto industry was
shrinking and the oil industry was expanding,workers moved from Michigan to Texas; and in later years, when these fortunes were reversed, labor
followed in the opposite direction. Although in the U.S. such movements
entail considerable economic and human costs, in Eastern Europe such
relocationsare evenmore difficult. First of all, there is much lesstraditional
precedent for people to leave their families and communities in order to
move about; and second,the housingshortageis suchthat it is very difficult
to relocate-not to mention the costsof building newschools,hospitals, and
the other facilities required by new concentrationsof the work force. Many
other parts of the infrastructure are similarly quite underdeveloped.
6. -The Importance of Capital
Next is the matter of capital. While productivity is affected by workers'
morale, work ethic, and dedication, the amount of capital available per
worker is critical. Needlessto say,Poland and other suchcountries are very
shortof capital. It might be said that the West, througheconomicaid, credit,
and private investments could provide the capital needed for a new
infrastructure and capital goods. But first, it must be understood that the
necessaryamounts are much larger than the transitional aid usually cited;
after all, $ 24 billion in aid was given to Poland in the 1970sand was used
up without leaving much of a trace, other than $ 40 billion of accumulated
debt. To get a senseof the magnitude of the sumsinvolved, BusinessWeek
reports that EastGermany, the most productive and well-financed communist economy,would need$ 800 billion to bring its technologyand economy
up to par.
Moreover, Westernbanks and other investorsare unlikely to ignore the
risks involved. There are very strong reasonsto believe that sometime
during the next decadethere will be a major traditionalist reaction to the
recent changesin the USSR and at least in some of the Eastern European
countries. It does not take a full return to Stalinism for the Western
investors to lose all or most of their investments -as they did in recent
decades in scores of countries. We already have a case study of what
happenswhen, as AmbassadorRonald S. Lauder put it, Americans grab
deals in the East they would walk away from in the West. A study by Jim
Mann shows how Americans lost their shirts in China trying to build a
« Beijing Jeep» (the name of his book) the result of which is well summarized in the book's subtitle: The Short, Unhappy Romance of American
598
599
Business in Cfzina. Most Western investors are unlikely to repeat the same
mistake on a large scale.
It follows that Poland and other Eastern European countries will have
to prove their political stability over years and accumulate more capital of
their own if economic development on a higher level is to take place. In
short, progress will be, at best, gradual.
REFERENCES
EASTERLIN,
R.A. «Does Economic Growth Improve the Human Lot? Some Empirical Evidence », in Nations and Households .in Economic Growth. Essays in Honor of Moses
Abramowitz. (edited by) P.A. David and M. Reder, New York, Academic Press, 1974,
pp. 89-125.
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