August 2014

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In the West that the same crappy socialist ideas about "social justice" can be promoted as soon as the chattering classes have managed to forget about the Soviet Union and the fall of the Wall.

In the East that culture is a long lived thing. François Furet (in The Passing of an Illusion - The Communist Idea in the 20th Century) that there was nothing left, but Bourgeois culture (in Eastern Europe) when Soviet communism died.

But Russia didn't even return to Bourgeois culture. Unfortunately Russia was blessed with oil and natural gas. Otherwise it would have needed to face up to reality.

On the other hand, Argentina did not have oil and abandoned laissez-faire in 1929 and has made idiotic economic decisions ever since. So maybe, because Russia did not have a tradition of private property rights (see Richard Pipes), it was screwed in the short term anyway.

I don't think it's possible to design institutions. De Soto shows that most Latin American nations adopted constitutions similar to that of the US, and created the right institutions, only everyone ignored them and continued with their traditional ways.

The US has ignored its Constitution for at least the last century.

"Culture Matters: How Values Shape Human Progress" by Lawrence E. Harrison and Samuel P. Huntington concluded that religion creates culture and culture creates institutions. To change institutions, one has to change culture which means changing religions.

Hayek touched on that in "Fatal Conceit" when he wrote about the role of religion in persuading people to follow rules that have no obvious immediate benefit but whose benefits are long term

We can see what happens when both the rule of law and the traditional moral framework are effectively absent for two or more generations, compared with the diminished damage in Eastern Europe where they were only missing for a generation or so.

Attention has returned to the moral framework with the work of Deirdre McCloskey. It was flagged in a passing moment by Popper in a 1954 paper at the Mont Pelerin Society.

Something else that we have discovered especially from Hayek is the importance of traditions, rules and institutions that were notoriously overlooked in the kind of economics that has flourished under the triumph of positivism/empiricism and the cargo cult of inductive science, as described by Boettke and O'Donnell, Critical Review, last year.

Regarding the role of religion, the concept of "the new traditional economy" is one way to approach this in the comparative systems context.

In any case, have fun with it, Pete, :-).

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