THEDEEPHISTORICALROOTSOFMODERNCULTURE:ACOMPARATIVEPERSPECTIVE.*

BasedonKeynotelectureat2ndWorldCongressinComparativeEconomics,June2017.

November12017GerardRoland,UCBerkeley,CEPRandNBER

Keywords:comparativeeconomics,comparativehistory,institutionsinancienttimes,culture,individualism,collectivismJELcodes:N00,P40,P50Abstract:Thispaperpresentsevidenceshowingthatsinceantiquitytherehavebeentwoopposedtypesofinstitutionalsystems:oneresemblingcentralplanningandpresentinancientChina,ancientEgypt,theIncaEmpireandotherterritorialstates,andanotheronewithstrongmarketinstitutions,protectionofpropertyrightspresentmostlyincity-statesnotjustintheMediterraneanbutthroughouttheworld.Evidenceispresentedthattheseinstitutionaldifferencesdatingbacktotheantiquity,andshapedbyspecialgeographicalconditions,canbeseentobeattherootofthetwoculturalsystemsintoday’sworld:individualismandcollectivism.Theseculturaldifferenceshaveeffectsoneconomicperformanceandinstitutionsintoday’sworld.

*IamverygratefultoLiDuan,YunhaoZhang,YueMaandespeciallyShaoyuLiuforexcellentresearchassistance.

1. Introduction

Inrecentyears,avibrantnewliteraturehasdevelopedontheeconomicsof

culture.Alargepartofthatliteratureexaminestheeffectsofculturalvaluesandbeliefsoneconomicoutcomes(growth,institutions,fertilitychoices,femalelaborforceparticipation,….)Itismorechallengingtounderstandtheoriginsofdifferentcultures.Alargepartoftheexistingliteratureaimsatunderstandingtheroleofparticularhistoricalvariablesonparticularculturaltraits.AgoodexampleistheresearchbyAlesinaetal.(2011)onhowdifferencesinsoiltypesledtothechoiceofuseoftheploughorthehoeinworkingthefields,andhowthisaffectedgenderrolesandculturalnormsrelatedtogender(otherexamplesarediscussedbelow).Tothisday,therehasnotbeensystematicanalysisoftheroleofhistoricalinstitutionalsystemsonbroadculturalsystems.Thisiswhatwetrytodointhispaper.

Forinstitutionalisteconomists,thereisoftenthepreconceptionthatpre-

industrialeconomicsystemswereroughlysimilar,orthattheirdifferenceswerenotthatmarked.Thereisinsteadastrongfocusoninstitutionaldifferencesinamorerecentpast,culminatingwiththecoexistenceofcapitalistandsocialisteconomicsystemsinthetwentiethcentury.However,ifwegobackinhistory,asearlyaswhatJaspers(1951)callstheaxialage(betweenthe8thand3rdcenturyBC),wewillfindthatthereexistedverydifferentinstitutionalsystemsamongearlystates.Thephilosophiesandreligionsthatemergedduringtheaxialagewereareflectionoftheexistinginstitutionsofthetimeandonecanarguethattheirdifferencesreflectedinstitutionaldifferencesacrossthemajorexistingcivilizations.Surprisinglyandinterestingly,thephilosophiesandreligionsoftheaxialage(ancientGreekphilosophy,Hinduism,Bhuddism,Zoroastranism,Confucianism,Judaism,etc…)nearlyallstillplayanimportantroleinthemodernworld.Theyarethemaininspirationbehindmodernculturesandculturaldifferencesobservedintoday’sworld.

Lookingateconomicsystemsintheancientworld,wefindthatsomesystems

(Egypt,China,PeruundertheIncasandothers)weremorelikecentrallyplannedeconomies.Therewasnoprivatepropertyofland(thelandbelongedtotheEmperororruler),agriculturalgoodsandcraftgoodswereallocatedbythegovernment.Marketswerehardlydevelopedandforeigntradewasunderthecontrolofgovernment.Forlackofabetterwording,Iwillcallthemstatistsystems.Othereconomies,likeancientMesopotamia,Athens,theAztecsinMexico,theChampa(coveringroughlytoday’sSouthVietnam)weremoreclearlymarketeconomieswithprivatepropertyoflandanddevelopedmarkets,bothdomesticallyandinternationnally.Iwillcallthemmarketsystems.Manyothersystemswereinbetweenbothofthesesystems,asdocumentedbelow.

Thesedifferenceshavebeennotedbefore.MaxWeber(1922)usedthetermofpatrimonialstatetocharacterizestateslikeAncientChinaandotherswheretheabsolutedominationofthefatherfigureinafamilyisprojectedontothestate.Privateandpublicpropertyareblendedinthepatrimonialstate.

Wittfogel(1957)theorizedaboutorientaldespotismandhypothesizedthat

theabsolutistruleinancientChinaandEgyptwasbasedonfactthattheabsolutistrulefacilitatedwhathecalledthehydraulicstatewherethestateorganizedlargescaleirrigationsystems,whichcreatedconditionsthatmadebureaucraticandgovernmentdespotisminevitable.

Polanyiandcoauthors(1954)documentedthelimitedroleofmarkets,where

privategoodswereexchanged,intheAntiquity.Trigger(2003)providesaveryinterestingclassificationofancientsocieties,

basedonarcheologicalevidence.Heemphasizesmostlythedifferencebetweenterritorialstatesandcity-statesbuthisclassificationisquitecomprehensiveandbasedonextensivescholarlyevidence.

Amongeconomists,GreifandTabellini(2017)analyzetherelative

importanceofclansinformationofcitiesinChinaandEurope.TheyfindthatinChinesehistory,thedevelopmentofcitieswasbasedonclansandclanorganization,whichhasplayedanextendedroleinChinesehistory.Incontrasts,citiesinWesternEuropedevelopedonthebasisofindividualcitizenship.Theytracethesedifferencestoculturaldifferences:generalizedmoralityinEuropeversuslimitedmoralitywithintheclaninChina.Theculturaldifferencestheyemphasizeareclosetothedifferencebetweenindividualismandcollectivismthatweputforwardinthisstudy.

BritishhistorianMacFarlane(1978)foundthatasearlyasthe13thcentury,

individualistculturewasmoreprevalentasontheEuropeancontinentandthathouseholdstendedtobemorenuclear,relyingmoreonthemarketineconomictransactionsthansocietieswherepeoplewereembeddedinlargerclans.

Maysharetal.(2017)emphasizetheroleoftransparencyinproduction.

Wheneveroutputcouldeasilybemeasured,peasantsworkeddirectlyforthestate,aswasthecaseinancientEgypt.Whenoutputwasinsteadlesstransparent,peasantshadpropertyrightsoverlandlikeinMesopotamia.

Inthispaper,Ipresentadatabasebasedonhistoricalandarcheological

researchtocharacterizethemajordifferencesbetweenstatistsystemsandmarketsystemsintheantiquity.Theevidencewepresentshowsclearlythatthesetwosystemsformdistinctinstitutionalclustersthatarecomparabletothedifferencebetweensocialismandcapitalisminthetwentiethcentury.Thesedifferentsystemsoperatedinmostlyruralsocietieswheremodernindustrialtechnologywaslargelyabsentandwherelaborandlandwerethemajorfactorsofproduction.

Whydothesedifferencesmattertoday?Whystudythedifferencebetweenstatistandmarketsystemsinthedistantpastexcepttosatisfyournaturalhistoricalcuriosity?Theargumentputforwardinthispaperisthattheseinstitutionaldifferencesfromthepastmatteralottounderstandtheworld’slongtermeconomicandsocietaltrajectories.Indeed,followingBisinandVerdier’s(2001,2017)canonicalanalysisofthedynamicsofculturaltransmission,andespeciallythejointdynamicsofinstitutionsandculture,wecanhypothesizethatparticularearlyinstitutionshaveaffectedculturalvaluesandbeliefs,whichhasinturnhelpedconsolidateboththeseinstitutionsandtheunderlyingculture.GiventheinertiaofculturepredictedfromtheBisin-Verdiermodel(seealsoRoland,2004),institutionsmayhaveaffectedculturalvaluesandbeliefsthatarestillpresentintoday’sworld.

Themainculturaldivideintheworldtoday,accordingtocross-cultural

psychology,istheonebetweenindividualismandcollectivism(seeHeine,2008;seealsothesurveyinGorodnichenkoandRoland,2012).Individualistcultureplacestheindividualatthecenter,valuesindividualrightsandfreedom,opportunityandindividualsuccess.Collectivistcultureseesinsteadtheindividualasembeddedinacommunity(tribe,clan),emphasizesconformity,adaptationandharmony.

Theseculturaldifferenceshaveimportanteffectsintoday’sworld.In

GorodnichenkoandRoland(2017),itisshownthatindividualistcultureprovidesaboosttoinnovationandlongrungrowth.Individualismalsoaffectsinstitutionalchange.InGorodnichenkoandRoland(2015),individualismleadstoearlieradoptionofdemocracythancollectivism,andthelattermayleadtostableautocracy.Thedegreeofverticalintegrationinmulti-nationalcompaniesisalsoseentodependonculturaldifferences,especiallybetweenindividualismandcollecvitism(seeKukharskyyetal.2016).Manyothervariablescanbearguedtobeaffectedbytheseculturaldifferences(seeGorodnichenkoandRoland,2012).

Whileeconomistshaveincreasinglyrecognizedtheimportanceofculture,

alongsideinstitutions,oneconomicoutcomes,thereisalsoalargeliteraturetryingtoexplaintheoriginofculturaldifferences.Thisisnotaneasytopicbecauseitisdifficulttodisentangletheeffectsofculturefromtheircauses,andfilteringoutthecausesofcultureisimportanttobetterunderstanditseffects.

PsychologistsKashimaandKashima(1998)remarkedthatculturalvalues

couldbetracedbacktolinguisticdifferences.Totheextentthatthestructureofalanguagereflectsculturalvaluesandbeliefs,onecananalyzelinguisticandgrammaticalstructurestodiscoverculturaldifferences.KashimaandKashimapointedoutanimportantdifference:whetherornotalanguageprohibitstodropthepersonalpronouninasentence.ThisisforexampleprohibitedinFrench,GermanandEnglish,butnotinItalianorSpanish.Theideaisthataprohibitionwouldindicateamoreindividualistcultureasitinsistsondifferentiatingindividualsbyaclearindicationofthepronounused(first,secondorthirdperson).Anotherdistinctioniswhetheralanguagehasornottwodifferentpronounsforthesecondperson(TuandVosinLatin)todifferentiatebetweenamoreinformalandamore

formalwayofaddressingaperson.Theexistenceoftwodistinctpronounsforthesecondpersonofthesingular(existinginFrenchandItalianbutnotinEnglishforexample)wouldindicateamorehierarchicandlessegalitarianculture.Similarly,theyalsosingleoutwhetherthereisasingleorseveralexpressionsforthefirstpronounofthesingular.Forexample,thereisonlyoneexpressioninEnglish(I),butseveralinotherlanguageslikeJapanese.Theideaisthatiftherearemultipleexpressions,languageemphasizesmorethesocialfunctionofthepersonwhereasifthereisonlyoneexpression,languageemphasizesmoretheindividuality.KashimaandKashima(1998)documentthestatisticalcorrelationbetweenthelinguisticmeasurestheyputforwardandmeasuresofculturesuchasHofstede’sindividualismscore.Someoftheirvariableshavebeenusedasinstrumentalvariablestoanalyzetheeffectofcultureoninstitutions(seee.g.Lichtetal.2003,Tabellini,2008).

Otherresearchershaveemphasizedtheroleofthedistributionofparticular

variantsofgenesindifferentcountriesinshapingculturalvalues.Forexample,ChiaoandBlizinsky(2009)andWayandLiebermann(2010)analyzedrespectivelytheroleofvariantsofgenes(calledallelesinlifesciences)thatleadmoreeasilytodepressionwhenfacedwithstressfulsituationsandtheroleofvariantsofgenesthatcreatemorepainfromsocialexclusion.Theseauthorsfoundthatahigherfrequencyofthosevariantsofgenesweremorepresentinsocietieswithcollectivistculture.Thebasicideaisthatthosesocietiesandcommunitieswithhighfrequencyofthoseallelesthatdevelopedculturalvaluesandsocialnormstoprotectindividualsfromstressfulsituationsandsocialexclusionwouldfarebetterthanthosethatdidnotdevelopsuchvaluesandnorms.

Asimilarlogicisfoundwiththehistoricalpresenceofparticularpathogens.

Fincheretal.(2008)andMurrayandSchaller(2010)findthatcountrieswheretherewasastrongpresenceofpathogensbeforethe20thcenturydevelopedmorecollectivistcultures.Again,theideaisthatinareaswithhighpresenceofpathogens,thosecommunitiesthatdevelopedmorecollectivistnorms,restrictingindividualbehaviorandshowingalessopenattitudetowardsforeignerswouldbemorelikelytosurvuvebetter.

Otherexplanationsfortheoriginofindividualismversuscollectivisminvolve

thehigherfrequencyofricecropsoverotherwheatcropssincericeismorelabor-intensiveandrequiresbettercoordination(Thalhelmetal.,2014)orahigherpresenceofirrigation(Buggle,2015),inthespiritofWittfogel(1957).Ontheotherhand,Knudsen(2017)findsthatahigherrelianceonfishingforone’slivelihoodinhistoryismoreassociatedtoindividualism.

Theseareallinterestingexplanations,andmostofthosevariablescanbe

usedasinstrumentalvariables.Nevertheless,itisrelativelyeasytoseethattheseexplanationsarepartialatbest.Giventheimportanteffectsofcultureoninstitutionsandeconomicperformance,onewouldgainfromcomingupwithamorecomprehensivehistoricalexplanationoftheemergenceofculturaldifferences.

Thisispreciselyourgoalinthispaper.Wehavegatheredanumberofvariablesthatcharacterizeinstitutionaldifferencesintheancientpastaswellasgeographicalvariablesthatmayexplaintheseearlyinstitutionaldifferences.

Insection2,weprovidesomenarrativesfromtheantiquitytoillustratethe

institutionaldifferenceswefocusonthatarecharacteristicofancientsocieties.Onthatbasis,wedevelopinsection3aclassificationofvariablesthatshouldmattertounderstandtheseinstitutionalclustersofthepast,theiroriginandwhytheymayhaveaffectedculturaldevelopment.Insection4,wedescribethedatabasewehavebeenbuildingtomeasurethosevariables.Insection5,wegivesomepreliminaryregressionresultsbasedonthisnewdataset.Section6concludes.

2. StatistversusMarketSystems:SomeNarrativesfromtheAntiquity.

ItisusefultostartwithanarrativecomparisonofancientEgyptandancientMesopotamiatoillustratetheinstitutionaldifferenceswehaveinmind.

EgyptwasaterritorialstatewiththePharaohhavingauthorityoverthe

extentofEgypt’sterritory.Theareaaroundthe800kmlongNilewasofexceptionalfertility.SeasonalfloodingdepositedmineralsonbothsidesoftheNile,makingtheearthveryfertileforgrainlikebarleyandwheat.WhatisimportantforourpurposeisthattheproductionconditionsalongthesidesoftheNileweregeographicallyrathersimilar,creatinghomogeneousconditionsofproductionontheproductivepartsoftheterritory.ThismeansthattherewerenogreatbenefitsintradinggrainfromoneregionoftheNilewithanotherregion.Becauseofthehomogeneityinconditionsofproduction,insteadthereweregreatadvantagesincoordinationandspecializationproducingsuchgreatmonumentsasthepyramids,butalsovariousspecializedcraftwork(Trigger,1993).InancientEgypt,resourceswereingeneralallocatedbythegovernment.Internalmarketswerelimitedandforeigntradewascarriedoutbythegovernment(Trigger,2003,p.351).Ordinarypeasantsdidnothaveprivatepropertyoverland.Theywereworkingthelandandthegovernmentinstructedthemhowmuchgraintodelivertothegovernment(Trigger,2003,p.320).NotealsothatwhileslaverywaswidespreadinEgyptlikeintheancientworld,slaveswereingeneralpropertyofthegovernment,notofprivatehouseholds.Ineffect,householdsdidnot,asarule,ownprivateslaves(Trigger2003,p.160).LawsthatwerecodifiedinEgyptweremainlyaboutregulatingattitudesandbehaviorofordinaryEgyptianstowardsthePharaohandtherulingelite(Trigger,2003,p.228-233).IncontrasttoMesopotamia,therewasnoformallegalcoderegulatingrelationsbetweencitizens,butprovincialofficialshadrightsoflifeanddeathovertheirsubjects,thereweredetailedregulationsdefiningpunishmentsincaseoftheftofstateproperty,evasionofcorvée,dutytowardsthegovernment,theftsfromtemples,royaltombrobberies,conspiraciesagainsttheking.Socialstratificationinsocietywasratherlow.Therewasrelativeequalitybetweenordinarycitizens.Theywerenotslavesbutweremostlyunfreeastheylackedanybasicrights.TheEgyptiangovernmentadministrationfunctioned

inarelativelymeritocraticway.Highlevelofficialsenjoyedhighprestigeandbecomingonewasthemostimportantaspirationamongordinarycitizens(Trigger,2003,p.627).

Onmostoftheseaspects,Mesopotamia,locatednottoofarfromEgyptalong

theTigrisandEuphratesriver,wascompletelydifferent.Mesopotamiawascomposedofcity-statesforalargepartofitshistorystartingfromtheSumeriancity-states.IncontrasttotheNilewhereconditionsofproductionwerequitesimilarandhomogenous,thereweremarkeddifferencesbetweenNorthernandSouthernMesopotamia.SouthernMesopotamiawasquiterichinagriculturalgoodsbuthadfewothernaturalresources.TheNorthinsteadhadlotsofstone,timber,bronzeandproducedluxurygoods.Becauseofthisgeographicalheterogeneityinconditionsofproduction,therewasalotoftradebetweencitiesofNorthernandSouthernMesopotamia(Finer,1997,p.106).TradeinsidecitieswaslessdevelopedasnotedinPolanyietal.(1954).PrivatemerchantshadanimportantroleinMesopotamiasincetradewasquitedevelopedandorganizedtoalargeextentbytheseprivatemerchants(Trigger,p.343).Craftworkwasalsomostlydonebyprivatecraftsmen(Trigger,p.364).MarketsforlandwerehighlydevelopedincontrasttoEgypt(Trigger,p.333)andmarketsforprivateslaveswerethriving(Trigger,p.158).AlsoincontrasttoEgypt,thelawcodifiedrelationsbetweencitizens,inparticularregardingconflictsoverprivateproperty.Oneofthebiggestaspirationsinsocietyforcitizenswastoendupbeinganowneroflargetractsofprivateland(Trigger,2003,p.333).

Ifwelookatotherancientcivilizations,wefindthatancientChinahadmany

similaritiestoancientEgypt.Fromwhatweknowevenabouttheearliestdynasties,theShangdynasty(1600-1046BCE)andtheZhoudynasty(1046-256BCE),thesesimilaritiesarealreadyquitestriking.ThesedynastiesdevelopedaroundtheYellowRiverand,likeinEgypt,conditionsofproductionwerequitehomogenous,mostlypropitiousforgrowingwheat(Keightley,2014).Thereisevidenceofstrongspecializationanddivisionoflaborincraftworkinimperialworkshops(Trigger2003,p.371-373).FarmersdidnothaveprivatepropertyoverlandasalllandbelongedformallytotheEmperor(Trigger,p.325-26).LawsweredesignedtoregulaterelationsbetweentheEmperorandhissubjects,specifyingpunishmentsassociatedtobreachofobligationsofsubjectstowardstheEmperor.WhenChinawasunifiedforthefirsttimewiththeFounderoftheQindynasty(221-206BC),thedoctrineof“legalism”statedthattheEmperorshouldusethetooloftheLawtoexercisehispowerovercitizens.TheLawisthusseenasaninstrumentofoppressiontofurthertheinterestsoftheruler.ThisisstillthecaseinmodernChina.MaoZedongwasanadmirerofthefounderoftheQindynasty,QinShiHuangDi,andwhenpresidentXiJinpingmentionstheRuleofLaw,hehastheChineselegalisttraditioninmind.LikeinEgypt,inancientChinatherewerenoprivateslaves,onlypublicslavesworkingfortheEmperor,forexampleintheconstructionoftheGreatWall.Prisonersofwarwereusuallykilledinsteadofbeingtakenasslaves.OnedifferencebetweenancientEgyptandChinaisthatclansplayedamuchlargerroleinChina.ClanswereregroupedincitiesandtheEmperor

managedrelationswithhissubjectsviatheheadsofclans(Finer,p.450;seealsoGreifandTabellini,2017).AnimportantinnovationofancientChinaistheestablishmentofpopulationregistriestocontrolthemovementofpopulations.IncontrasttomedievalEurope,peopleneededanofficialpermittoliveinaparticularplace.ThemodernHukouthusalreadyexistedalonglongtimebeforetheCommunistRegime,putativelysincetheXiadynastyandthelegendaryYutheGreatalready.Interestingly,theMongolstookovertheinstitutionofpopulationregistryfromtheChineseinotherterritoriesthattheycontrolled,inparticularinRussiawhenitwasunderTatarcontrol,andtheRussianstookitoverintheirturnafterthecollapseoftheMongolEmpireandtheEstablishmentoftheRussiantsaristregimeoutoftheGrandDuchyofMoscowandkeptitundercommunismasthefamouspropiska,whichhelpedlimitfreedomofmovementofSovietcitizens.

OtherancientcivilizationslookedmuchmorelikeMesopotamia.Thiswas

verymuchthecaseforAssyria(growingoutofNorthernMesopotamiatotheWest,ancientGreece(coveringmodernGreecebutalsoAsiaMinorandtheSeainbetween)orancientPhenicia(locatedroughlyintheterritoryoftoday’sLebanon).Thesecivilizationsallwereabletobenefithighlyfromtradeandhadquitedevelopedforeignaswellasdomestictrade.Theyalsohadstrongsocialstratificationwithononehandfreecitizensenjoyinghereditarystatus,citizenshipandpoliticalparticipationrights,andontheotherhandpeoplewithoutrightsandfreedom,suchasslaves,butalsointermediatecategories.AncientGreeceinparticularwasdifficulttoconquerbecauseofitsgeography,alternatingmountainousterrainswithproximitytothesea,bothimportantobstaclestoexternalconquest.Proximitytotheseamadealsotaxationdifficultasmerchantscouldsmugglegoodsviatheseaandevadecustoms.

Thesedifferencesinancientcivilizationscouldbeobservedondifferent

continents.Everywherewherestateshadformed,somecountrieshadinstitutionsclosertoEgyptandChina,whileothershadinstitutionsclosertoMesopotamiaandancientGreece.

TheIncaEmpireinPeruandtheAndesregionwasforexampleverymuch

likeEgyptandChina.Tradewasverylimitedandproductionwasorganizedbythestateinwhatwascalled“verticalarchipelagos”(Murra,1968).TheAztecEmpireinCentralMexicoandtheMayasinSouthernMexicowereinsteadmoreorganizedascity-stateswheretherewasalargerolefortradeandmarkets(Trigger,pp.114-16).

3. InstitutionalclustersintheAncientWorldandtheireffectsonmodernculture.

Thenarrativeoftheprevioussectiongiveusasenseofthekindofvariables

thatmaymatterindescribingancientsystemsaseitherstatistsystemsormarketsystems.

3.1. ClassifyinginstitutionsoftheAncientworld.

Thebasicforcesatplayleadingearlysocietiesintheancientworldtobeeither

statistormarketsystemscanbecharacterizedintermsoftwoofthemostimportant,arguablyeventhetwomostimportantprinciplesineconomics:thebenefitsfromtradeversusthebenefitsfromspecialization.ThetheoryofcomparativeadvantagecreatedbyRicardoexplainshowtradecanmakeeverybodybetteroff.OnedoesnotevenneedRicardo’sideaaboutspecializinginone’scomparativeadvantagetounderstandthebenefitsfromtrade.TheCoasetheoremalreadyexplainshowtrademakeseverybodybetteroff.ThetheoryofdivisionoflaborcreatedbyAdamSmithexplainshowtaskspecializationcanspectacularlyexpandproductivity.Thesetwoprinciples1)thebenefitsfromtrade,2)thebenefitsfromspecializationcandeliverthekeyinsightsforwhywecouldobservethetwosystemsintheantiquity:marketsystemsversusstatistsystems.

Thesetwoprincipleshaveusuallybeenputforwardinthecontextof

industrialization.Notehoweverthattheforceoftheseprinciplesisequallyvalidinsocietieswherecapitalandtechnologyarelessdeveloped.Indeed,benefitsfromtradeareuniversallyvalid,buttheybecomestrongerwhenthecostsfromtradearebroughtdownviareductionintransportcostsmadepossiblebytechnologicalprogress.Similarly,thebenefitsfromspecializationcanbereapedwithoutmachines.Allthatisneededisadivisionoflaborandtasks.Ofcourse,machineshelpincreasethebenefitsfromdivisionoflabor,buttheyarenotapreconditiontoitsbenefits.

Differentsocietiesfaceddifferentinitialconditions.Somewerefacing

heterogeneousconditionsofproductionintheirgeographicalsurroundings.Thiscreatedstrongpotentialbenefitsfromtrade,therebyencouragingtheformationofmarketsandaclassofmerchants,aswellasdemandforprotectionofprivatepropertyrights.Conversely,insocietieswhereconditionsofproductionweremorehomogeneousandwherepotentialbenefitsfromtradeweresmaller,itwaspossibleinsteadtoenjoylargerbenefitsfromspecializationanddivisionoflaborbyhavingalargernumberofpeopleparticipateinproductionsoastoestablishamuchfinerdivisionoflaborandspecializationoftasks.Inthosesocieties,strongstatesdevelopedexercisingcontroloverallofsociety,withthemeansavailabletothematthetime.

Othergeographicalvariablescouldaffectthebenefitsoftraderelativetothe

benefitsofspecialization.Afirstoneiseasinessoftransport.Lowercostsoftransportmadeitpossibletoengageintradeoverlargerdistances,makingitmorelikelytofindlargerbenefitsfromtrade.Geographicalclosenesstoahottradingzonewouldsimilarlyaffectthebenefitsfromtrade.

Geographymayalsohaveaffectedtheeasinessoftaxation,whichwould

favorthedevelopmentofthestate.Traderoutesoverlandmadeiteasiertopost

customsofficerstotaxmerchantstravelingfromoneplacetoanother.Maritimetraderoutesontheotherhandmadeitmoreeasytosmugglegoods,especiallyifcommoditiescouldbeloadedandunloadedatdifferentplacesalongthecoast.

Geographicalvariablesmayalsoaffecttheeasinesswithwhichaterritory

couldbeinvaded,whichwouldalsofavorthedevelopmentofaterritorialstate.Plainsarethemostvulnerable.Mountainousareasoffermoreprotection.

Thedifferenceinbenefitsoftraderelativetobenefitsofspecializationledto

acertainnumberofsharpinstitutionaldifferences.Thefirstrelatestopropertyrightsandthelaw.Statistsystemsdidnothaveprivatepropertyoralegalsystemtoprotectprivatepropertyrights.Twoareaswhereonecanseethistypicallyislandandslaves.Intheantiquity,landandslavelaborweretwoimportantfactorsofproduction;landbecauseoutputwasmostlycomposedofagriculturalproducts,andslavesbecausetheirlaborforcecouldcontributetoallsortsofproductsandservices.Instatistsystems,peasantswerenotowneroftheirland,whichbelongedtotheruler.SlaveswereputtoworkongovernmentprojectslikethepyramidsortheGreatWall,buttherewasnoprivatemarketwherehouseholdscouldbuyandsellslaves.

Legalsystemswouldbedifferentinstatistandmarketsystems.Inmarket

systems,theroleofthelawwouldbetoprotectprivatepropertyrightsandtherightsoffreemenandwomen.Inotherwords,thelawwouldprotectindividualsfromboththestateaswellasfromotherindividualsencroachingontheirrights.Instatistsystemsinstead,thelawisseenasaninstrumentusedbytherulertoensureobedienceofhissubjects.Thisis“rulebylaw”insteadof“ruleoflaw”.Inthiscase,thelawspecifiesthedutiesofsubjectstowardstheruleraswellasthepunishmentsassociatedtobreachoflaw.Thelawisthusmoreaninstrumentofoppressionthananinstrumentofprotection.Thebestexampleforthisisthe“legalist”doctrineinChinaintroducedbythefirstEmperorwhounifiedthecountryQinShiHuang,thefounderoftheQindynasty.

Differencesinpropertyrightsandlegalpropertyrightprotectionwould

translateintodifferencesindevelopmentofmarkets,bothdomesticandforeign.Marketsystemswouldhavedevelopedprivatemarkets.Privatemerchantswouldplayanimportantroleintrade,andtheirroleinsocietywouldbeimportant.Instatistsystems,domesticmarketswouldbelessdeveloped,foreigntradewouldbeconductedmostlyfortherulerorviagovernmentchannels.Privatemerchantswouldbemoremarginalizedinsociety.

Similarly,citieswouldplayamoreimportantroleinmarketsystems

comparedtostatistsystemssincemarketdevelopmentisassociatedtothedevelopmentofcities.Incontrast,instatistsystems,onewouldtendtoobservemorethedevelopmentofterritorialstatessinceastronggovernmentwouldbeabletocoordinateproductionoversufficientlylargeterritories.Statistterritorialstates

wouldthusalsobemorecentralizedwhilemarketsystemswouldhavemoredecentralizedformsofgovernment.

Statistsystemswouldtendtobelesstoleranttowardsforeignerswhereas

marketsystemswouldbemoretolerant.Indeed,ahighleveloftradeisassociatedwithhighlevelofethnicdiversityasmerchantstravelinandoutofcountries.Instead,statistsystemswouldbewaryoftoleratingtoomanyforeignersonitsterritoryasitislesseasytoexercisecontroloverforeignersthanoverlocalsubjects.

Similarly,weakclansystemswouldbemorefavorabletomarket

developmentwhereasstrongclansystemswouldbeassociatedwithnonmarketallocationofresourceswithintheclan.Whetherclanswerestrongorweakdependedmuchonexistingkinshipsystems.Manykinshipsystemsintheworldareunilineal,meaningthatsomeone’sdescendanceistracedthrougheitherthefather(patrilinealoragnaticsystem)orthroughthemother(matrilinealsystem).Unilinealorcognaticsystemsaremorefavorableforclandevelopmentassomebody’smembershipofaclaniseasilytraceabletomaleorfemaleancestors.Livinginlargeclansmeansallocationofresourceswithintheclan,thuswithoutusingmarkettransactions.OtherkinshipsystemslikethebilinealkinshipsystemthathasbeenprevalentinNorthernEuropethroughouthistoryforexamplemeanthatone’sancestorsshouldbetracedthroughbothone’sfatherandmother.Withbilinealsystems,thereisnomoreaclearcutmembershipofaparticularclan.Householdstendtobemorenuclearfamilieswithlessextensivetiestootherfamilymembers.Asaconsequence,membersofnuclearfamilieshavetomakemoreuseofthemarketbyexchanginggoodsandserviceswithpeopleoutsidetheirfamily.Bilinealkinshipsystemswouldthustendtobeassociatedwithstrongerdevelopmentofmarketsandpropertyrights,whereasunilinealkinshipsystemswouldbeassociatedwithstrongclansandasmallerdevelopmentofmarkets(ontheeffectsofkinship,seetherecentpaperbyEnke,2017).AswasthecaseinancientChinaforexampleintheShangdynasty,theEmperorwouldruleoverhisterritoryviarelationswithclanheads,whereclanswerelivinginurbanconcentrations.

Onewouldalsoexpecttoseestrongersocialstratificationinmarketsystems

comparedtostatistsystems.Indeed,thisisimpliedbythecombinationofprivatemarketsforslavesaswellaslawsprotectingpropertyrightsofcitizens.InAthensforexample,freecitizensenjoyedthemostrightsastheycouldholdpoliticalofficesandvote.Metics,residentaliens,werefreebutdidnothavepoliticalrights.Finally,slaveshadnorightsatall.ThecastesysteminIndiaorhereditaryaristocracyinfeudalEuropeisillustrationsofstrongsocialstratification.Socialstratificationtendedtobelowerinstatistsystemsasmostpeoplewereunfreeandsharedthislackoffreedominaratheregalitarianway.

3.2. Theeffectofancientinstitutionsonmodernculture.Wenowdiscusstheeffectsofstatistandmarketsystemsonculture.The

frameworkwithinwhichwearelookingatthisisverysimilartothecanonical

modelofBisinandVerdier(2014)aboutthejointdynamicofinstitutionsandculture.Weindeedasktowhatextentthedifferentinstitutionalsystemsoftheancientworldaffectedculturalvalueandbeliefs.Wemakeseveralargumentstothatextent.Giventhefactthatthesedifferentinstitutionalsystemsexistedforaverylongtime,culturalsystemshadthetimetoemergeinaconsistentway.Giventheinertiaofculture(seeinparticularRoland,2004),itisplausibletothinkthatculturaldifferencesintheworldtodayare,atleasttoapartialextent,thelegaciesoftheculturalsystemsthatformedintheancientworld.

Firstofall,socialstratificationmayhaveworkedasapowerfulforceforthe

emergenceofindividualistculture.Indeed,animportantcharacteristicofindividualistcultureissocialprestigerewardfromstandingout.Socialstratificationleadsthoseatthetopofthesocialhierarchy(freecitizensinAthens,BrahmincastemembersinIndia,DukesandCountsinfeudalEurope)tostandout.Sincetheeliteplaysanimportantroleinelaboratinganddiffusingculturalvalues,onecanunderstandhowsocialstratificationleadstovaluesglorifyingsuchstratification.

Atthesametime,privatepropertyisalsoafactorleadingtothedevelopment

ofindividualistvalues.Theextentofprivatepropertymaybeseenasdefiningsomebody’svalue.Thelargerthesizeofone’sproperty,themoreonestandsoutandthehigherone’ssocialstatus.

Onecanalsounderstandhowstatistsystemswouldhavefosteredcollectivist

values.Firstofall,insidelargeclans,somedivisionoftasksexistedbetweenmembersoftheclan.Fulfillingone’spositionandfittinginthelifeofthecollectivity,whateverone’sposition,wouldberewardedbysocialprestige.Asimilarlogiccanbeseentoapplyoutsidetheclanandinsocietyatlarge,inparticularforthosehavingapositioninthegovernmentadministration.BeingaloyalservantoftheEmperorandfulfillingone’sdutieswouldberewardedbypromotion,butalsobysocialprestige.

Theseargumentsmayseemsomewhatabstractbutacomparisonofsomeof

themainphilosophiesandreligionsthatemergedintheAncientworldcanmaketheseideasmoreconcrete.Confucianistphilosophyisagoodexampleofacollectivistphilosophy.IthasbeenarguedthatthesuccessofConfucianistphilosophyatthetimeoftheZhoudynastywasduetothefactthatitcodifiedexistingsocialnormsandculturalvalues.WithoutexplainingindetailConfucianistphilosophy,itisquitestrikingthatitinsistsonpeopleholdingtheirrankinsocietyandinfulfillingthedutiesoftheirrank.Thus,ayoungerbrotheristoshowrespecttoolderbrothers,asontohisfather,thelivingtotheirancestors,subjectstowardstheEmperor.Stabilityandorderrequirepeopleadheringtothenormofbehaviorassociatedtotheirrankinsidethefamilyandwithinsociety.Similarly,fatherswereobligedtotreattheirsonsfairly,andtheEmperorhadthedutyofbehavinginabenevolentwaytowardshissubjects,orelsehewouldrisklosingthe“MandateofHeaven”.Buddhistphilosophyalsohasstrongelementsofcollectivism.Buddhismdoesnotencourageindividualstostandout,butinsteadtolosetheirindividuality,

abstractfromtheirdesiresandmergewiththesurroundinguniverse.TheseEasternphilosophiesstandincontrastwithGreekphilosophyandJudeo-Christianreligion(andlaterIslam),thataremoreindividualist.Greekphilosophyencouragesindividualstoexcel,beitasasoldier,aphilosopher,apoliticianoramerchant,andconsiderscompetitionashealthymeanstoexcellence.ChristianreligionemphasizessalvationoftheindividualandtherelationbetweentheindividualandGod.TheseaspectsofChristianreligionwerereinforcedlaterwiththedifferentvariantsofProtestantism.

Ifourhypothesesarevalid,thenweshouldseeanempiricallinkbetween

variablescharacterizingstatistsystemsandcollectivismononehand,andvariablescharacterizingmarketsystemsandindividualismontheotherhand.Itisnotthefirsttimesuchhypotheseshavebeenformulated,butIamnotawareofasimilarhistoricaldatacollectionasinthispapertoinvestigatewhetherthesehypothesesholdwater.

4. AdatabaseonComparativeHistoricalInstitutions

Usingextensivehistoricalandarcheologicalsources,wecollecteddataon

thevariableslistedinTable1for97countries.Thecountrylistisnotexhaustive.WerestrictedourselvestothelistofcountriesforwhichwehaveHofstedeindividualism/collectivismscoressincetheprimaryaimofourresearchistounderstandhowancientinstitutionalsystemsstillaffectmodernculture,i.e.valuesandbeliefs.

Thisfirstdatacollectionisbaseduniquelyonthereadingofhistoricaland

archeologicalscholarlysourcesonthetopic.Needlesstosay,thisinvolvesahugeeffortinthecollectionofhistoricalinformation.Indoingthisdatacollection,wehadtomakeseveralchoices.

Afirstchoicewehadtomakewasontheexacttimeperiodtofocusonfor

eachcountryforthedatacollection.Thebasicchoicewemadewastochoosetheoldestperiodofearlycivilizationforwhichwehavehistoricalandarcheologicalsources.Thisusuallycoincideswithancientstateformation,butnotalways.1Sincethereisarelativeinvarianceininstitutionalcharacteristics,especiallyatthetimeoftheformationofancientcivilizations,wecanbeconfidenttomeasurevariablesthathadacertaindegreeofpersistence.Thereisofcoursenoabsolutetimeinvarianceonallvariables,butitisneverthelessquitestrongwhenweconsiderallvariablestogether.Thistimechoicewasrelativelystraightforwardinmostcases,astheseancientcivilizationsaffectedfuturehistoricaldevelopments.ThisisobviousforexampleinthecaseofChina,ancientRomeorancientGreece.ItisnotobviousatallforancientEgypt,thelongestlastingancientcivilization,thatwasnot1Forexample,thePhilippinesdidnotreallyhavestateformationbeforeSpanishcolonization.ThisisalsothecaseforsomeAfricantribes.

onlywipedouttwothousandyearsago,butthatdoesnotseemtohaveleftmanytracesincontemporaryEgypt.Onemightargueinthatcasethatlaterperiodsmightbemorerelevant.Itwould,inourview,howeverbearbitrarytodothingsthisway,andthiskindofdataselectionwouldbiasourdatacollectiontowardsfindingstrongpersistenceofearlyinstitutions.Wethinkitismoretransparenttolookasfaraspossibleinhistorytounderstandtheemergenceofparticularinstitutionalclustersandtheirhistoricalimpact.Ontheotherhand,insomecases,notonlyhaveancientcivilizationsdisappeared,buttheirancientpopulationswerereplacedbynewandcompletelydifferentpopulations.ThisisthecaseforexamplewithBritishcoloniesintheUnitedStates,Australia,CanadaandNewZealandwhereimmigrationandthequasi-eliminationofindigenouspopulationsbythenewmigrantsprofoundlytransformedthosecountries.Forthosecountries,wesimplyusedtheinstitutionaldatawehavefortheUKsincethisisthelargestoriginofthemigrants.Similarly,forSingapore,weusedthedatafromChina.Countrycompositionofmigrantsthusplayedanimportantroleinourchoiceoftimeperiodforacountry.Achoicethatispotentiallymorecontroversialisthechoiceofthepost-TatarDuchyofMuscowyforRussia.RussianhistoriographyalwaysemphasizesKievanRusasthecradleofRussiancivilization,butthishasbecomemoreandmorecontroversialovertime.WethinkourchoiceisreasonablesincetsaristRussiareallystartedtodeveloponlyaftertheeliminationoftheTataryoke,andourdatacollectionshowsthattheTatarsleftadeepinfluenceonRussia’sinstitutions.

Asecondissuehastodowiththeabsenceofoverlapbetweencurrent

countryboundariesandancientboundaries.Ifancientboundariesarelargerthanthecurrentones,thereisnoproblem.Theproblemariseswhenancientboundariesweresmallerthanthecurrentones.Thisismostlythecaseforsomebigcountries.ThemostobviouscaseisIndia.Here,wecollecteddataontheinstitutionsofthreeancientempires/kingdoms:theMauryanEmpire(322BCE-185BCE)thatcoveredmostlyNorthernIndiabutexpandedmosttotheSouthunderEmperorAshoka;theBengalKingdomthatstraddledcurrentBanglaDeshandcurrentWestBengalinIndia,aswellastheTamilkingdoms.Similarly,thecurrentterritoryofSouthVietnamwascoveredforaverylongtimebytheChampaEmpire(27BCE-1453CE),whileNorthVietnamwaspartofChinaformorethanthousandyears.

Athirdissuehastodowiththefactthatinsomecases,therehavebeen

multipleinfluences.Wetriedtoavoidasmuchaspossibletochoosemultipletimeperiodsinhistory,butinsomecasesitwasimpossibletodootherwise.ThemostobviouscaseisthatofLatinAmerica.Ononehand,importantancientcivilizationshaddevelopedthere,whichareimpossibletoignore:theIncaintheAndesregion,theAztecinCentralMexicoandtheMayaaroundtheYucatanpeninsula.Ontheotherhand,Spanishcolonizationlastedroughly500yearsandhadanenormousinfluenceonLatinAmerica.Insomecases,theinfluenceoftheSpanishwaspredominantastheyoccupiedterritoriesinhabitedbytribesthathadnotyetreachedstatehood,thatdiedoutorwereexterminatedtoalargeextent,andforwhichwehaveverylittleinformation.Againthepopulationcriterionplayedan

importantrolehere.ThePhilippinetribeshadnotyetreachedstatehoodbythetimeofSpanishcolonization,buttheautochtonouspopulationremainedverylarge,sowetooktheirinfluenceintoaccount.AchoicethatmayappearcontroversialisthatwedidnottakeintoaccountanycolonialinfluenceinAfrica,exceptforSouthAfricacolonizedbytheBoers.Indeed,thecolonialerainAfricahasbeenmuchshorter(roughly100years)thaninLatinAmericaandonecanarguethatcolonialpowersinAfricadidnotleaveanimprintasbigastheSpanish(orthePortuguese)leftinLatinAmerica.

TableA1intheappendixshowsthemappingbetweenmoderncountries

andancientfoundingcivilizations.Wescoredmostofthevariableswecollectedwithnumbersfrom1to10,

usingparticularcriteriaforourscoring.Thisisthecaseforthefollowingvariables:1)heterogeneityofproductionconditions,2)easinessoftransport,3)closenesstoahottradingzone,4)easinessoftaxation,5)easinessofconquest,6)natureofthelegalsystem(citizen-citizenorruler-subject),7)propertyrightsoverland,8)propertyrightsoverslaves,9)developmentoftradewithinthepolity,10),developmentofforeigntrade,11)theroleofmerchantsinsociety,12)theimportanceofcities,13)governmentdecentralization,14)tolerancetowardsforeigners,15)ethnicdiversity,16)extentofsocialstratification,17)strengthofclan.Thereissomewhatofacontinuuminthemeasurementofthosevariables,andwetriedtoscorecountryvariablesusingascaleof1to10toreflectthiscontinuity.Othervariableswerecodedasdummyvariables.Thisisthecaseforkinshipvariables(unilinealvsbilineal)aswellaswhethertheancientcountrieswerecity-statesorterritorialstates.Theappendixcontainsthescoringcriteriaused.Weareconstructingawebappendixthatcontainsnotonlythescoresbutalsothesupportinghistoricalevidence.Manyofthesevariablescanbebettermeasured,especiallythosedeterminedtoalargeextentbygeography.

Thedisadvantageofourmethodisthatwecanbeusedofarbitrarinessin

thescoring.Thisiswhywewanttomakethedataavailableinatransparentwaysoastocorrectpossiblemistakesofjudgment.

5. Preliminarydataanalysis

Westartbyshowingthecorrelationmatrixbetweenthevariableswe

collected.ThisisshowninTable2.Significantcorrelationsareindicatedinbold.Aswecansee,manyofthevariablesarestronglycorrelated,whichisnotsuprisinggivenourexpectationsofobservinginstitutionalclusters.

5.1.Institutionalclustersinancienttimes.Toputsomeorderinourdescriptiveanalysis,westartbylookingatthe

relationbetweenexogenousvariablesandinstitutionalvariables.InTables3and4,welookattheeffectofgeographicalvariablesontheintensityoftradeinancient

times.InTables5,6and7,welookatinstitutionalandsocialeffectsassociatedtohigherlevelsoftradeandinTable8,welookatlongtermeffectsofearlyinstitutionsonculture.

Table3looksattherelationbetweenheterogeneityofproduction

conditions,easeoftransportation,easinessoftaxationandclosenesstoahottradingzoneonintensityofdomestictrade,intensityofforeigntradeaswellasontheimportanceofmerchantsinsociety.NotethateasinessofconquestwasnotsignificantlycorrelatedwiththosevariablesandweomitteditintheTable.Thevariableshavetherightsignandaremostlysignificant,thoughheterogeneityofproductiondecisionsceasestobesignificantwhenweincludeclosenesstoatradingzone,arguablyduetomulticollinearitysincethetwovariablesarestronglycorrelated.

Table4looksattheimportanceofcitiesinancienttimesasafunctionofthe

samevariablesandtheresultsareroughlysimilar.Thistime,easinessofconquestappearssignificant.Citieswereindeednotonlyplacesoftrade,theywerealsosafehavensprotectingpeoplefromoutsideaggressors.

Table5looksatthedeterminantsoflegalsystems,i.e.whetherlegalsystems

were“citizentocitizen”protectingpropertyrights,orinstead“rulertosubject”regulatingthebehaviorofsubjectstowardstheirruler.Asonecansee,legalsystemsthatwere“citizentocitizen”wereassociatedtohigherintensityofdomesticandinternationaltradeaswellasimportanceofcitiesandmerchants.Itisalsoassociatedtoeaseoftransportation,which,asseeninTables3and4,affectedtheintensityoftrade.

Table6looksattheextentoftheinstitutionofprivateslavery.Wesee

similareffectsasinTable5.Privateslavemarketsweremorepresentinplaceswheretherewashighintensityofdomesticandinternationaltradeandwheremerchantsandcitiesplayedamoreimportantrole.Itisalsocorrelatedwithgeographicalvariablesaffectingtheintensityoftrade.

Figures1and2lookattherelationshipbetweensomevariablesthattake

onlytwovalues.InFigure1,wecanseethatclanstrengthwasstrongerinunilinealkinshipsystemsrelativetobilinealkinshipsystems.Thisisnotsurprisinggivenourdiscussionofkinshipsystems.InFigure2,weseethatpropertyrightsoflandweremoredevelopedinplaceswithbilinealkinshipsystems,whichalsocorrespondstoouranalysisabove.

Table7looksattheextentofsocialstratificationinancienttimes.Aswecan

see,itispositivelycorrelatedwiththeimportanceofmarketsforprivateslaves,withthelawbeing“citizentocitizen”,withtheimportanceofmerchantsandwithprivatelandownership.Itisnegativelyassociatedwithclanstrength.Thisisnotsurprisinggivenourabovediscussionthatmarketsystemstendtocreatemoresocialstratificationthanstatistsystems,wheremostpeoplearenotfree.

Fromthesedescriptiveregression,wegetaprettygoodpictureofstatist

versusmarketsystems.Statistsystemshadlowerintensityofdomesticandforeigntrade,citiesplayedlessofaroleandtheroleofmerchantswassmaller;legalsystemswerefocusedontherelationbetweenrulerandsubjectsratherthanrelationsbetweencitizens,theinstitutionofprivateslaverywaslesspresentandprivatelandownershipwaslessdeveloped;socialstratificationwasalsolessdeveloped.Ourempiricalanalysisalsoshowsthatstatistsystemsweremorelikelytoemergeundergeographicalconditionswhereconditionsofproductionweremorehomogeneous,transportwaslesseasybutconditionsoftaxationweremoreeasy.Theseresultsallcorrespondtoourtheoreticaldiscussionfromsection3.

5.2.Ancientinstitutionsandmoderncultures.Wenowexaminetowhatextenttheseancientinstitutionalsystemsmay

haveaffectedmodernculture,aswehypothesizedinsection3.Inparticular,welookattheextenttowhichmarketsystemstendedtodevelopamoreindividualisticculture,whereasstatistsystemsdevelopedamorecollectivistculture.

First,weseeinFigure3thatindividualismscoresarehigherinplacesthat

usedtobeorganizedascity-statesratherthanasterritorialstates.Indeed,individualistcultureisassociatedwiththecultureofcitizenship,whichhasdeeperrootsinsocietiesthatwereorganizedascity-states.Figure4showsthatindividualismscoresarehigherinsocietiesthathadbilinealcomparedtounilinealkinshipsystems.Indeed,thelatterhadstrongerclansystems,whichismoreconducivetocollectivistculture.

Table8looksattherelationbetweenacertainnumberofvariablesand

Hofstedeindividualismscores.Column1,showingapositiveandsignificantcorrelationbetweeneaseoftransportationinantiquityandindividualism,canbeinterpretedasareducedformregression.Indeed,easeoftransportationreducedthecostoftradeandencouragedformationoftrade,privatepropertyandlegalsystemsprotectingpropertyrights.Column2showsthatancientlegalsystemsemphasizingrelationsbetweencitizensarepositivelyandsignificantlyassociatedwithindividualismscores.Column3showsapositiveandsignificantpositiveassociationwithprivateslaveholdingandcolumn4showsapositiveandsignificanteffectofsocialstratification.Column5showsallthesethreevariablestobesignificantinajointregression.Thisconfirmsourviewthatancientmarketsystemsfosteredindividualistculturegivingsocialprestigetoindividualachievementwhereasstatistsystemsbredacollectivistcultureawardingsocialstatustoconformityandembeddedness.

6. Conclusions.

Wehaveputtogetheranewdatabaserelativetoinstitutionsinancient

history.Wefindthatsomesocietieswereorganizedasstatistsystemswithresourceallocationdonebythestate,underdevelopmentofpropertyrightsandlegalsystemsfocusingonenforcingthepoweroftheruler.Othersocietiesweremoremarketoriented,withabigrolefortrade,bothdomesticallyandinternationally.Thesesocietieshadlegalsystemsfocusingmoreonconflictsbetweencitizens,suchasconflictsoverproperty.

Itappearsthatgeographymayhaveplayedanimportantroleindetermining

whetherancientsocietiesbecamestatistormarketsystems.Oneimportantvariablerelatestoheterogeneityorhomogeneityofconditionsofproduction.Heterogeneitycreatedlargebenefitsfromtrade,whichmayhaveledtotheemergenceofmarketsystems,whereasgreaterhomogeneitymayhavegeneratedbenefitsfromdivisionoflaborandspecialization,whichmayhaveledtotheformationofstatistsystems.

Wehaveshownthatcountriesthatusedtoberuledbystatistsystemstend

todaytohaveamorecollectivistculture,whilecountrieswheremarketsystemsdevelopedinthepast,tendtohaveamoreindividualisticculture.

Thisresearchisonlyinitsbeginningandmanyquestionsareraisedrelative

tothedeeperreasonsbehindtheemergenceofthesetwodifferentsystemsintheantiquity.Forexample,howtoexplainwhycouldthebenefitsfromtradenotbereapedviacentralizedresourceallocation?

Thedatacollectionneedstobemuchimproved.Inparticular,manyofthe

geographicalvariablesusedtoexplaindifferentinstitutionscancertainlybebettermeasured.Giventhattheinstitutionaldatahavebeencollectedandscoredviaexistinghistoricalscholarship,onemaybeconcernedofpotentialbiasesindatacollection.Wewillputonlinenotonlyourscoresforparticularvariables,butalsoliteraturenotestojustifyparticularscores.

Finally,itisimportanttodisentanglerelationshipsbetweenmanyofthe

variablesintroducedhere.Wearewellawarethatthecurrentpaperdoesnotgobeyondbroadquantitativedescription.Nevertheless,giventhenoveltyofthedataandtheapproach,wethinkthisdescriptiveexerciseisanimportantfirststep.

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TABLES TABLE 1. Statist and Market Systems Compared.

market institutions statist institutions

Comparative advantage of trade heterogeneity of production conditions strong weak

easyness of transport strong weak closeness to hot trading zone strong weak Other geographical variables

easyness of taxation weak strong easyness of conquest weak strong strength of property rights

Legal system citizen-citizen Ruler-subject Land ownership Private and public Public Right to own slaves private and public public only Development of markets

internal markets strong weak, central allocation foreign trade private for the ruler role of merchants strong weak Importance of cities large weak Government and society

type of state city-state territorial state government decentralization strong weak tolerance to foreigners strong weak ethnic diversity strong weak social stratification strong weak strength of clan weak strong kinship bilineal unilineal

Table2.CORRELATIONMATRIX.

TABLE3:PotentialbenefitsofTradeandintensityofTradeinAncientTimes (1) (2) (3) (4) (5) (6) Domestic

tradeDomestictrade

Internationaltrade

Internationaltrade

Importancemerchants

Importancemerchants

OLS OLS OLS OLS OLS OLS Easeoftransportation 0.470*** 0.259** 0.284*** (0.106) (0.111) (0.105)Hetero.Tradeconditions 0.291** 0.032 0.413*** 0.216** 0.310*** 0.079 (0.134) (0.119) (0.116) (0.092) (0.110) (0.094)Closetotradinghotzone 0.259** 0.267** 0.308*** (0.121) (0.115) (0.106)Easinessoftaxation -0.406*** -0.251** -0.350*** -0.243** -0.476*** -0.352*** (0.135) (0.116) (0.116) (0.108) (0.102) (0.085) Observations 84 83 84 83 84 83R-squared 0.172 0.514 0.267 0.496 0.282 0.562Notes:Robuststandarderrorsinparentheses***p<0.01,**p<0.05,*p<0.1

Table4:ImportanceofcitiesinEarlyTimes. (1) (2) (3) (4)VARIABLES OLS OLS OLS OLS Easeoftransportation 0.239* 0.228* (0.123) (0.121)Heterogeneityoftradeconditions 0.535*** 0.293* 0.548*** 0.303* (0.122) (0.167) (0.118) (0.165)Closetoatradinghotzone 0.316* 0.298* (0.160) (0.160)Easinessoftaxation -0.056 0.058 (0.097) (0.082) Easinessofconquest 0.211* 0.056 (0.116) (0.103) Observations 83 82 83 82R-squared 0.164 0.340 0.191 0.340Notes:Robuststandarderrorsinparentheses***p<0.01,**p<0.05,*p<0.1

TABLE5:Institutionaleffects.Lawcitizentocitizen. (1) (2) (3) (4) (5) (6) OLS OLS OLS OLS OLS OLS Domestictrade 0.720*** 0.268 (0.076) (0.180) Internationaltrade 0.813*** 0.567*** (0.097) (0.213) Importanceofmerchants 0.749*** 0.228 (0.091) (0.226) Importanceofcities 0.260** -0.224** (0.124) (0.106) Easeoftransportation 0.548*** (0.145)Hetero.Tradeconditions 0.217 (0.167)Closetotradinghotzone 0.034 (0.159) Observations 95 95 95 86 86 83R-squared 0.408 0.386 0.330 0.051 0.479 0.272Notes:Robuststandarderrorsinparentheses***p<0.01,**p<0.05,*p<0.1

TABLE6:Institutionaleffects.Privateslaves (1) (2) (3) (4) (5) (6) OLS OLS OLS OLS OLS OLS Domestictrade 0.792*** 0.308* (0.066) (0.178) Internationaltrade 0.943*** 0.510** (0.072) (0.208) Importanceofmerchants 0.904*** 0.216 (0.073) (0.199) Importanceofcities 0.477*** -0.005 (0.111) (0.101) Easeoftransportation 0.426*** (0.124)Hetero.Tradeconditions 0.206 (0.138)Closetotradinghotzone 0.402*** (0.134) Observations 96 96 96 87 87 84R-squared 0.468 0.504 0.467 0.168 0.568 0.460Notes:Robuststandarderrorsinparentheses***p<0.01,**p<0.05,*p<0.1

TABLE7.Socialstratificationinancienttimes. (1) (2) (3) (4) (5) (6) OLS OLS OLS OLS OLS OLS Privateslaves 0.167*** 0.133 (0.061) (0.091)Lawcitizentocitizen 0.138** 0.001 (0.064) (0.110)Importanceofmerchants 0.161** -0.066 (0.076) (0.124)Privatelandownership 0.156** 0.072 (0.061) (0.126)Clanstrength -0.127* -0.055 (0.069) (0.074) Observations 93 92 93 91 93 90R-squared 0.094 0.062 0.049 0.075 0.036 0.103Notes:Robuststandarderrorsinparentheses***p<0.01,**p<0.05,*p<0.1

TABLE8:Longruneffectsofearlyinstitutionsonindividualismscores (1) (2) (3) (4) (5) Easeoftransportation 4.028*** (0.583) Lawcitizentocitizen 4.185*** 3.021*** (0.487) (0.523)Privateslaves 3.629*** 1.304** (0.477) (0.544)Socialstratification 3.790*** 1.660* (1.076) (0.860) Observations 95 95 96 93 92R-squared 0.293 0.439 0.346 0.113 0.502Notes:Robuststandarderrorsinparentheses***p<0.01,**p<0.05,*p<0.1

FIGURESFigure1

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bilineal unilineal

Kinshipsystemsandclanstrength

Figure2

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Kinshipsystemsandlandpropertyrights

Figure3

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EarlyStateTypeandaverageindividualismscores

Figure4

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Kinshipsystemsandaverageindvidualismscores

APPENDIX.

Table A1. Mapping between modern countries and ancient or founding civilizations Albania Illyria France Franks Angola Kongo, Mbundu, … ancient Rome Argentina Spanish colony Germany Ancient Germanic tribes Australia English colony Ghana Ashanti Austria ancient Germanic tribes Greece Ancient Greece Bangladesh Bengal Guatemala Spanish colony Belgium independent cities Honduras Spanish colony Bhutan Bhutan Hungary Hungary Brazil Portuguese colony Iceland Viking Bulgaria Blakanic Bulgaria India Mauryan Empire Burkina Faso Mossi kingdoms Tamil states Canada British colony Bengal Chile Inca Indonesia Indonesian Islands Spanish colony Iran Ancient Persia

China Ancient China (Shang and later) Iraq Mesopotamia

Colombia Inca Assyria spanish colony Ireland Celtic Ireland Costa Rica Spanish colony Israel ancient Israel

Croatia Ancient Rome + Eastern Adriatic coast Italy Ancient Rome

Czech Rep. Bohemia Jamaica Spanish colony Denmark Viking Japan Ancient Japan Dominican Rep. Spanish colony Kenya Swahili kingdoms

Ecuador Inca Korea Ancient Korea (Gokuryo, Baekje, Silla)

spanish colony Kuwait Mesopotamia Egypt Ancient Egypt Latvia Livonia El Salvador Spanish colony Lebanon Phenicia Estonia estonian tribes Libya Arabia Ethiopia Aksum Lithuania Grand Duchy of Lithuania Fiji Fiji Luxembourg Germanic tribes Finland Finnish tribes (continued below)

Table 2 (continuation) Malawi Maravi South Africa Boers Malaysia Malaysia + Sumatra Spain reconquista Castille Mexico Aztec Catalonia Maya Aragon Spanish colonizer Sri Lanka Sri Lanka Morocco Morocco Sweden Viking

Mozambique Tonga, Makua, Maravi and Karanga Switzerland Germanic tribes

Namibia German colony Syria Mesopotamia Nepal Nepal Assyria Netherlands Independent cities Taiwan China New Zealand English colony Tanzania Swahili kingdoms Nigeria Yoruba Thailand Dvaravati Norway Viking Trinidad and Tobago Spanish colony Pakistan Ghaznavid Turkey Seljuk/Ottoman Panama Spanish colony Assyria Peru Inca United Arab Emirates Arabia Spanish colony United Kingdom Saxons Philippines Spanish colony United States English colony pre-colonial Uruguay Spanish colony Poland Piast dynasty Venezuela Spanish colony Portugal reconquista Portugal Vietnam Champa

Romania Balkanic region Vietnam

North Vietnam/Southwest China/Tonkin

Russia Russia post-Tatar (Muscowy) Zambia Bemba Kingdom

Saudi Arabia Arabia Serbia Balkan Sierra Leone Tribes of Sierra Leone Singapore China Slovakia Hungary

Slovenia Ancient Rome + Balkan

SCORINGCRITERIA(DESCRIPTIONTOBECOMPLETED).

Heterogeneityofproductiondecisions.1-2:Veryhomogeneousgeographicalenvironment,oneoronlyafewkindsofresources.Typically,barrenlandduetoclimateorothergeographicalconstraints;alluvialplainonlyforgrainproduction;plantationeconomy3-4:Afewkindsofresources/products,somedifferencesofenvironmentacrossthegeographicalsurroundings.5-7:Somediversityofnotableresources,adifferentiatedenvironmentacrossthegeographicalsurroundingsandclosenesstoplaceswithdifferentresources.8-10:Verydiversegeographicalenvironment,manykindsofresources.Typically,vibrantinterregionaltradeofnaturalresources

Easynessoftransport1:noaccesstowatertransportation(lakes,riversorsea);landtransportationhastoovercomesignificantnaturalbarriers(jungles,swampsorhighmountains)typicallylackedbeastsofburdenandwheeledcarts2:lackednavigablerivers,landtransportationencounterssignificantnaturalbarriers(jungles,swamps,highmountains)3:lackedwatertransportation,landhassomenaturalbarriersthatblockcommunication4-5:lackedrivertransportation,butlandroutesarewell-maintainedanddonotencountermuchnaturalbarriers6:Moderaterivertransportation,landtransportationhassomebarriers(hills,trails,forests,deserts)7:Moderaterivertransportation,easylandtransportation.(well-maintainedroadsorplains)8:fairlyeasymaritimeand/orrivertransportation,difficultlandtransportation(e.p.jungles,mountains,bogs)9:easymaritimeand/orriverinetransportation,moderatedifficultyoflandtransportation(e.p.forests,deserts,hills,trails)10:easymaritimeand/orriverinetransportation;easylandtransportation(roadsystems;plains,etc)

LandOwnership1:noevidenceofprivateownershipinsociety,stateownershipdominates.2:noevidenceofprivateownershipinsociety,stateownership+communalorchiefownership3:noevidenceofprivateownershipinsociety,communalownershipdominates.4:someevidenceofprivateownership,whichcoexistedwithcommunal/familial/institutionalownership

5:mixed,limitedprivateownership6-7Privatelanddominates,cannotbetransferred;usufructrights;notinheritable,revertedtothestateafterdeath(iqta,Prazo)8:Privatelanddominates:ownedbyasingleperson;cannotbetransferred.Inheritablebuthadonlyusufructrights.9Privatelanddominates:ownedbyasingleperson;limitationsonlandtransactionorlittleevidenceoflandtransaction(example:landcanonlybetransferredwithintheclanorkindred);inheritable,anindividualcandisposethelandathisorherownwill.10:Privatelanddominates:ownedbyasingleperson;strongevidenceoflandtransferandtransaction.Canbeinherited,anindividualcandisposethelandathisorherownwill.

PrivateSlavery1:noslaves:serfdomandservants;mastersintegratedwarcaptivesintotheclan/adoption;2:noprivateslaves:uncommonforindividualstoholdslaves;typically,slaveswerewarcaptives;slaveswereheldbythechief/ruler/king/stateandworkedfortheruler;absenceofslavemarketandslavetrade;communalworkorcorveelaborreplacedslaveryinpublicworks3-4:privateslavesexisted,yetplayedaminorpartineconomiclife.Littleevidenceofslavemarketandslavetrade5-6:individualscanownslaves;existenceofslavemarketandslavetrade;slaverycoexistedwithserfdomandotherformsoflaborinsociety7-8slavesweretradedinmarketasproperty;individualscanownslaves;existenceofslavemarketandslavetrade;lawdefinedslavesasobjects;slaveryplayedanimportanteconomicroleinsociety9-10:Privateslavesslavesweretradedinmarketasproperty;verycommonforindividualstoownslaves;veryactiveslavemarketandslavetrade;lawdefinedslavesasobjects;slaveryplayedaveryimportanteconomicroleinsociety

RoleofMerchants1:Nomarket,reciprocityandredistribution2-3:taxationtodiscourageprivatetrade,stateagentscompetedwithprivatemerchants4-5:strictlyregulatedmarketwithprivatemerchants+statemonopoly6-7:strictlyregulatedmarketwithprivatemerchants8-9:governmenthadcertainlimitationsonprivatetrade10:Privatemerchantsinafreemarket

Governmentcentralization1:decentralized.Lackedaformofgovernment;societyisfragmentedintomanysmallandautonomousentities(bands/families/villages)2:Decentralized,lackacentralgovernment.manylocalauthoritiesareautonomousandthereisnotasinglecentralauthorityunifyingthem(tribes)3:mandala/largechiefdom/tribalconfederations.Thecentralauthorityhasweakoronlynominalsuzeraintyoverlocalauthority,localauthoritiesaredefactoindependentandautonomous4:suzerain-tributary/vassalrelationship(feudalism)5-6:powerissharedbetweenthecentralauthorityandlocalauthorities/institutions;thecentralgovernmenthaslimitedcontroloverlocalauthorities,someareas(cities/towns/state)haverightsofautonomy7-8:thecentralauthorityispowerfulandisabletoexertinfluenceandcontroloverlocalauthority,buttheeffectivenessislimitedbysomeotherfactors(ineffectivebureaucracy/religion/communicationetc.);localauthoritykeepscertainindependentrights9:highlycentralizedgovernment;thecentralgovernmenthaseffectiveeconomicandpoliticalcontrolovermostlocalgovernment(certainareashavelimitedautonomy/tributarystates/vassalstates)10:highlycentralizedgovernment;thecentralgovernmenthasaneffectivebureaucracy/toolstocontrollocalauthorityinalmostallaspectsSOCIALSTRATIFICATION1:societyisnotstratified(egalitarian).Statusisnothereditary.Typicallyseeninpre-statesorintribes,clansbasedonkinship2:Fewdistinguishablesocialstrataexistedinsociety.Statusisnothereditaryforthemostcasesandwidespreadmobilitybetweendifferentsocialstrata3:Societyhasafewsocialstrata.Statusisnotstrictlyhereditaryandmeritocracycouldprovidepossibilityofverticalmobility4:Societyhasafewsocialstrata.Somestrataarehereditarywhilethereismobilityintheothers.Example:Hereditaryfreemenandslaves.Lackedhereditaryaristocracywithinfreemen.theverticalmobilitywithinthegroupoffreemenispossibleandprevalent5:Societyhasmanysocialstrata.Somestrataarehereditarywhilethereismobilityintheothers.Example:Hereditaryfreemenandslaves.Weakhereditaryaristocracywithinfreemen.theverticalmobilitywithinthegroupoffreemenispossible6,7:Societyhasmanysocialstrata.Moststrataarehereditary;limitedverticalmobilitybetweenstrata.Example:hereditaryfreemenandslaves.Withinthefreemengroup,therewerethedistinctionsbetweenhereditaryaristocraticgroupsandcommoners/peasants/serfs8,9:Societyishighlystratified.Casteexistedinmostsocialclasses/groups.Anindividual’sstatusisalmoststrictlyhereditary.Limitedverticalmobilityamongdifferentstratainthehierarchy

10Societyishighlystratified.StrongCasteinalmostallclasses/groups.Anindividual’sstatusisstrictlyhereditary.Socialstatusisascribed;verylimitedverticalmobilityamongdifferentstratainthehierarchy(TOCOMPLETE)