W_CHAPTER15 - Chapter 15 On the Convergence of Ideas and...

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Unformatted text preview: Chapter 15. On the Convergence of Ideas and Values among Civilizations Our &rst aim in this concluding chapter is to bring together the funda- mental conditions of economic growth. As we mentioned at the outset of Part I, we believe they were laid out in a de&nitive, masterly way by Ibn Khaldun in his Muqaddimah ( Introduction to History , 1377). Western civilization had to wait four centuries for those conditions to be formulated independently. One of them would be expressed in a most daring and powerful conjecture: we owe it to Adam Smith. It is intimately linked to the very engine of growth we have described in this text: investment, or the accumulation of capital. Smith wrote that whenever individuals try to &nd the most advantageous use of their capital, they are led to prefer that employment which is most advantageous to society. By doing so, the individual ¡intends his own gain, and he is in this as in many other cases, led by an invisible hand to promote an end which was no part of his intention¢ 1 . Here is what Kenneth Arrow had to say about Smith£s conjecture: ¢The notion that a social system moved by independent actions in pursuit of dif- ferent values is consistent with a &nal coherent state of balance, and one in which the outcomes may be quite di/erent from those intended by the agents, is surely the most important intellectual contribution that economic thought has made to the general understanding of social processes¢ 2 . The conjecture is daring: it is not in the least supported by intuition. It is also far reaching because it can steer society away from what might appeal to many: the centralization of decisions, or planning. Our second aim in this chapter will be to convert Smith£s conjecture into a theorem. The power and similarity of Ibn Khaldun£s and Adam Smith£s messages will induce us in a natural way to ask the question of the convergence of ideas and values among civilizations. 1 A. Smith, An Inquiry into the Nature and the Causes of the Wealth of Nations (1776). This edition: Dent ¤ Sons, London and Toronto, 1975, p. 400. 2 Kenneth Arrow and Frank Hahn, General Competitive Analysis , Holden-Day, San Francisco, Oliver and Boyd, Edinburgh, 1971, p. 1.) 1 1 Ibn Khaldun&s message Ibn Khaldun built his theory of economic growth on a deep understanding of fundamental economic mechanisms which would come to be comprehended only very slowly, centuries later, in the Western world 3 . We should cite here the idea of the gains society can derive from the division of labour and specialization; the mutual advantages received by two parties in an exchange process, an outcome that was casually denied not only by Aristotle but also, two millennia later, by some thinkers of the mercantilist school....
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This note was uploaded on 06/16/2010 for the course MS&E 249 taught by Professor Olivierdelagrandville during the Fall '08 term at Stanford.

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W_CHAPTER15 - Chapter 15 On the Convergence of Ideas and...

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