Kazimierz Z. Poznanski

Evolutionary Paradigms in the Social Sciences

Change usually occurs imperceptibly and out of sight, so that it becomes hard to grasp and think about in a systematic fashion. We are most effectively alerted to the fact of change when its pace accelerates, and in particular when change manifests itself in the form of crises. The recent collapse of the Communist system in Eastern Europe is one such sign of crisis, because for a time that system stood for one of the directions of social change, a systemic alternative that at times it seemed a permanent feature, possibly even embodying a winning strategy. Another development of wide portent is rapid economic expansion of East Asia. At such times minds search for explanations of what they observe happening but cannot handle and seemingly can do little about. To some, such crises herald the dawn of a new age of democracy and peace; others observe a flare-up of ethnic strife and anticipate world chaos. That is when new theories of transformation arise and old ones are refurbished for the occasion. That is when and how new social science paradigms are either built or rediscovered. One such paradigm that might help us comprehend rapidly changing reality is an evolutionary one. It is distinguished by a well-grounded intellectual tradition in almost all the major disciplines, among them sociology (August Comte, Herbert Spencer, Talcott Parsons), archaeology (Gordon Childs), and philosophy (Karl Popper, Donald Campbell). Among the most elaborated contributions to such thought have been those in economics, involving such major figures as Thorstein Veblen, Friedrich von Hayek, andJoseph Schumpeter. Evolutionary economics has experienced a particularly notable growth in recent years. While rich, this tradition might not currently possess the coherence and the complexity of other paradigms in the social sciences. The present collection, a sample of papers presented at two workshops held at the University of Washington, in May 1994, and May 1995,1 represents a step in the direction of increasing that coherence, and adding to the complexity. It does so both by undertaking comparative assessments of paradigms and of the state of the field, and by attacking some recent problems in international relations and international political economy.

Market alternative to state activism in restoring the capitalist economy

The theory of economic transition is concerned less with the end product of building a capitalist economy than with intermediate solutions and the appropriate pace of institutional change. This article advances theoretical arguments on the advantages of a self-grown, evolutionary restoration of the capitalist economy in Eastern Europe or any country abandoning the socialist experiment.The article develops the point that of the two basic methods of setting up an economic order—the state or a market-type mechanism—only the latter can assure the emergence of a genuine, complete market. Further, it suggests that markets with self-interested individual actors at the center are not only superior to states in the allocation of scarce resources, be they economic or political, but are also the best vehicle for institution building.

State condition, foreign influence and alternative models of market reforms in China, Russia and Eastern Europe

China, Russia and Eastern Europe can be considered the principal examples of a massive globalization in the last two decades. All expanded their use of market forces but in terms of growth rates only China is an obvious success story; Russia is a failure, while Eastern Europes record is lackluster. The diverse experience of these countries indicates that whether globalization succeeds or fails is a function of the condition of the state. With a strong state, China was able to undertake a gradual pattern of reforms that allowed firms to thrive. Because in Russia the state almost collapsed, reforms followed a chaotic model, throwing firms into a two-decade period of no growth. With less severe but still major state crises, Eastern Europeans followed a radical approach which locked firms into a massive downturn followed by weak growth thereafter. These economic outcomes validate the theoretical argument in favor of gradual reforms advanced by the so-called evolutionary (Austrian) economics of Joseph Schumpeter. Each of the three models of reform produced a different final type of economic system. In China a ‘corporatist structure’ with an activist but impartial state has emerged. In Russia we find ‘industrial feudalism’ with regional fiefdoms sharing power with the state, while Eastern Europe established ‘imported capitalism’, with the majority of industry and banking sold to foreigners. Foreign investors were assisted by their states in gaining access to state assets in these countries. Where these foreign states encountered weak states, as in Eastern Europe, the bulk of capital was transferred to the respective foreign buyers. But this was not the case in China, where the state agency has actually strengthened. In Russia, foreign states proved no match in asset acquisitions for the so-called oligarchs that emerged as a substitute for the largely defunct local state. It follows from these experiences that successful globalization does not involve markets replacing states. Instead, such globalization requires that the expansion of markets has to be paralleled by the expansion of states.

Diffusion performance of major steel-making countries: alternative econometric tests

The purpose of this study is to compare the speed of diffusion in major steel-making countries. This is a cross-system analysis, involving industrial market countries (Western Europe, the United States, Canada, and Japan), quasi-market economies (selected newly industrializing countries, India), and the central planning states (the Soviet Union and Eastern Europe). The study reveals that at least in this, significant case, the latter countries are clearly inferior, i.e. slower.The article seeks the most accurate measure of speed of diffusion of one radical steel innovation, the oxygen process. The speed is estimated by regressing a logistic function not applied to the steel industry to date. Parameters of a logistic function are estimated first with linear least squares methods and then with nonlinear (or iterative) least squares, to establish which offers more accurate estimation than the widely used linear approach. It is shown that the iterative method produces a better statistical fit.

Confucian economics: how is Chinese thinking different?

ABSTRACT The Chinese have their economics. Not yet acknowledged, it is contained in the Confucian thought. Called by me ‘Confucian economics’, it sharply differs from the Western ‘Liberal economics’. Individuals seek posterity through offspring, rather than ‘instant gratification’. Resources are not seen as scarce but as abundant. Rather than take resources from others, people work to make a living. The work ethics and not the profit margin is a key motive. Individuals work not for themselves but for their family. The family is a source of moral sentiment, understood as responsibility for others. This is why the main institution is family and not market. To Confucians, the key principle is equality, which precedes efficiency. Inequality upsets ‘social peace’, as a precondition for growth. Built on Liberal principles, the Western capitalist system is a market one. The Chinese system, which I call ‘Confucian system’, is also market-based. The former is a ‘free market’ animated by individuals, the latter is a ‘familial market’ built around households. Both approaches advocate ‘minimal state’, but for Liberals the state is a ‘night watchman’ to ensure the security of resources, while for Confucians, the state is a moral guide to enable social harmony. As a theory, Confucian economics is a form of ethics and the Liberal is not. China has never abandoned Confucianism. The recent reforms are not about rolling back the Soviet model to establish a capitalist system. Relying on Confucian economics, China is reviving Confucian system. Paradoxically, the ancient Confucian economics has become the engine of China’s modernity. This is a key reason for China’s ‘longest boom’. To extend it, China needs to refocus its policies from ‘capital formation’ to the ‘moral cultivation’, along the Confucian principles.