2009 Social Achievement Capital Country Rankings
By Stephen B. Young and Josiah Lindstrom
The Caux Round Table is pleased to provide a unique ranking of countries in order that they have accumulated social capital for successful economic development and achievement of social justice.
The fact that the economic development of nations – industrialization, modernization, westernization, bourgeois capitalism, globalization, neo-liberalism (the phenomenon goes by many names) – has occurred more robustly in some countries than in others has given rise to much intellectual debate and political controversy as to the causes of the different rates of growth.
Capitalism is a form of economic growth that has changed humanity and made possible our modern world. Alternative forms of government-driven economic growth have consistently failed to replicate the wealth-creation and so disruptive cultural and social impacts, made possible by capitalism.
But why is one country poor and another rich? Why, within one country, does one ethnic group grow wealthy from commerce and industry, while another ethnic group or social class seems unable to climb out of poverty?
Who is to blame for poverty and who is to get credit for wealth creation?
Is it a matter of culture, individual genetic endowments, unfair institutions, colonialism, exploitation, unfair terms of trade, or what?
Who, if any, should we reproach? Who should we emulate?
We can be sure of one thing: many systemic injustices and imbalances, along with accidents of fate, keep both individuals and peoples from reaching their highest and best potentials.
But we can also be sure of a second thing: attitudes, values, habits, preferences - on both individual and societal levels - make a difference in economic development, as well.
From the perspective of political institutions, socialism, along with its more extreme extension, Communism, did a poor job of creating wealth. Government, especially bureaucratic government, we have learned at the cost of millions of lives and lost hopes, is not the human institution best suited for economic development.
We have also learned that crony capitalism, while it can and does create wealth, achieves its benefits at a cost of considerable social injustice.
A lessen of history is that traditional political and social structures of feudalism and tribalism do not permit capitalist enterprise to thrive under their tutelage.
Societies without access to the written word and concepts of mathematics seem especially frozen in traditional patterns of clan and family-based economic activity.
One lesson I draw from this historical anthropology is that economic development is a secondary phenomenon. It does not cause itself. Rather, it follows upon certain preconditions. Once up and running, economic development gains the power to change cultures, politics and social structures through the creation of new wealth. The new wealth, produced by capitalism, leads directly to new motivations, new values, new habits, new possibilities, new empowerment of individuals and private entities. These new motivations, values, habits, possibilities, empowered individuals and civil society entities challenge and undermine traditional orders.
But getting the economic development engine started is a different matter. Within old social and political orders, the power of capitalism, markets, banks and entrepreneurs is emergent only, lacking social substance and political heft. When we look for the origins of economic development, we see that certain conditions must be created in order for this process to start.
Countries that gain access to those conditions develop economic power. Countries that cannot put the conditions in place do not develop economically.
As Japan, South Korea, Hong Kong and Singapore have recently demonstrated, possession of ample stocks of natural resources is not a necessary precondition for economic development. To the same point has been the experience of countries possessing oil, silver, diamonds or other natural resources. Economic development has not naturally occurred in such countries, though an important form of wealth was entirely within their legal rights to exploit.
What are the conditions for the self-sustaining, economic growth that benefits the common people and who is responsible for putting these conditions in their proper places?
What I loosely call those necessary conditions bringing forth robust economic development “social capital.” By use of this term “social capital,” I want to call attention to values, principles, institutions and social habits. These “soft” variables of social capital, I believe, drive the human manipulation of such “hard” economic variables as cash, labor, machinery, roads and bridges, ports and airfields, government regulation and corruption.
To master the “hard” variables of economic development, we need to assess the potential of the “soft” variables to put in place those values, principles, institutions and social habits most conducive to just economic development.
Necessary to any investment in appropriate social capital is building a cultural capacity for trust, as opposed to mistrust, a political capacity to use the Rule of Law ideal, a social capacity to aggregate finance capital with limited liability and individual capacities to study, learn and apply new technologies.
As U.N. Secretary General Kofi Annan once wrote:
“Each developing country has primary responsibility for its own development - strengthening governance, combating corruption and putting in place the policies and investments to drive private-sector-led growth and maximize domestic resources available to fund national development strategies. Similarly, without dynamic, growth-oriented economic policies supporting a healthy private sector capable of generating jobs, income and tax revenues over time, sustainable economic growth will not be achieved.”
(Report of the Secretary General 21 March 2005 A/59/ p 12 -13.)
Legal regimes of contract and property rights, banking law and securities regulations and constitutional regimes of checks and balances and with viable independent judiciaries, are also fundamental to the social capital most open to robust economic development. The individual protections we often call by the name of “human rights” flow naturally from such a legal and constitutional order. Extractive “rent seeking” on the part of the police, the military, politicians, officials, great families, political parties, etc., is hard to maintain when such legal social capital is thickly forested in society and pulses with vital energy.
There is a profound congruence between the social capital needed for economic development and the social capital that will restrain abuses of human power. This is as it must be for where there is abuse of power – in many forms – there will be distrust, fear and unfair exploitation. Investment in productive enterprise, invention and innovation will necessarily be stillborn. The social capital that fosters economic development simultaneously promotes the values and habits calling forth good stewardship.
Where people earn one another’s trust, they refrain from abuse of power. Where laws are clear and fairly enforced, abuse of power recedes. Where political institutions of checks and balances – popular elections, an independent judiciary, written laws, fixed terms of office, multi-party rivalries, a limited executive – the abuse of power does not become habitual.
The stage has been set for us. We have been empowered with reason and sense, but left vulnerable to temptations and arrogance. It is up to us to play our rightful parts. The choice as to right conduct, I believe, is ours. The course of our development – cultural, social, political, and economic – is largely up to us. How should we best choose to bring forth abundance in the earth?
We at the Caux Round Table have suggested a set of Principles for Governments that can be used as a guide for the creation of the appropriate legal and constitutional components of social capital. We also suggest that the emergence and vitality of civil society organizations also contributes to the stock of social capital in any society.
The full set of recommendations of the Caux Round Table for building the social capital necessary for economic development are contained in our Principles for Business, our book, Moral Capitalism, the management process we call Arcturus, our Principles for Government, our handbook on Moral Government, our implementation of self-assessment questionnaires for politicians, civil servants and government departments, our Principles for Civil Society Organizations and a set of suggested Principles for the Owners of Wealth. All of these are at your disposal to help in the formation of needed and legitimate social capital to promote social justice among all peoples.
I am most grateful to my colleague, Dr. Noel Purcell, for his warm support of our pioneering work on social capital and his technical proficiency in statistics in reviewing our calculations to improve their accuracy and relevance. I am also deeply indebted to Dovlet Babajanov, an intern with the Caux Round Table and a graduate student in the Masters of Public Administration program at Minnesota State University, Mankato. Dovlet compiled the 2012 social capital country rankings, while working with supportive faculty at the school. He had an immediate understanding of the concept and its importance.
Stephen B. Young
Global Executive Director
Caux Round Table
To view the 2012 Caux Round Table Social Achievement Capital Country Rankings and methodology, please click here.
The first country rankings were issued in 2005. Click here for the country SCA rankings for 2009 (PDF).