Divergent Paths: How Culture and Institutions Have Shaped North American Growth

Published by EH.NET (August 1998)

Marc Egnal, Divergent Paths: How Culture and Institutions Have Shaped North

American Growth. New York, Oxford University Press, 1996. xi + 300 pp.

$19.95 (paper), ISBN: 0-19-510906.

Reviewed for EH.NET by Leonard Carlson, Department of Economics, Emory Univers

ity.

This book is provocative, informative, and fun-to-read. In the preface,

Marc Egnal, an Associate Professor of History at the University of Toronto,

states that the book “. . . explores the impact of institutions (such as

slavery

and the seigniorial system) and culture (including religion,

literacy, and the entrepreneurial spirit, and intellectual activity) on

development” (p. vii). How institutions and culture shape economic growth are,

of course, important and controversial topics in economic history.

Egnal ventures into territory that is both novel and familiar. The work

compares the U.S. North, U.S. South, and Quebec. His single most important

contribution is his comparison of Quebec with the U.S. South and U.S.

North. Most comparative work has ignored Quebec and this has been a big

omission. An example of the familiar is Egnal’s use of Max Weber’s

“Protestant Ethic” hypothesis.

Egnal draws on the debates as to whether colonial British North America was

“pre-capitalist

” or not, and a similar debate about Quebec. In a nutshell,

his conclusion is that all three regions were similarly pre-capitalist in

outlook and had comparable standards of living in 1750. The North,

however, had a tradition of thrift and hard work that differed from the South

and Quebec. Drawing on these traditions in the century after 1750,

the North became truly “capitalist,” while the South and Quebec stayed

hierarchical and pre-capitalist. To Egnal, capitalism is distinct from

capitalists. Capitalists could operate in the South and Quebec without their

values dominating the social and economic life of either region. By contrast

he concludes that capitalist values favoring entrepreneurship,

risk taking, and profits dominated in the North, making it truly capitalist.

I am on the side of those who do not find it useful to draw a distinction

between capitalist and pre-capitalist societies, but Egnal is part of a large

tradition that sees this as important.

Chapter one, “the paths diverge,” sets

the stage for the arguments that follow. Egnal makes a good case that as of

1750 there was relatively little difference in the material standard of living

in Quebec, the North,

and the South. All three were traditional, agricultural, slow growing, and

pre-literate (although literacy was widespread in the Northeast, according to

Egnal, it was not important in the economic realm). The South, with its wealth

in slaves and export-oriented economy was something of a special case, but

still pre-capitalist and hierarchical. By 1840, however, per capita incomes

in the North (the eight original northern states) were much higher than either

the South (the five original southern states) or Quebec.

The North also led the other two regions in urbanization and manu facturing.

The fact that Egnal leaves out the western states at this point in the

comparison is important. As he discusses in later chapters, the North Central

states in 1840 had lower than average per capita incomes while states in the

South Central region had much higher per capita incomes.

Since there was a notable east-west pattern of migration, many scholars treat

the old northwestern states as an extension of the “North,” and the old

southwestern states as an extension of the “South.” Egnal might

be right in limiting his comparison to the same states in 1750 and 1850, but

since it is so favorable to his argument, he could do more to justify the

choice. Similarly, the use of per capita income in 1840 is important,

since the south was a slave society and slaves are both part of the population

and treated as a capital asset. Thus most scholars discuss both per capita

income and per capita income of free persons. Egnal does discuss the

distributional consequences of slavery, but his arrangement of

the data in a way most supportive of his argument is typical of the book’s

approach.

Egnal is building a case that culture and institutions matter, not trying to

reject the null-hypothesis that there is no difference.

Chapters two through four look at the eighteenth-century origins of the

differences among the regions. As Egnal sees it, even in the eighteenth

century, there was a ” . . . gulf separating the entrepreneurial North and the

other two regions that were less concerned with money making” (p. 21

).

Egnal supports his claims by citing evidence from sources ranging from the

writings of contemporary observers to examples of how people chose to be

depicted in family portraits. Contemporary observers described the French as

more luxury loving and less concerned with making money than New Englanders.

Similarly, contemporaries saw the southerners as more concerned with luxurious

living and “lazier”

than northerners. In paintings, wealthy northerners had themselves portrayed

as busy and prosperous, while wealthy southerners had themselves pictured as

idle aristocrats. Quebecois portrayed themselves as pious. In contrast to

more quantitative historians,

Egnal uses this type of “soft evidence” to illustrate his points.

Legal structures also differed

among the regions. French Canada had the seignorial system and property rights

that made it hard to sell land outside the family. These feudal vestiges and

the outlook that went with them persisted after the English takeover of Canada

in 1765. The South had bound labor and, in Egnal’s view, slave labor was

obviously less motivated and efficient than free labor (a claim that Robert

Fogel and Stanley Engerman would dispute). French Canadian society was based

on traditions and hierarchy in the eighteenth

century and remained so throughout the nineteenth. By contrast southern

colonies developed new institutions as fast as the north, but plantation

agriculture and slavery lead to a commitment to hierarchy and status missing in

the north. Egnal sees the shared commitment to a hierarchical society as

factors that united the South and Quebec and caused both regions to trail the

northeast for so long. It is important, however, to keep in mind that the

North had a higher per capita income than any other region in the world except

Australia in 1860, not just Quebec and the South (Fogel and Engerman,

Time on the Cross, 1974, p. 250).

In chapters five through eight, Egnal argues that the differences in attitudes

played out in the growing differences among the three regions.

He conducts an imaginary dialogue with an advocate of the view that the South

was as profit oriented and rational as the North, and he rejects that claim.

Intellectually, the North in the nineteenth century had entered an “age of

Emerson

. . . individualism, optimism, enthusiasm,

and reform.” (p. 120) These ideas helped make the North ready for the changes

needed to sustain modern economic growth. By contrast,

the southern intellectuals were closed off to new ideas, as the defense of

slavery became more intense. Similarly, Quebec saw the triumph of the Catholic

Church and a commitment to tradition.

This is not to say that Quebec and the South were identical. The French stayed

close to home, reflecting a desire to remain close to hearth and home that

Egnal traces back to the original unwillingness of the French to move to the

New World. Southerners were willing to move, but not to pursue manufacturing

and other risky activities in the same way as the northerners. In these

chapters

Egnal discusses the high rates of interstate migration of southern slaveholders

and high relative incomes in the southwest. From 1860 to 1940, incomes in the

South and Quebec remained low relative to both the North and English-speaking

Canada. Racism and

the politics of segregation may have held back the South, but what held back

Quebec? Gavin Wright (Old South, New South: Revolutions in the Southern

Economy Since the Civil War, 1986) emphasizes the isolation of the southern

labor market and the lack

of outside investment as key factors in the slow growth of the South. A

question for further research is whether Quebec was isolated in a similar way.

Chapter ten looks at the convergence of Quebec and the U.S. South to levels

close to the rest of the U

.S. and English-speaking Canada. Incomes in Quebec converged in the

mid-sixties, somewhat later than for the deep South. Egnal sees the narrowing

as based on the convergence of mind-sets. Southerners and Quebecois became

more entrepreneurial while New England businessmen became less aggressive and

more risk averse.

Again, adding Quebec changes the focus away from race. Did the Catholic

traditions and the active participation of the church lead to a lack of

entrepeneurship in Quebec in the first half of

the twentieth century? Did an increasing secularization change Quebec? Why

did New Englanders loose their edge (or did they?)?

In chapter 11, the author brings the story up to the present. This is,

perhaps inevitably, the weakest chapter. Egnal sees

the period since 1975 as the “Post-Industrial” economy. Fair enough, but it is

hard to use the tools of the historian to analyze the recent past, since it is

still too soon to know what will prove to be of lasting importance and what is

transitory.

In the end, the value of this book lies in the thought-provoking questions it

raises, not with the definitive answers it provides. I still don’t know how to

test whether many of the “cultural factors” that Egnal cites are a cause of

lower incomes, an effect,

or a mere coincidence. But if “culture and institutions” (however defined) do

not explain the differences among the North and the other two regions, what

does provide the explanation? If they do provide the answer, we need to refine

the concepts to exp lain how this process worked. It is to Marc Egnal’s credit

that he raises these issues in such an interesting way.

Leonard A. Carlson Department of Economics Emory University

Leonard Carlson is author of Indians, Bureaucrats, and Land: The Dawes Act

the the Decline of Indian Farming(1981), “The Economics and Politics of

Irrigation Projects on Indian Reservations,” in Linda Barrington (ed), The

Other Side of the Frontier (forthcoming), and other articles on U.S. and

southern economic history.