Ben Blevins, Guadalupe Ramirez, and Jonathan Wight.
ACCEPTING THE INVISIBLE HAND: MARKET-BASED APPROACH TO SOCIAL-ECONOMIC PROBLEMS, Mark D. White, ed., Palgrave Macmillan
Abstract
A voluntary and often unconscious practice of redistributive justice exists in the indigenous marketplace based on social relationships embedded in Mayan cosmology. This paper explains that ancient belief system, which is based on something akin to—although pre-dating—Adam Smith’s theories of moral sentiments. The paper relates Mayan social and market institutions to modern institutions that create moral limits to markets. At the same time, indigenous Mayan culture is more receptive to self-help and entrepreneurial activity than to pity and charity. The paper draws upon Adam Smith’s theories to demonstrate the overlap between Smith’s thought and Mayan thought.
1 Introduction
Indigenous Mayan cultural and social systems are based on non-Western concepts of harmony, community, natural energy, and a coexisting spirit world. Christianity co-exists and is transformed by these indigenous beliefs (Schuster 1997). Likewise, Mayan market activities predate the arrival of the Spanish and serve multiple purposes in a community that go beyond the calculation of monetary profit. The Maya cosmo-vision today is a blended version of indigenous and Western ideas, and is changing rapidly. The purpose of this paper is to understand how this worldview, as it still exists in some highland villages, affects attitudes to markets and the means and efficacy of development efforts. In particular, this paper seeks to show that indigenous Mayan culture is more receptive to self-help and entrepreneurial activity than to pity and charity.
This is not an “official” Maya viewpoint on these topics because doing so would be both presumptuous and misleading. Rather, this is an attempt by a Highlands Maya woman to reflect on her experiences building market capacities; and by two outsiders, one of whom has worked extensively on economic development in the highlands since the early 1990s. The usual caveats apply. After a brief overview below, the second section develops the concepts of Mayan cosmo-vision. Section 3 shows how this worldview shapes the social relationships in markets and creates moral limits on transactions (similar to the “just price” doctrine). Section 4 explores the implications of this for public policy, particularly economic development theory and practice. Section 5 provides conclusions. Throughout the post we call attention to Adam Smith’s notions of economic development and his theory of moral sentiments that underlies human motivation.
Overview
Mayan culture endures in rural southern Mexico and northern Central America. Estimates of the Mayan population in Guatemalan vary widely, between 40-60 percent of the total population of about 13 million. Official government estimates are in the low range, while indigenous groups claim systematic underrepresentation (Lovell and Lutz 1994). Many indigenous Mayans do not identify themselves as such to census takers. Vital statistics are lacking or questionable on socio-economic characteristics. The latest World Bank (2009) indicators for Guatemala as a whole show an average life expectancy of males of 66 years and females of 73 years.[5] The fertility rate is high even by developing country standards at 4 births per woman. Women also make up 31 percent of the formal labor force, but this number is virtually meaningless in villages since women work long unpaid hours gathering firewood, tending crops, and so on. The infant mortality rate is 31 per 1,000 live births and essential Vitamin A coverage for infants under 5 years is only 44 percent. Health spending per person is around $130, with 90 percent or more of this paid for privately out-of-pocket. About 43 percent of the population is under age 15, and approximately two-thirds of children ages 7-14 are economically active. Slightly less than two-thirds of children make it through sixth grade on time. Slightly more than half of Guatemala’s population is rural and rural population density is 466 people per square kilometer of arable land. Finally, per capita GDP (based on PPP) was $4,565 in 2007.
In countries with wide income and wealth differences, these average values mask large standard deviations.[6] In particular, rural Mayan villages are isolated and poor. There are several Mayan dialects and many Mayans speak no Spanish, creating further isolation. Per capita income in highlands Mayan villages may be closer to $500 per year (less than $2 a day). Males of working age often migrate seasonally to coastal areas to work on commodity export plantations or they may leave the country for years; worker remittances from overseas are a huge part of village income and amount to about 12 percent of Guatemala’s GDP. Women and children remain behind in the village to tend crops in family gardens and labor in handicraft industries like sewing. Like most of Latin America since the conquest, Guatemala’s land ownership patterns can be traced to the Spanish crown, the Catholic Church, and the expropriation of indigenous lands. The most fertile lands along the coast were taken over for large plantations of coffee (run by German immigrants), bananas, and sugar. Exports account for about one-quarter of GDP. A clique of powerful families (oligarchies) control about 70 percent of the land (Viscidi 2004). For reasons of monopsony, migrant workers in agriculture are likely to be paid less than the value of their marginal products, leading to exploitation in the neoclassical sense. While free trade based on comparative advantage raises average living standards, some individuals can be made worse off in this context. Large landowners who have the monopsony power to exploit workers can reduce living standards for the poor even in the context of free trade (Wight 2001). The oligarchs also control significant political capital (including control over the military), which makes it difficult for workers to seek redress in unions or at the ballot box. Not surprisingly, Guatemala has a record of human rights abuses and a modern civil war that lasted thirty-six years (1960-1996).
This discussion reminds us that to be an engine of economic development, the market requires an additional and complementary institution: a reputable and fair system of justice. Adam Smith noted that justice is the “main pillar” without which society would “crumble into atoms” (Smith 1982a, 86). Society can survive without benevolence, but no society can progress without justice. Justice includes property rights and fair rules (commutative justice). After 500 years of repression and a brutal civil war, the issue of property rights and justice for Mayans is highly problematical in Guatemala. Without minimizing these issues, this paper addresses a different topic: given the reality of the economic poverty in Mayan villages that will likely not be ameliorated by government action or handouts by foreign charities, how do Mayan institutions act to promote efficiency and create their own safety nets? Mayans are relearning how to be self reliant and using the new global market to their own advantage. At the same time, there is a tension created because the Mayan concepts of corporate community conflict with notions of individualism and autonomy associated with Western markets.
2 Mayan Cosmo-vision
Cosmology is the study of the universe and the place of humanity within it. A cosmo-vision is a particular set of beliefs that explain these questions within a particular cultural context. Every Guatemalan guidebook discusses the quaint indigenous festivals and weekly saintly processions, and tourists flock to the colorful Tuesday and Sunday bazaar in Chichicastenango—the largest indigenous market in the western hemisphere. But few visitors—and certainly few economists—get inside the mindset of the Mayan people. To do so requires a leap outside of Cartesian concepts of space, time, and rationality. In Mayan cosmo-vision there is no separation of mind, body, spirit, and nature. The concept “I think—therefore I am,” is patently unbalanced, and unhealthy, in this framework.
Mayan civilization goes back in history more than four thousand years; at its peak (250-900 AD) it was characterized by a well-developed language and specialization of labor in agriculture, art, architecture, crafts, and building trades. Relatively high population density was achieved in independent city-states that were supported by crop cultivation techniques such as raised beds, irrigation canals, cyclical rotations, and so on. Based on artifacts, Mayans likely maintained widespread trading networks across Mesoamerica. Mayan technology of this time was in many ways significantly advanced compared to European knowledge. Ancient Mayan mathematicians, for example, utilized the concept of zero and astronomers plotted the heavens with accuracy. Mayan calendars recorded complex cycles as well as provided a non-repeating “Long Count” calendar dating back to 3114 BCE. To the Maya, the past provides a means of understanding the cyclical nature of life leading to the present, and from the present one can anticipate future cycles. Unfortunately, most astronomical and other writings of the Maya were purposefully destroyed by Spanish conquistadors.
Mayan cosmo-vision should thus be understood not as the ramblings of a technologically primitive, culturally illiterate, and economically deprived people, but rather—for its day—the relatively sophisticated philosophy of a knowledge-advanced urban society. This point is difficult for Westerners to comprehend when viewing the modern-day poverty and illiteracy in surviving rural Mayan villages. For reasons not yet understood, several important southern Mayan city-states began to collapse during the 8th and 9th centuries A.D. The subsequent Spanish conquest destroyed remaining Mayan city-states by the late 17th century. Official colonial policy (supported by the Catholic Church) was to eradicate the Mayan culture and supplant it. Hence, Catholic churches were constructed on top of Mayan religious sites and Christian rituals and functions were layered over Mayan ceremonies. The Mayan languages were forbidden in public schools. The persistent discriminatory policies of the last 500 years, and the devastating effects of civil war that ended only in 1996, have left Mayan communities in a shambles. They are: deprived of fertile lands (taken over by Spanish land grants); deprived of male wages (200,000 died during the civil war in which Mayan leaders were targeted);[7] deprived of identity that comes from language; and deprived of political power (despite representing about half of the population in Guatemala). As a result, the Maya cosmo-vision today is a blended version of indigenous and Western ideas, and is changing rapidly.
The central element of this surviving Mayan worldview revolves around a key idea: that humans are a physical manifestation of the mystical cosmos and that aspects of the cosmos are reflected along different metaphysical planes (for example, in a spirit world). Each person is part of this wider universe and should achieve harmony with it as a principal ethical precept. Becoming one with the natural universe—experiencing no separation—is at the heart of Mayan peasant religion. Harmony is regulated by “energy” flows that need to be kept in balance. Achieving balance requires the loss of ego, and a focus on observing the natural laws for personal and social behavior. In Western terms, we might say that the Mayan religion reflects the view of quantum physics, in which everything at its core is a particle of pure energy. Energy flows can be “seen” or “felt” everywhere—like halos in Medieval European portraits.
In the Mayan natural world there is thus no separation of the sacred from the mundane. Everything is endowed with a sacred element because all material objects are constructed from elements of creation. The very act of creating is sacred because it is a manifestation of the cosmic consciousness in a time-space continuum. The Quiche Maya word for this interdependent fabric of life is “Pop,” or literally “mat.” Maya organizations refer to consensus-based horizontal organizational structures of their communities as a Pop. Mayan culture is also shamanistic—concerned with communicating with a spirit world that exists in a parallel plane and is inhabited by good and bad elements. David Friedel observes that:
Shamans are specialists in ecstasy, a state of grace that allows them to move freely beyond the ordinary world – beyond death itself – to deal directly with gods, demons, ancestors, and other unseen but potent beings. Shamanic ecstasy can last moments, hours, or even days, but the amount of time spent in trance is less important than the knowledge of its existence. (page cite needed)
This mystical underworld is called Xibalba and belief in its existence plays an important role in shaping attitudes toward the physical world above. As a result, Mayan beliefs revolve around “living magic” (Schele and Friedel, 1990, 34).
Mayan temples such as Chich’en Itza and Tikal represent devices for tapping into this spiritual power. Importantly, Mayan religion is not theistic: God is not personified, rather the cosmic intelligence is a unified and integral part of one’s existence and society. No entity exists outside the system and the whole equals the sum of the parts. In contrast to much Christian theology (in which there is an orchestra conducted by God), Mayan religion makes no distinction between the notes played and the musicians, nor does it provide for a conductor. However, in all anthropological work we must distinguish the “high” culture of the Kings and nobles from the “low” culture of peasants. Mayan high culture is ritualistic, ceremonial, literal, and hierarchical; Mayan low culture is allegorical, egalitarian, and non-hierarchical. The contemporary Mayan culture has elements of both, but is mainly peasant-based and is the focus of this paper.
The Mayan cosmo-vision thus provides a set of principles for organizing individual and community life. While the forces of nature dissipate energy as in the entropy law, humans operating in the cosmos act as a countervailing force. The dominant theme is that humans are not apart from nature and others, and unlike the Cartesian divide, the human person cannot be separated into component parts whether spiritual, material, or corporeal. Life is holistically integrated, and the ideal is to achieve harmony and balance with the environment and with one's community. This philosophy is in many respects similar to the Stoical philosophy that interested Adam Smith. In recounting the Stoic system, Smith writes:
[A wise man] does not look upon himself as a whole, separated and detached from every other part of nature, to be taken care of by itself and for itself. He regards himself in the light in which he imagines the great genius of human nature, and of the world, regards him. He enters, if I may say so, into the sentiments of that divine Being, and considers himself as an atom, a particle, of an immense and infinite system, which must and ought to be disposed of, according to the conveniency of the whole (Smith 2008a, 276).
Perhaps like Stoics, Mayans use ceremonies to assist someone to tune their frequency to the rhythm of the cosmos, which has its own orderly cycle of its own. The danger is seen in focusing on oneself, rather than on the integrated whole of which humans are an infinitesimal part.
3 Ethics in a Mayan Market
To recap, the Mayan cosmo-vision places each person and each act within an integrated and seamless fabric of the universe called Pop. Political and economic transactions are a reflection of Pop and bind the participants in a web of social and spiritual relations. This is reflected in cultural behavior by redistributive justice, price discrimination, and socially-controlled local monopolies and specializations. We turn now to these issues.
Redistribution
Fiestas are one of the primary means of economic redistribution within Mayan villages and towns. The wealthiest people become the chairs of the fiesta committee and subsidize fellow villagers by both creating demand for their handicraft products and by providing in-kind subsidies of food and entertainment. In more urban locales there is corporate sponsorship. Mayan spirituality is experienced through ceremonies and festivals, and business leaders are expected to participate in the spiritual life of the community and keep the energy reciprocity flowing.
Low income villagers make the marimba music, fireworks, food, piñatas, and other goods and services used during the fiestas. Since fiestas are a weekly event throughout the country, the economic impact of this redistribution in poorer areas may be considerable. Social welfare is a conscious and unconscious factor in deciding which small businesses get the fiesta trade. If one family has sick children that need medicine, fiesta business is directed to that family. This is a mechanism for providing desirable and voluntary income redistribution without imposing the stigma of charity or imposing the power of government. Such considerations are expected as part of the proper and normal balancing of energies.
Cofradia is an organized brotherhood of the Catholic Church (which, as noted earlier, has rituals and functions layered on top of ancient Mayan ceremonies). These fraternities serve as de facto political and legal structures in a town; the members are often associated with the Chamber of Commerce. A businessman can elevate his status by sponsoring a fiesta, and thus these are often organized and run by the brotherhoods. Social capital is needed to attract clients, and a business leader who fails to sponsor a fiesta may be treated as an outcast. Proving one’s worth to the village is an important step spiritually, economically, and politically.
Accordingly, every Mayan has a ledger system in her head. The smaller the village, the more powerful that energy ledger system becomes. Every child starts life with a hugely negative ledger because there is a welcoming ceremony for newborns—by which babies become indebted to others at their birth. The child’s identify is formed by the community that feasted her. Hence, since everyone is in debt to the village from birth, it is one’s obligation to always help the village. As with the birth ceremony, such rituals of passage are repeated at various points in a Mayan’s life. When a person marries they are expected to feed everyone who comes to the wedding (and in a village that would be everyone). There is a notion that if you feed everybody when you get married, you’ll never have a hard time in life because everyone is then obligated to feed you.
Unlike Western notions of individuality and autonomy, the Mayan cosmology does not allow people the freedom to escape group consciousness. Business and one’s economic life are bound up with one’s spiritual and ethical obligations to the community. Mayan villages are a “corporate” community—where everyone has a role in the growth and wellbeing of the area. One could speculate that the socialization process of debt-obligation from birth serves a vital evolutionary role in survival of the group. That is, social bonds and cultural practices provide mechanisms of redistribution that help the marginally worst-off in society, and thus raise average group fitness. Darwin (1871) noted that moral practices can serve evolutionary purposes, an idea that he derived from a careful reading of Adam Smith’s The Theory of Moral Sentiments.[8]
The fiesta redistribution system is quite similar to Adam Smith’s “invisible hand” example in Moral Sentiments.[9] In a feudal society Smith noted that a rich landlord often overplants his fields—not because he can eat the produce thereof, but because that food will be traded for the “baubles and trinkets” produced by nearby villagers. Landlords provide, in essence, a “living wage” to the less fortunate, and thus:
[The rich] are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. (1982a, 184)
According to this notion, a voluntary and unconscious system of distributive justice operates to maintain balance and harmony in society through an invisible hand. Something similar to Smith’s theory exists in Mayan worldview, in which energy flows serve to balance the scales of life.
One can further speculate that such a social mechanism could arise from calculated or enlightened self interest in an economic system subject to cyclical fluctuations. Fiestas are similar to African tribal wealth-sharing and to native American potlatch ceremonies that are thought to provide social insurance for bad times. However, although such systems are compatible with rationally-enlightened self interest, these behaviors may originate from unconscious or instinctual drives. Adam Smith noted that sympathy, for example, did not arise from self-love but from an instinctual fellow feeling. In other words, sharing behaviors may produce long run benefits but yet not arise from the agent’s long run consequentialist analysis.
From an ethical perspective Smith thought that it was important to maintain the distinction between conscious rational calculation of virtue as contrasted with instinctual virtue because the former produces conduct in the long run of a “much inferior order” (1982a, p. 263). Hence to Smith it is better to act out of genuine feeling and authentic regard rather than from pure calculation of self interest: virtue ethics requires more than narrow prudence (see McCloskey 2006). To amplify this point, when Adam Smith again uses the “invisible hand” in The Wealth of Nations, it occurs in conjunction with a discussion of virtuous “character”: “[The merchant] can know better the character and situation of the persons whom he trusts....” (Smith 1981 [1776], 454). A person of character is virtuous because of a love of virtue, not from the consequences that flow from being virtuous.
Amartya Sen takes a slightly different approach, in which he assigns the term “commitments” to reflect binding obligations or duties to others that impose harm or cost on oneself (Sen 1977). These reflect meta-preferences rather than simple preferences of the moment. The redistributive practices that produce group solidarity in Mayan villages likely arise and are sustained by some combination of enlightened self interest, sympathy, and commitments; the working hypothesis of this paper is that such practices generate advantages to the group that cannot be obtained by individuals acting alone. However, in times of rapid change—as is the case economically and culturally in Guatemala today—institutions can become anachronistic.[10]
Pricing Behavior
In addition to redistribution through festivals, the Mayan worldview pervades price setting and leads to widespread price discrimination based on perceptions of heterogeneous situation and need. For Mayans the marketplace is a sacred space of mutual assistance. The vendor of beans from the Highlands is dependent on the oranges brought up from the tropical cost for survival, as are the coastal people dependent on the protein from the Highland beans. From an elevated position in this simple market, it is easy to see that many Maya are locked into a sacred web of interdependent relationships. To better understand this phenomenon, an anthropologist might record the following anecdotal behavior that provides insights into the Mayan worldview in the market:
We witness an elderly Maya vegetable vendor give thanks to God for the first sale of the day and watch as she stores that money away to be given in alms for the poor. She has a sense of duty and believes that good fortune is a blessing of the cosmos and that nothing happens by chance. The cosmos provides opportunities. We see the little shrine she erected in her stall with Saints in place to protect and assist her in feeding her family. She greets the next customer with a term that means blessing, for each customer is viewed as a blessing from the creator and their business a gift.
Energy equilibrium—not price equilibrium—is what matters in the Mayan marketplace.
Energy flows require balance, and it unleashes very bad energy (for example) to cheat someone. In doing that you bring bad energy into your life and you will need to "clean" that energy.
Market pricing is thus another manifestation of Pop. Being “honest” in a market transaction, however, does not mean that everyone pays the same price for a similar product. Balancing of energy is subtle and requires that different people pay different prices. A ritualistic bargaining brings out the “just price” in every circumstance. A rich consumer is expected to be willing to eventually to pay a higher price and a poorer consumer would be expected to pay a lower one. One could say this is similar to the Golden Rule—“do unto others as you would have them do unto you”—considering one’s circumstance. It also allows for social redistribution (as discussed above) in a way that maintains dignity and a work ethic.
Mohammed Yunus discovered the important role that social capital can play in micro finance (e.g., the Grameen Bank). In a similar way, social capital provides a mechanism for redistribution and pricing in a microeconomic Mayan community. However, this behavior is subject to breaking-down with the influx of tourists. An act that was considered sacred—buying and selling with a “just price”—can become corrupted when the process is made secular and impersonal (see Sandel 1998). The Mayan practices discussed here are gradually disappearing as roads improve bringing in outsiders and Western habits of thinking appear that are consequentialist in a narrower way.
Specialization and Local Monopoly
A village economy is cooperatively specialized. Everyone has a defined role in the economy and occupations are a calling, arrived at through an intuitive, reflective, and spiritual process. One’s birth sign, as well as one’s abilities, influence choice. Not surprisingly, children often follow in the parent’s occupation. One’s occupation is thought to maintain order and the functioning of the cosmos; each does her part for the maintenance and survival of the group.
Economies of scale are not compatible with competition in villages hindered by poor transportation systems. Economics of scale thus lead to natural monopolies in areas subject to high fixed costs relative to the small local demand. Without laws to enforce natural monopolies, social injunctions are used instead to prohibit competition. It is considered socially improper, for example, to open a competing bakery if the village already has a bakery. Someone competing in this setting destroys the balance and harmony of the village and in economic terms would result in higher prices to consumers (assuming economics of scale). Likewise, it is improper for that baker to use his village monopoly to gain unfair advantage in pricing. Given the isolation of many villages caused by bad roads, this social system of regulation seeks to encourage economies of scale through specialization while also reducing deadweight losses caused by monopoly pricing. Like the Grameen Bank, social harmony can be a powerful force for marshalling resources. However, those same social forces could act as constraints on development if free riders take advantage of them.
The social nature of production is also reflected in job allocations. When a large textile order comes in, all shops in town are expected to get a piece of the contract. Weavings are purchased in bulk and every woman contributes to the order. One shop paints and/or dyes the thread, another lays threads out for the foot loom, and so on through a number of different specializations. This is eerily similar to Adam Smith’s explanation of specialization in The Wealth of Nations, in which he discussed the cooperative nature of production:
the whole work is a peculiar trade ... divided into a number of branches .... One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving, the head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations .... (Smith 1981 [1776], p. FIX).
Smith never addressed how the operations are organized or managed, that is, how one worker is selected to straighten, how another is selected to cut, and so on. Presumably there is an overseer or entrepreneur who directs worker activities so that there is cooperation without redundancy. Mayan village production appears similar in some ways, but the organizing principles are different as explained in the following section: Mayans rely less on hierarchy and order-giving and instead are likely to use unspoken, cooperative mechanisms of management.
In addition to local specializations, Mayan villages exhibit regional specializations. Totonicapán focuses on commercial floor loom weaving done by men using a technique imported by the Spanish. The indigenous back strap loom weaving, practiced for thousands of years, is done by women in villages. Back strap looms are used to make personal items such as the huipil (woman’s blouse), which is considered a sacred item. Chichicastenango (“Chichi”) is the regional outlet for back strap loom fabric that is more elaborate, and explains why Chichi is the hub of the tourist trade. Chichi also has sowing shops. Given these regional specialties, there are high fixed marketing costs for remote village producers. For example, there is a high fixed cost in traveling long distances along poor roads to take one’s weavings to the market, and then to sit for a full day at the market selling. When high fixed costs of marketing exist, it is expected that one villager will carry out marketing activities for others. If each villager acted independently and separately traveled to Chichi to sell on market days, there would be an immense opportunity cost of time. Alternatively, a cooperative solution is for one person in the village—acting as a natural monopsony—to buy the weavings of everyone in the village to take to the market. As noted earlier, the Mayan communities are corporate. People have unwritten rules for remuneration and a ledger system of energy balance. These issues constrict and also inform how development policy might work in the highlands of Guatemala.
4 Development Policy
Rodrik (2007) provides a scathing critique of development economists whom he accuses of forgetting economic fundamentals. Rodrik argues that economics is fundamentally about means and ends—of analyzing what works as opposed to what sounds good in theory. Since the 1990s, the reform package known as the “Washington Consensus” has attempted to stabilize macro economies, liberalize markets, and privatize state enterprises. The results for growth in Latin America have been lackluster (Rodrik 2007). By contrast, countries in East Asia that followed unorthodox policies grew much faster.
The reason most Latin American economies have not taken off using neoliberal policies, Rodrik argues, is that reform efforts have not been prioritized. That is, marginal costs and marginal benefits of reform vary depending on the particular bottlenecks of a particular country at a point in time. A general reform effort targets nothing specifically and may be counterproductive in terms of second-best options: "What [countries] need,” Rodrik argues, “is not a laundry list [of reforms], but an explicitly diagnostic approach that identifies priorities based on local realities” (2007, 5).
By contrast, the World Bank and IMF adopted a “cookie-cutter” list of reforms in the 1990s that every country receiving support was expected to fulfill. For Rodrik, identifying priorities for reform relies extensively on local context. History, culture, politics, and path dependency limit the range of options and the methods used. Hence, while development policy should be guided by first-order principles of property rights and markets, it should be grounded and activated through specific institutions of a country. Rodrik notes:
First-order economic principles -- protection of property rights, market-based competition, appropriate incentives, sound money, and so on -- do not map into unique policy packages. Reformers have substantial room for creatively packaging these principles into institutional designs that are sensitive to local opportunities and constraints (2007, PAGE NUMBER).
Adam Smith was well aware of the difference between ideal philosophy and policy in practice. Hence, in The Wealth of Nations Smith argued that it was not necessary or desirable to follow an ideological approach. For example, although Smith respected Dr. Quesnay as the leader of the Physiocrats who advocated laissez faire, he did not accept the pure approach advocated by this doctrine. Smith, like Rodrik, was a pragmatist and noted:
Some speculative physicians seem to have imagined that the health of the human body could be preserved only by a certain precise regimen of diet and exercise …. Mr. Quesnai, who was himself a physician, and a very speculative physician, seems to have entertained a notion of the same kind concerning the political body, and to have imagined that it would thrive and prosper only under a certain precise regimen, the exact regimen of perfect liberty and perfect justice. He seems not to have considered that, in the political body, the natural effort which every man is continually making to better his own condition, is a principle of preservation capable of preventing and correcting, in many respects, the bad effects of a political economy…. (Smith 1981 [1776], 435-436).
These observations provide ample reason for development economists to be humble about what can be done from the “top down,” and instead, to be more focused on supporting context-specific opportunities for people to better their own condition by their own natural efforts from the “bottom up.” In particular, economic development policy in the highlands of Guatemala needs to consider not only the geographic isolation, the political strife, and the poverty of human and physical capital, but it also needs to consider the context of Mayan institutions and worldview. We turn now to an example of such a development approach.
Highland Support Project
The Highland Support Project (HSP) is a 501(c)(3) founded in 1993 and headquartered in Richmond, Virginia. HSP’s development work in Mayan villages is instructive in three ways: first, it highlights the importance of first-order principals of property rights and trade; second, it highlights Rodrik’s injunction about the importance of developing institutions and policies within a particular context; and third, it illustrates the use of Mayan ethical precepts as a foundation for Mayan development.
With regard to trade, HSP creates a global market for weavings and other village products by providing direct links between handicraft producers in Guatemala and consumers in the U.S. Items are sold at a retail store in Virginia, via the Internet, and also via special event sales at churches. Having access to global capital, marketing, and markets frees highland workers from the monopsony power of plantation agriculture; and it fulfills Adam Smith’s vision that trade provides opportunities for specialization and increased standards of living. However, a key problem with introducing global trade is that villagers lack both the knowledge of foreign markets and the practice of dynamic innovation needed for long term survival in a rapidly changing market. HSP attempts to counter this by involving design students from a U.S. university to help Mayan women fashion products that are the size and shapes most likely to sell; they also help identify and/or create new products that take advantage of comparative advantage. In short, it is a blend of Mayan inspiration and American marketing.
Another HSP initiative is to take North American tourists directly to remote Mayan villages where they buy direct. In addition to providing tourist revenue, visitors typically perform community service by tutoring in schools and by building energy- and health-enhancing concrete stoves in village homes. Because unvented open fires are a major cause of respiratory ailments, vented stoves serve dramatically to improve human capital. In addition, because the stoves are more efficient, they reduce the labor time in gathering firewood and improve the regeneration of forests and reduce soil erosion.
These activities raise the question of whether, through its transformation of village production and the introduction of tourists, HSP is contributing (paradoxically) to the decay of the Mayan culture and community. While economic growth changes culture and institutions, HSP’s efforts are guided by working exclusively through a Guatemalan partner it created, the Asociacion de Mujeres del Altiplano (AMA or Highland Women’s Association). AMA is run by, and for, Mayan women. AMA works on a number of projects that seek to revitalize Mayan culture, such as introducing the Mayan Arts Program (MAP). Most schools lack even crayons for children to draw. MAP provides art supplies and volunteer instructors to connect children with their heritage, which is a first step in creating self confidence needed for entrepreneurial success. AMA works from the belief that Mayans are natural entrepreneurs, who can lift themselves out of poverty through formal and informal businesses. Market-based activities are the foundation for maintaining and restoring Mayan culture and identity—even if markets also threaten that identity and culture in the short run.
As noted, village males often migrate in search of work. Hence, women are the backbone of village enterprises. AMA strengthens entrepreneurship through “women’s circles” that meet weekly. These groups encourage participation and organization of local women to solve local problems in their communities. After the devastation of civil war, a major problem was debilitating depression and pessimism. Women’s circles aid in psychological healing using trust games and other self-esteem raising activities. Social capital is enhanced when women encourage and support each other—and equally as important, hold each other accountable. A Mayan saying provides the link, “All rise together and no one will remain behind.”
AMA also works to preserve the ethics of Mayan exchange. When AMA goes into a village to buy weavings, they follow the Mayan custom of buying from all producers, even if the quality of some sellers is lower. From experience AMA learned that not doing so disrupts harmony and sends the wrong social incentives (e.g., promotes individualism that goes against communal corporatism needed for women’s circles to succeed). The consequence, of course, is that this practice lowers the average price women get from selling, and the better quality weavers end up subsidizing the lower quality weavers. This is considered normal; just as some women are good at embroidery and others at day-care, energy is balanced when women distribute roles by talent and ability.
AMA also selects households for stove construction and other assistance on a self-help model that protects and reinforces the dignity of individuals. To participate, families join the local PTA, contribute to women’s circles, and do other forms of community service. Stoves and other aid are earned by the active efforts of families, not by charity. Families play an active role in the process of selecting projects and carrying them out. While at times this may result in the appearance of “inefficiency,” the broader consequentialist goal is to help communities develop the leadership and institutions that can solve their own problems rather than rely on outside assistance.
These experiences suggest ways in which development practices can be improved by understanding Mayan social practices, particularly in terms of management. Mayans use non-verbal communication: people often stand around and sense the spiritual energy. Self discipline is required as each holds back from asserting control. Indigenous leadership is revealed quietly and indirectly, by example and never through giving orders. Harmony is the key goal, requiring reflection and self-command.
Western aid workers, by contrast, may have notions of efficiency and hierarchical management that can be inappropriate and counterproductive. For example, accountability and involvement are often lacking when aid workers come to bestow unearned “bounty” on a remote village. In a Mayan worldview this produces a bad energy balance and breaks down indigenous values. Process, in addition to outcomes, matter to Mayan development. Another example of the conflict between Western aid and indigenous values can be seen when AMA brings stove materials to a village. In a Western mindset “time is money” and North American volunteers desire to quickly organize the distribution of supplies. A self-appointed Western “leader” will take charge and assign roles, giving commands. To peasant Mayans, this assertion of hierarchy is seen as aggressive and rude and produces disharmony. In talking with informants, AMA has learned that the efficiency gains to hierarchical leadership are lost due to the political problems caused by conflict and the lost opportunities for indigenous management to appear. While hurricanes and floods often mandate immediate food and shelter relief, NGO’s that simply bestow aid on villagers fail to develop the key resource required for sustainability—indigenous leadership and entrepreneurship.
5 Conclusions
Adam Smith believed that natural instincts for sociability provide human motivations that precede and supersede markets. Smith theorized, for example, that the natural propensity to “truck, barter, and exchange” (1981, 25) arose initially not from the desire for pecuniary reward but from the social instinct to share beliefs and to persuade (1982b, 493). Social instincts work to enhance cooperation vital for survival and propagation, which to Smith were the “great ends” of nature (1982a, 77). The forces at work are not all—or even mainly—rational or conscious. Recent discoveries in neuroeconomics support Smith’s view that automatic mechanisms of social affiliation are at work. For example, the discovery of “mirror neurons” in the brain may be the physiological link to Smith’s “fellow feeling” model of sympathy; and the discovery that the hormone oxytocin is released during trust exchange provides evidence of a natural foundation of ethics in trade (Zak 2008a; Zak 2008b; Umilta et al. 2001). While enlightened self interest is a powerful force in markets, Smith and others have argued that instinctual, emotional responses are often more reliable ways of producing successful cooperation and trust essential for markets.
In this context, many Mayan communities continue to adhere to imbedded cultural and social customs that have profound psychological and economic implications. These include the practice of voluntary redistribution through fiestas, price discrimination in markets, natural monopolies in villages (with social injunctions against deadweight losses), corporatist community buying and selling, and other practices that bind the villagers in affective and symbiotic interdependence. Economic development policies that overlook indigenous practices by imposing other values will miss much of the natural social capital that can create sustainable practices and economic independence. As Mayan communities continue to evolve and increasingly interact in global markets, many of these practices are changing, without providing in their place the safety nets and constraints that provide dignity in Mayan culture.
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[1] For presentation at the Association for Private Enterprise Education annual meeting, Guatemala City, Guatemala, April 2009. The opinions expressed are those of the authors and not their organizations.
[2] Founder and Executive Director, Highland Support Project of Guatemala, hspben@aol.com.
[3] Founder and Volunteer Director, Highland Support Project of Guatemala and Manager, AlterNatives fair trade store in Richmond, VA.
[4] Professor of Economics and International Studies, University of Richmond, jwight@richmond.edu. Corresponding author.
[5] Unless indicated otherwise, all data are for the years 2005-2007 and come from the WDI on-line (2009).
[6] Guatemala’s Gini coefficient of inequality was 49 in 2004, down from 55 in 2002. Such a rapid drop in so short a time suggests underlying problems of measurement.
[7] Death estimates come from Charles Babington, “Clinton: Support for Guatemala Was Wrong,” Washington Post (3/11/1999), p. A1.
[8] For a modern treatment of multilevel selection theory, see Wilson and Wilson (2007).
[9] A discussion of Smith’s different uses of the invisible hand term is found in Wight (2007).
[10] Biologist David Wilson notes that “ghost” institutions survive many generations, even though as the environment changes they may no longer serve any adaptive function (Wilson 2007). Adam Smith also noted that institutions linger long after their purpose has passed. Primogeniture, for example, was an institution of property rights that became obsolete yet lingered for centuries (Smith 1981, 377).
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