An expanded version of the Ohlin Memorial Lectures at the Stockholm School of Economics in 1995, "Unintended Consequences" reads like a book-length recipe. In the first chapter the ingredients are set forth, in the main body of the book they are mysteriously mixed, and at the end, out comes the cake. Just as the oven hides the baking process of the cake, most readers will not quite know how the book's conclusions were reached.
The author begins by setting forth the building blocks of a theory of long-run economic performance, without explicitly stating that theory. Although the lectures supply delightful reading on differences among civilizations the world over, comparing East and West, they lack a coherent theoretical underpinning.... The lectures ramble from one topic to another, each one fascinating in its own right, but without much integration.
In the first chapter (lecture), Lal sets forth two main building blocks of long-run economic performance: relative factor endowments and culture.... In the remaining lectures, the author leads us through explanations of the social and religious systems, the cosmological beliefs, the material factors, the politics, law, society, and economy of Egypt, Mesopotamia, Judea, India, China, and Islam, which he then contrasts with the West. The development of individualism is the key to the West's economic advantage over the other areas. However, he does not specifically say what caused the West to have this advantage. I was particularly disappointed here, because I believe I have set forth a theory to explain that development (in [my 1994 book] "Centuries of Economic Endeavor"), which would have been useful to Lal, but he makes no reference to it.
Lal explains the rise of individualism in the West largely through the evolution of Christianity, beginning with St. Augustine's "City of God." Shame and guilt are principal building blocks in the economies of the West. Those economies he contrasts with the dirigisme and ultimate reform in China and India. His references to the "miracle" economies of East Asia were apparently written before the East Asian financial collapse, which he did not foresee.
Although Lal refers to "unintended consequences" at various points in the book, the biggest unintended consequence is that individualism led to the welfare state. "But individualism has paradoxically undermined the very cement of the prosperous societies it created.... The growing failure of Western states to provide the most basic of public goodsguaranteeing their citizens' safetyis eroding their legitimacy, but it need not dissipate the economic vigor of the West" (p. 176).
In sum, this book constitutes a pleasurable window into the mind of a great thinker, who jumps from one theme to another as if they are all clear in his own mind. But the links may not be readily perceived by the ordinary intellectual.
