Edited by Peter Bernholz and Roland Vaubel
Deepak Lal A major materialist hypothesis that political and military competition among states and decentralization promotes institutions which lead to economic freedom, innovation and development is belied by the case of India. I had used this counter-example to argue in my recent book Unintended Consequences (1998) that purely materialist explanations were insufficient to explain the differing economic outcomes in Eurasia over the last millennium. In this chapter I first set out the similarities between India and ‘Europe’ in terms of being areas of Eurasia with cultural unity but political disunity. I then outline the reasons, based on my earlier book The Hindu Equilibrium (1988), why these similar initial conditions did not lead to the same institutional developments in India as in ‘Europe’. In the final section I argue that, to understand the divergence in institutional developments, one has to bring in the role of what I have labelled ‘cosmological beliefs’, and show that even in this respect there were initially greater similarities between the cosmological beliefs of these two Eurasian civilizations, and that they only diverged because of two great Papal revolutions in the sixth to eleventh centuries initiated by the two Popes Gregory (the Great and the VII). In this context it is worth noting that, the reason I have written ‘Europe’ is because as Michael Mann (1986) has rightly noted: ‘Why is Europe to be regarded as a continent in the first place? This is not an ecological but social fact. It has not been a continent hitherto...
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