MySay: Economic growth and a societal merdeka of our spirit

This article first appeared in Forum, The Edge Malaysia Weekly, on September 6, 2021 - September 12, 2021.
MySay: Economic growth and a societal merdeka of our spirit
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Last week, we celebrated the 64th anniversary of independence, or merdeka, from the British. The point of merdeka is straightforward but powerful — it is the freedom to decide, for ourselves, where we want to go, who we want to be, what we want to achieve, and how we should go about accomplishing those aims.

During this period, it is hard to argue that we have not Frank Sinatra-ed our way to where we are — by doing it our way. Not many countries would historically have had the courage to enact the New Economic Policy in 1970 or go against global conventional wisdom by introducing capital controls during the 1998 Asian financial crisis. We have made some missteps, including some very large ones, but we have also made significant progress. But, as P Diddy & the Bad Boy Family would say, “The Saga Continues”.

In thinking through the notion of merdeka, I wonder if we can extend the concept further. Instead of thinking about merdeka as a spirit of national independence, I wonder if we can also think of a different kind of merdeka — a societal merdeka of our spirit, if you will. Beyond the more philosophical reason of having an independent-minded populace who can reason and think for themselves, there is another reason that this matters; it may be a necessary, if not quite sufficient, condition for our future economic growth. Hear me out.

In a recent book, The Power of Creative Destruction, French economist Philippe Aghion and his two co-authors make the point that while it is common to see lower-income countries transitioning towards becoming middle-income countries, the next step in the transition is far too rare. An International Monetary Fund paper in 2019 makes the point that between 1960 and 2014, only 16 out of 182 economies globally reached high-income status. This is, as the term is commonly known, the so-called middle-income trap.

One explanation for the trap, as provided by the book, is that countries such as Malaysia that transition to middle-income status via a “learning” model struggle to move towards an economic model that is based on innovation.

The inertia that arises from the combination of institutional, cultural and infrastructure development associated with learning from the technological frontier makes it difficult to pivot towards a new combination, or a new “collective brain”.

Moreover, the inertia is also political. Those who have gained significantly from the existing growth model would certainly be reluctant to shift to a new growth model where their positions and their sources of income may very well be disrupted, or even destroyed.

At the societal level, if we become too entrenched in a particular type of economic model, it’s not difficult to then believe that “this is where we are, this is who we are, and these are our options”.

We become bound by our perception of our environment. And this is where a societal merdeka of the spirit, or at least of the imagination, is required. To illustrate this, let’s turn to a crucial moment in global economic history where such a merdeka of the spirit played a vital role in bringing about significant economic and social change, namely, the Industrial Revolution.

In A Culture of Growth, Joel Mokyr, a leading economic historian, argues that one of the chief contributors to why the Industrial Revolution happened in Europe, as opposed to, say, China, was because of the Enlightenment. The Enlightenment required a significant break from centuries of intellectual dominance by Greek philosophers. This, in turn, could only have come about from a willingness to break with authority and tradition. It required, in other terms, a merdeka of the intellectual spirit.

Mokyr highlights the role of two “cultural entrepreneurs” — Francis Bacon and Isaac Newton. Bacon is widely known now as the father of empiricism, calling for a science, or natural philosophy as it was called then, that was based on observation and experiment rather than authority. Newton’s role was to show how nature can be understood in mechanical terms, most notably via his Principia publication.

Bacon’s role is crucial as it shifted natural philosophy away from the beliefs of Greek philosophers, such as Aristotle who believed in the five elements of nature — Earth, Water, Air, Fire and the mysterious and divine Aether. But think about what that meant. Aristotle was a towering figurehead in philosophical and intellectual history amongst other Greek philosophers. Going against their teachings and beliefs was effectively going against centuries of entrenched conventional wisdom.

Thinkers of the Enlightenment had to be willing to overcome the taboo of questioning the authority of the Greeks and, indeed, the Bible. Of course, not all Enlightenment thinkers of the period were as progressive; some attempted to marry Aristotle’s principles with modern thinking on natural philosophy. But, as Mokyr puts it, thinkers in Europe showed “… disrespectful skepticism towards the formerly sacrosanct knowledge of earlier generations that awoke in Europe when more and more beliefs of ancient authorities were questioned, tested and found wanting by European scientists and physicians …”

On the other side of the globe, China, despite its long history of and dominance in advances in knowledge, innovation and technology, never became the birthing ground for the Industrial Revolution. One key reason for this is that Confucian philosophy and teaching, spread and institutionalised via civil service examinations, remained unassailable.

Thinkers such as Li Zhi, Dai Zhen and Wang Yangming attempted some progressiveness in China’s intellectual landscape, but ultimately ended up unable to break away from the individual and societal shackles of ancient classical learning. In short, as Mokyr, so eloquently puts it, “What Europe did to Aristotle, Ptolemy and Galen, Chinese intellectuals could not do onto Confucius, Mencius and Xunzi.”

As such, it was the questioning of authorities of the past —entrenched conventional wisdom — that was key in initiating and sustaining the Enlightenment. From the Enlightenment, modern attitudes on progress and useful knowledge became key ingredients in the Industrial Revolution.

Had this spirit of “disrespectful skepticism” not broken through so comprehensively at the societal level, who knows where the world may be today. Even in more contemporary times, James Pallais, a former professor of Korean history, argues that “… [South] Korea’s capacity to adapt to the demands of the modern world …was hindered by … the extraordinary stability of the Yi dynasty (1392-1910)”.

Coming back to the present and to Malaysia, we lead the world in Power Distance, a national culture measure created by Dutch social psychologist Geert. Power Distance is defined as “… the degree to which the less powerful members of a society accept and expect that power is distributed unequally … People in societies exhibiting a large degree of Power Distance accept a hierarchical order in which everybody has a place and which needs no further justification”.

This will not do. Questioning the wisdom and the authority of the past is how progress progresses. We will not achieve a true merdeka of self-determination for our country if we, at the societal level, do not ourselves possess a merdeka of our spirits. The saga continues for our country, but whether or not we plod along or achieve genuine breakthrough will depend in no small part on our ability to engender a societal “disrespectful skepticism towards the formerly sacrosanct knowledge of earlier generations”.

Nicholas Khaw is an economist at the Khazanah Research division

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