The Difference Principle

Can ethnic identity and individual freedom coexist?

Joel Kotkin from the February 1993 issue

(Page 2 of 5)

This pattern of outsiders creating change goes far into the Japanese past, notes Hidetoshi Kato, one of Japan’s leading social theorists. Toyotomi Hideyoshi, the man who united Japan in the 16th century, was the child of unknown, poor peasants. The architects of the modernizing Meiji period were largely lower class samurai. And many of Japan’s early entrepreneurs–the Mitsuis, Iwasakis, Sumitomos–came from less than aristocratic backgrounds. More recently this tendency shows up in individuals such as Soichiro Honda, Konosuke Matsushita, and Masaru Ibuka and Akio Morita of Sony, classic outsiders who have driven Japan’s global economic expansion.

In the last decade, new and potentially even more potent global tribes–the Chinese and the Indians–have entered the scene, each producing large numbers of individualist achievers. Conditions of chronic insecurity, much like those facing the Jews in Europe, have fostered in both the overseas Chinese and Indians an almost unparalleled passion for self employment. As the old Chinese saying has it: "Better to be the head of a chicken than the tail of an ox."

The power of this self-reliant attitude can be seen most notably in such Chinese capitalist havens as Hong Kong, where local entrepreneurs start businesses–most with fewer than 100 employees–at roughly twice the rate of Americans. Critically, the value system of both Indians and Chinese puts primary emphasis on achieving success for one’s family rather than on any broader concept of company, society, or state. In one 1980 survey, Hong Kong Chinese ranked their families more important than society by a margin of better than five to one.

Even the most globally influential contemporary Chinese and Indian capitalists still follow this general pattern of enterprise. Most of their most powerful economic entities remain essentially in family hands and are motivated by family values. Explains George Harilela, the 70-year-old eldest brother and head of trading operations for his Hong Kong

based Indian family, "We have no real skill other than being traders and working hard....We work for our children. Without that, there’s nothing. If not, why not drink? Happiness is one thing: working for them, for the future, for the family."

Driven by their passion for individual and family success, these global tribes have succeeded in virtually every country they have settled in, displaying extraordinarily low rates of criminality, poverty, and welfare dependency. But although they eschew state aid, they do not expect individuals to succeed by themselves. All of the successful global tribes, particularly in their ascendancy, have relied heavily on communal self

help and voluntary cooperation.

In most cases the tradition of self-help grew from necessity. Throughout most of their history Jews could count on little but grief from the governmental or ecclesiastical powers, leading them to emphasize the economic self-sufficiency of Jewish families. "He who increases the number of his slaves increases sin and iniquity in the world," wrote the 12^th century sage Maimonides, "whereas the man who employs poor Jews in his household increases merits and religious deeds." Maimonides also deemed giving someone the capital with which to start a business to be the greatest form of charity.

As they began their mass migrations in the early 20th century, newly arriving Jews, whether in Britain, France, Israel, or America, built their own, largely self

contained economies. Following Maimonides’ advice, Jews tended to hire as well buy from their own community. In turn-of-the-century New York, Jews went to their own doctors, butchers, dry goods dealers, shoe stores, coalmen, and grocers; both their apartments and their places of employment were owned largely by fellow Jews. In 1914, there were 514 Jewish benevolent societies in the United States, providing everything from insurance and burial plots to summer camps. Many immigrants learned English not in the public schools but in special programs within the Jewish community.

In the process, Jews also created the essential nongovernmental infrastructure for the growth of industries. Within the diamond business, they set up a network of self

regulating institutions that effectively monitor trade from Antwerp to Tel Aviv and New York. In Hollywood, they developed a powerful interactive network of entertainment producers, talent agents, and scores of other specialized related professions. Much the same process took place in fields such as the garment industry.

To acute observers, the primary role of ethnic culture, tradition, and skills in the development of these industries seems obvious. Writes economist Thomas Sowell, "One academic writer, for example, said that the nineteenth century Jewish immigrants to the United States were fortunate to anrive just as the garment industry in New York began to develop. I could not help thinking that Hank Aaron was similarly fortunate– that he often came to bat when a home nun was due to be hit."

No more mysterious was the role of communal self help in the development of North America and other regions under the control of the British. Wherever they migrated, the "Calvinistic diaspora," as Max Weber described it, established informal networks between kinsmen and coreligionists. The 19^th-century entrepreneur Samuel Slater, for instance, established a thriving network of textile mills all over New England by drawing on his Quaker family and friends, who owned, managed, and provided capital to mills. Through such associations, Anglo-Americans transferred technology, capital, and entrepreneurial skill from Great Britain to New England, the American Middle West, and later the Pacific Coast.

Throughout the 19th century, such informal networks helped create many of the key institutions–such as accounting firms and investment banks–that made the Anglo-Americans the preeminent economic powers in the competition among the various European ethnic groups. Simply bringing underdeveloped regions such as South America under European control was not enough. Without the attitudes and institutions of the industrial revolution, white men in regions such as Latin America did not produce a similar rush toward progress and development.