The ethic of everyday behavior that was seen as an advantage was a combination of individualism and accomplishment and a belief in the legitimacy of man’s mastery over nature. It was epitomized in Adam Smith’s analysis of the division of labor in _The Wealth of Nations_ , where the key to enhanced productivity consisted in the separation of the individual in the workplace and his specialization in a narrow set of tasks, generally in the context of a small firm in which the organization of activity was as important as the underlying technologies being used. At the same time, a belief in the idea that man could have mastery over nature enhanced social capabilities to assimilate the latest technologies and legitimized the pursuit of science and knowledge for their own sake. The availability of survey data has now made it possible to empirically test the relevance of these values for economic and social development. For example, Licht, Goldschmidt and Schwartz (2007) show that countries whose citizens favor autonomy (as opposed to embeddedness), egalitarianism (vs hierarchy), and mastery (vs harmony with nature) have higher rule of law, less corruption, and more democratic accountability.

One important additional dimension of organization was the recruitment of women and children into the workplace which reduced costs and prices, boosted demand and contributed to deepen the reach of the industrial revolution. The sense of individualism and empowerment, widespread in Britain, which promoted innovation and selfimprovement, may also explain some features of the geographic spread of the industrial revolution, very quickly making its way into New England but taking one hundred years to make its way into northern Italy. So, even in the most famous case of culturally determined economic development—the alleged superiority of a Protestant ethic during the industrial revolution in Britain—we can see that there are many other factors at work which interact with culture or act independently of it or in conjunction with it, to suggest considerable caution in attributing to culture more than a peripheral role.<sup>32</sup> To say that “culture matters” or to claim, as David Landes (2000) does that “culture makes almost all the difference” is to state an important truth, but only in the sense that genes matter and that good genes make a good part of the difference. No doubt true, but difficult to operationalize, and even more problematic as a guide to policy. We think one can make a case that our understanding of _culture_ is changing, that it is being shaped by the forces of globalization and by the impact of government policy. Our understanding of the key drivers of economic prosperity has evolved over time; in the pre-globalization days the existence of competing economic paradigms and systems may have heightened the role played by certain cultural factors. In time, we also came to acknowledge the role of natural resources (for better or for worse), population dynamics, technology,

> (2006) also use survey data to show that stronger religious beliefs have a positive effect on economic growth. Kuran (2004) argues that three Middle Eastern institutions rooted in religion constituted obstacles to the economic development of the region: these were the Islamic law of inheritance, the lack of the concept of corporation in the Islamic law, and the waqf, an Islamic form of trust.

> 32 De Long (p. 1147) makes the additional point that Protestantism is correlated with other things, such as specialization in manufacturing, a high investment ratio, and northern latitude. And, of course, neither Japan nor Italy, two countries that successfully converged in the 20th century to the upper ranks of the rich had much connection with the Protestant ethic.

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