Paul Collier’s Exodus, which I reviewed in Inroads in 2014, is an economist’s assessment of the pros and cons of large-scale immigration. He began the book with a précis of his family history. Prior to World War I, his grandfather, Karl Hellenschmidt, migrated from an impoverished German village to Bradford, at the time a prosperous city in northern England. Come the war, a “gutter rag” newspaper labelled Hellenschmidt a traitor and a mob ransacked his shop. Paul’s grandfather was interned; his grandmother sank into terminal depression. His father, age 12, left school to run the shop. A quarter-century later, the threat of European war reemerged and Paul’s father decided to change his name and his identity and become English.
Given this family history, the reader might reasonably expect a vigorous denunciation of host-country nationalism and a defence of immigrants’ rights. That is not Collier’s conclusion. A strong national identity, he argues, is a necessary – although obviously not sufficient – condition for a society to have a successful set of social programs. Without a reasonably strong national identity, he argues, the rich will not agree to pay high taxes to fund programs that disproportionately benefit the poor. While the host country has an obligation to suppress violent anti-immigrant activities, immigrants have an obligation to integrate and accept core features of the host country’s national culture – such as expectations of group reciprocity on social programs. More on reciprocity below.
In 2014, I agreed with Collier’s conclusion. Immigration is a mixed blessing. As I wrote at the time,
Immigrants clearly benefit from immigration. The benefits to members of the host society are ambiguous and often unevenly distributed. Those left behind in the country of origin may benefit from emigration via several routes, starting with remittances … However, if the state of governance (in the home country) is very low, emigration of the most capable may well be at a level that serves to entrench dysfunction. Collier cites Haiti: most decently educated Haitians are living in New York and Montreal (I should have added Paris). Were they living in Port-au-Prince, they would be less prosperous but their political weight would improve prospects for decent governance.
In 2021, I essentially agree with what I wrote in 2014. Were I writing the review now, I would elaborate on the role of immigration to Canada in explaining the disruptive increase in housing prices over the last decade, particularly in Toronto and Vancouver. There are multiple causes for housing price increases, but among them is the high concentration of new immigrants, nearly half of whom opt for one of those two cities.
Collier reworked and expanded the arguments in Exodus in his 2018 book The Future of Capitalism.¹ This book is his attempt to summarize conclusions from a long career as a World Bank economist in Africa and as a senior professor at Oxford University. As in Exodus, he slips fragments of his family history into this book. The reader learns about his cousin: “Aged fourteen, my cousin and I were in tandem: born on the same day, the children of uneducated parents. (We) had won places in grammar schools (academically oriented government schools). Her life was derailed by the early death of her father; shorn of that authority figure, she became a teenage mother, with its attendant failings and humiliations.” A dramatic contrast with his own education and career.
Reciprocal obligations and the welfare state
Collier chose his title to honour Anthony Crosland, a prominent Labour Party MP and public intellectual in the quarter-century following World War II. In 1956, Crosland published The Future of Socialism, in which he made a sharp distinction between social democracy, a set of policies intended to equalize opportunity, and Marxist-inspired strategies that seek to contain corporate power via nationalization of major firms. Both Crosland and Collier conclude that the evidence of the last two centuries is unambiguous: strategies that accommodate private corporations and markets are the only institutional basis through which the majority in a country can escape poverty – whether it be the 19th-century U.K. or 21st-century China. While capitalism is the necessary basis for economic productivity, left to itself capitalism does not assure high-quality basic services for all – and on occasion, as occurred in 1929 and 2008, it derails.
Collier and Crosland emphasize that the realization of social democratic goals in the mid-20th century owes much to the distress arising from the Great Depression of the 1930s and the sacrifices of World War II. Ultimate victory over fascism and mass unemployment bequeathed to the U.K. and U.S. a strong national identity among their citizens. Collier’s summary:
Social democracy worked from 1945 until the 1970s because it lived off a huge, invisible and unquantifiable asset that had been accumulated during the Second World War: a shared identity forged through a supreme and successful national effort. As that asset eroded, the power wielded by the paternalistic state became increasingly resented.
An element of this asset was agreement (more or less) among the majority, including the rich, to pay much higher taxes to fund massively expanded postwar social programs – the most important being universal health insurance and good-quality kindergarten-to-college education. Collier makes passing reference to parallel developments in continental Europe, but he primarily discusses the New Deal in the United States and the postwar Labour government in the U.K. Funding social programs required that government capture about 40 per cent of GDP via taxes, at least twice the share captured in the 1920s. The Democrats created better education programs in the United States than did Labour in the U.K. (for example, the GI Bill catalyzed U.S. expansion of college education); Labour created better health care programs (the single-payer National Health Service providing universal medical, hospital and pharmaceutical insurance).
The Magna Carta of the U.K. welfare state is the Beveridge Report, tabled in Parliament in 1942. William Beveridge was an economist who devoted his career to social policy reform in the U.K. (Leonard Marsh participated in research under Beveridge. He subsequently emigrated to Canada and authored a Canadian equivalent, submitted to Ottawa’s Parliament in 1943.) Beveridge perceived the welfare state as a set of reciprocal obligations among citizens. His report contains many passages on the obligation of the rich to pay highly progressive income taxes and the obligation of the working classes not to abuse health insurance, unemployment insurance and other social insurance programs.²
As have others, Collier describes the post-1980 lowering of global trade barriers, rise of manufacturing capacity in East Asia and technological change favouring jobs that require education over those that require manual skills. With some justification, Margaret Thatcher and Ronald Reagan succeeded in portraying centre-left governments and unions of the 1970s as “special interest groups” hampering economic development. When they came to power in the 1980s, major U.K. and U.S. coastal cities thrived; however, many cities dependent on traditional sectors fell into prolonged decline (shipbuilding along the Clyde, car manufacturing in Detroit). Income inequality has risen throughout high-income countries, more prominently in the U.S. and U.K. than in most others. In statistical explanations of family income distribution, a variable that looms large is parents with a college degree relative to those without. Geographic distribution of college graduates correlates closely with prospering and declining regions. In terms of group identity, Collier follows David Goodhart’s characterization of well-educated “Anywheres,” who increasingly identify with cosmopolitan international communities and who are abandoning their earlier identification with domestic “Somewheres.” ³
Cataloguing the factors that have worsened income distribution in high-income countries is hardly novel. The “big” idea that Collier pursues in this book is communalism: for better or worse, he insists, the human being is essentially a communal animal. Most of us identity with members of our extended family – albeit to varying degrees. Prior to settled agriculture 10,000 years ago, identity did not extend much beyond small villages. Among the changes brought on by industrialization, most of us now identify, at least to some extent, with our nation. Since the 19th century, we have extended our sense of identity from city to region to the country of which we are citizens. Collier makes references throughout to loyalties among working-class families in industrial cities (such as Bradford) in northern England.
Our portfolio of identities may extend beyond the nation-state but, as the travails of the European Union repeatedly reveal, most citizens of nation-states are loath to cede ultimate political authority to supranational bodies. Our identity with communities beyond our own country does exist – for example, in the form of foreign aid in times of natural or human-made crises – but this identity is weak relative to that accorded to citizens within our country. Depending what programs one counts, Canadian governments spend about 25 per cent of GDP on social programs for Canadians, and about 0.3 per cent on official foreign aid. Admittedly, new immigrants over the first and second generations usually maintain an identity with their country of origin far greater than most.
Collier relies heavily on Jonathan Haidt, champion of “moral foundations” theory.⁴ According to Haidt, human communities construct their moral conventions intuitively, with scant attention to complex implications and intellectual consistency. Dominant moral conventions are based on six fundamental values: loyalty to members of the community however defined; a sense of fairness among community members; extent of individual liberty; behavioural norms that define sanctity of community members; care or empathy for suffering among others; various concepts of equality. Different communities accord varying salience to each of these values. Haidt’s six intuitive human values are open to much debate. Here is how Collier interprets them.
Having staked out his belief that humans are fundamentally communal in both Exodus and The Future of Capitalism, Collier vigorously condemns academic economists for constructing elaborate models that envisage the economy as a series of market exchanges among individuals, each possessing a set of preferences and maximizing their utility (personal well-being) subject to their income and market prices. The idea is not wrong if the goal is maximizing national GDP. Deng Xiaoping understood the insights of The Wealth of Nations. Among his first accomplishments was to allow farmers, as opposed to government bureaucrats, to decide what crops to grow. Allowing farmers to choose crops yielding maximum expected income resulted in a doubling of wheat production from 1978 to 1985. By the end of the 1980s, Chinese production of grains and tubers was three times that of India.
Collier acknowledges that, post-1980, free trade “neoliberal” economic policies have increased world average per capita income and have modestly reduced worldwide income inequality – thanks to hundreds of millions of peasants in China and India moving to town and earning higher incomes in manufacturing jobs. But, he argues, this has been at the cost of increasingly polarized societies within high-income countries. Individual income maximization overemphasizes individual liberty and underemphasizes values of fairness.
Also, Collier has little good to say about Rawls. Rawls insists that we should make moral decisions as if each of us is behind a “veil of ignorance” as to our own future placement in the social hierarchy. Rawlsians will assent to a proposed policy that increases the sum of utility among those in a country if it offers benefits to those with the lowest utility. This reasoning, Collier argues, overemphasizes equality. It invites formation of minority identity groups defining new judicial rights. In reaction, populist demagogues (mostly conservative) and anticapitalist ideologues (mostly neo-Marxist) emerge in defence of the majority. Pragmatic policies of compromise may well become impossible.
Pragmatism, a nebulous philosophical trend that arose in late-19th-century America, rejects the search for philosophical and scientific certainty.⁵ It is associated with John Dewey and other liberal reformers of the first half of the 20th century, who argued for incremental progress and rejected ideological certainty. To give the flavour of Collier’s conclusions, I quote at some length a polemical passage:
In its origin (pragmatism) is communitarian, seeing the task of morality as doing our best to fit our actions to the values of our community and the specifics of the context … it rejects ideology, no one value is overarching, absolute and timeless. In real communities, the relative importance of values evolves; pragmatism asks “What, here and now, is more likely to work?”
In contrast, ideologies each lay claim to supremacy, derived from reason, over those who disagree with them. The custodians of the supreme ideology are a vanguard of the cognoscenti. Religious fundamentalists invoke a unique divine being as the ultimate authority; Marxists invoke the dictatorship of the “proletariat” guided by a hierarchy. Utilitarians invoke the sum of individual utilities and Rawlsians invoke “justice,” as defined by themselves. Just as pragmatism stands in contrast to ideology, it also stands in opposition to populism.
Collier acknowledges that “pragmatism has its dangers. The freedom to deduce moral actions situation-by-situation has to be bounded by our inherent limitations … Worse, we are tempted to fit reasons to our values. Worst, our judgements are no better than our knowledge.” At this point, an example helps us understand Collier’s over-the-top critique of utilitarian and Rawlsian moral theory.
Given Collier’s extensive work on African development, he not surprisingly has much to say about ethical responses among high-income countries to the increase over the last three decades in refugees from Africa and the Middle East – not to mention Afghanistan. The proximate cause of rising refugee numbers has been civil wars in, for example, Algeria, Ethiopia, Mali, Mozambique, Niger, Nigeria, Côte d’Ivoire, Chad, Iraq, Syria and Yemen. A second proximate explanation is religion: in all these cases, conflicting interpretations of Islam are implicated. In some cases, all participants are Muslim, one side moderate and the other committed to various Salafist perspectives. In Syria and Iraq, the conflict has pitted Sunni against Shi’a – exacerbated by unsuccessful U.S. and NATO interventions. In Algeria and West Africa, conflict has erupted between educated urban elites whose incomes have risen dramatically in the half-century since independence and a rural population whose incomes have not risen. In rural areas, Salafist imams define morality and jihadist extremists attack schools as institutions leading to apostasy.
Rawlsian moral policy, combined with economists’ emphasis on global utilitarianism and the responsibility of care for those faced with war and natural disasters, implies large-scale immigration of refugees as the appropriate response to civil wars. Not surprisingly, Collier disagrees: we have plenty of evidence, he argues, that large-scale immigration of refugees with values profoundly different from those of the potential high-income host country is a catalyst for populist anti-immigrant demagoguery (Donald Trump in the U.S., Nigel Farage in the U.K., Marine Le Pen and gilets jaunes in France, Viktor Orbán in Hungary, Matteo Salvini in Italy).
The clash between the “moral foundations” of immigrants from developing countries and citizens of high-income countries readily leads to a breakdown of pragmatic policy. As I write in mid-October, U.K. leaders are mourning the assassination by the son of a Muslim immigrant of a highly respected MP as he met with constituents. The recently elected Labour leader, Keir Starmer, spends most of his energy attempting to shift the public view of Labour from Jeremy Corbyn’s neo-Marxist tiers mondisme to some version of social democracy.
Among European countries, France has been the most dramatically afflicted by a Huntington-style clash of civilization between well-educated citoyens de souche and Muslim immigrants who have been in France for three generations at most. To some extent, the French have themselves to blame. Their social policies are overly generous and contain few reciprocal obligations (such as transfers conditional on employment) designed to accelerate integration.
In 2015, jihadists assassinated the editors of Charlie Hebdo, a high-profile satirical weekly. In 2020, a radicalized Chechen immigrant assassinated Samuel Paty, a secondary school teacher who, in conducting the required curriculum lecture about laïcité and free speech, displayed caricatures of Muhammad. Between these two high-profile events, Islamist jihadis killed some 250 people in targeted attacks throughout the country.
Emmanuel Macron is a pragmatist, but the chattering classes in Paris are not currently talking about pragmatic policy innovations to hasten integration. They are discussing the rising public profile of Éric Zemmour, an articulate Jewish journalist born in France to Algerian immigrant parents. Zemmour is convinced that the key policy innovation needed to preserve French secular values is a halt to Muslim immigration and deportation of those found guilty of serious crimes. Zemmour may, or may not, enter the 2022 presidential election. His latest poll result (mid-October) is 17 per cent, second only to Macron at 24 per cent for the first round of the election.
If not large-scale immigration, what? Collier does not discuss a Canadian point system designed to keep out those with low education levels and unable to speak English or French. His response turns around a responsibility of high-income host countries to finance employment opportunities in countries abutting the source of conflict. A good idea, but international support for such major interventions is, at present, marginal.
Anywheres versus Somewheres in developing countries
Collier’s thesis is that social democracy tamed capitalism and afforded a “good life” to the great majority of residents in high-income countries. It took two centuries after Adam Smith for countries in Europe and North America to abandon revolution and 19th-century Manchester liberalism. If the post-1980 lowering of global trade barriers, rise of manufacturing capacity in East Asia and technological change have polarized income and political identities in high-income countries, should we not expect a somewhat similar dynamic in developing countries? This is a question that Collier does not pose.
In the mid-20th century, a national identity on behalf of sovereignty accorded legitimacy to the first generation of postcolonial elites. It is an understatement to note that the governing elites of most newly sovereign countries emerging from European empires did not pursue social democratic goals consistent with Collier’s expectations. They did not prioritize good-quality health clinics and hospitals, good-quality primary and secondary education or adequate employment opportunities beyond the major cities. Many countries (e.g. India and Pakistan) copied the Soviet obsession with centralized investment in heavy industry; many collapsed into deeply corrupt dynastic regimes (e.g. Uganda under Museveni, Iraq under Saddam, Syria under the Assad family, Libya under Gaddafi, Algeria under geriatric FLN leaders, Zimbabwe under Mugabe, Pakistan – intermittently – under the Bhuttos).
With many national differences, the post-1980 factors that have fractured national identities in high-income countries have done the same in low-income countries. Over the decades, urban elites in the rapidly growing megacities of developing countries have identified with the lifestyles of high-income countries. Many young adults living in villages have migrated to urban slums in hope of gaining access to higher-income employment. Some succeed in gaining a formal-sector job, either in the public sector or in a labour-intensive sector such as construction or garment manufacturing; most remain in the informal sector earning not much more than they would have if they had stayed in their village.
Admittedly, per capita GDP has risen in the developing world post-1980, even in the poorest regions, sub-Saharan Africa and South Asia. But averages tell us nothing about income inequality, which is very high. Over half the South Asian population lives below the World Bank’s lower-middle-income threshold of US$3.20 per person per day.
These observations are not new. They have motivated international bodies such as the World Bank and various UN agencies to “nudge” the governments of developing countries into adoption of social democracy. The highest-profile initiatives have been the UN’s 2000–2015 Millennium Development Goals (MDG) campaign followed by the 2016–30 Sustainable Development Goals (SDG) campaign. These campaigns have realized some success, but public sector corruption and underfunding remain pervasive and most SDG goals are unlikely to be met.
In South Asia, the urban elites have long since abandoned public education and health services. Among the near-poor (those with some discretionary income), an increasing share have abandoned government schools and health clinics in favour of low-fee private schools and mediocre private health care.
European and North American countries took two centuries before they decided that “tamed capitalism” was the best of many imperfect options. I wish the SDG campaign well in attempting to make the transition in 15 years.