The editorial on July 5th, "Why Men Ought to Be Unequal," defending Francis Fukuyama's thesis in The End of History and the Last Man, evinces the inherent problem of political science. The discipline has failed to improve in theoretical rigor and continues to rely mostly on poorly-interpreted empirical evidence. This penchant is gravely problematic because inane empirical studies can only establish correlation -- but never causality -- among the phenomena that one might want to link.
For instance, the author of the editorial, in support of Fukuyama, seems critical of modernization theory, which claims that wealth accumulation due to industrialization is sufficient in triggering the establishment of a liberal democracy. This position has recently gained in popularity as more and more political scientists claim to have acquired evidence against the theory.
However, those who proudly present this evidence to strengthen their critique of modernization theory are unjustifiably doing so; none of these recent studies have seriously addressed the problem of endogenous variables that arises from the econometric equation that purportedly explains the causal relationship, or lack of, between a population's wealth and its level of liberal democratic development.
The reader should see why the endogenous-variable problem -- or the inability to differentiate dependent and independent variables -- would complicate these political scientists' proof of their critique. Consider the most simplified equation of modernization theory, LD=a+bW+e, where LD is the dummy dependent variable that assumes 1 if the observed country is a liberal democracy and 0 if not; W, the independent variable, is the country's level of wealth; a and b are coefficients; and e is the disturbance term.
Before one can show the statistical insignificance of the coefficient b, one has to illustrate that the equation is free of econometric problems, such as those concerning endogenous variables, which would render the equation meaningless.
Unfortunately this equation does not pass the first test. The premise that causality runs from W to LD is questionable, for is it not possible that the more liberal an economy is, the more productive it becomes; that is, that causality runs from LD to W? We face the endogenous-variable problem, unable to establish which of LD and W is the dependent variable.
Surprisingly many political scientists ignore this problem by simply explaining that numerous illiberal states have proven more successful than liberal states in guiding their economies.
To prove this they adduce countries such as Germany under Bismarck, Japan during the Meiji restoration period, and Chile under the dictator Pinochet -- all of which, on an ostensible level, excel or excelled in fostering development. So, they pontificate, it would be absurd to hypothesize that high levels of liberal democratic development cause growth.
However, little theoretical understanding of economic growth -- in particular, total factor productivity -- illustrates the flaw of their claim.
In accounting for growth, one has to figure out how much of it is caused by mere accumulation of capital and labor, because growth triggered by, for example, baby-boomers entering the labor market, thus accruing to the labor force, or land reform, making capital such as land widely available for production, is uninteresting.
What matters is the remaining component of growth, or total factor productivity, after subtracting capital and labor accumulation, since this residual captures the economy's productivity, believed to be the determinant of the living standard.
An increasing number of empirical studies with solid theoretical backing show that government intervention -- a manifestation of illiberalness -- hurts total factor productivity growth. Analyzing the growth of the residuals during comparable periods in Japan and Korea, former of which is more liberal, economists have discovered that the rate of Japan has consistently surpassed that of Korea.
Singapore has been shown to yield negative productivity growth for most years since its rapid development began. In other words, the country's economy could have grown even faster than its already astonishing rate, if it had been more liberal.
Thus all evidence must be treated carefully within theoretical frameworks. But political science lacks the tools to deal with evidence in such a fashion, and thus easily induces its scholars into mistaking correlation for causality.
I once attempted to explain to a political scientist the implications of total factory productivity. Sadly, he refused to accept my conclusion and called me a fool for thinking that some of the East Asian economies, with the fastest growth rates ever since the inception of modern civilization, could have developed more quickly if their governments had been more liberal. Having no legitimate argument against my position, he irrationally resorted to his jumble of historical facts, interpreted, again, only intuitively and not theoretically.
Such is a dangerous tendency characteristic of the entire discipline.
