Some Lessons from Burma

JEL-Keywords: Social Norms, Law, Rights, Money, Credit, Economic growth, Development, Poverty, Burma, Thailand.
JEL-Classification: K10, K19, O11, O12, O16, Z13.

Theoretical explanations about human rights or democracy and economic development have long been dominated by the so-called Lipset-hypothesis, in which levels of democracy and human rights area function of prosperity. However, cross-country evidence seems to indicate that multiple equilibria are more probable than a simple linear relationship. This paper explains the occurrence of low human rights equilibria as the result of a collective choice, where individuals take into account the prevailing consensus in society. This consensus is based on specific cognitive models and the related conceptions of justice. Modern societies are structured by debtor-creditor relationships in a monetary economy, while traditional societies are dominated by a safety-first principle rooted in the subsistence economy. Modern society requires a system of rights, including human rights, to ensure protection of the individual against interference by the collective. By contrast, the subsistence ethics of traditional societies privilege a holistic approach in which the collective guarantees the survival of the individual. In this context, the validity of human rights is less apparent. A collective choice of low human rights can be seen as an adverse selection by risk-averse agents, or as an insurance premium against individual precarity. These conclusions were derived from an analysis of Burma’s society and economy. In general, the transition to a sustainable democratic regime with better respect for human rights would require a profound restructuring of the economy with a properly functioning monetary economy.

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