Economic Impact: If Not Religion, Then Culture?

[Via Organizations and Markets.]

Max Weber famously conjectured that something called the Protestant Work Ethic was responsible for the industrial output of German-speaking workers. For as much as this hypothesis has become a cliche, it's attracted appropriate scrutiny. For example, in the excellent Mystery of Capital, Hernando DeSoto openly scoffed at the idea, turning to Japan as one counterexample. (As an aside: Japan is an excellent counterexample for many, many theories about economics, development, culture and religion, and one which is often inexplicably ignored by Westerners. Fortunately for accurate social science, it's getting much harder to miss the rise of Japan and the rest of East Asia.)

We now have solid quantitative evidence that DeSoto and other doubters were right. Davide Cantoni at Harvard has looked back at historical data from the German-speaking statelets of the Holy Roman Empire and shown no effect of religion on economic growth.

The question remains: what does explain industrial successes of this region, or of one region relative to another? One argument is that other aspects of culture are what matter, since religion and government differed between the German states.