BOOK REVIEW

Culture Matters
Edited by
Lawrence E. Harrison & Samuel P. Huntington

FUTURECASTS online magazine
www.futurecasts.com
Vol. 9, No. 3, 3/1/07

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The Harvard symposium on culture and economic development:

  "Culture Matters: How Values Shape Human Progress," is based on a 1999 Harvard University symposium. It is part of an ongoing debate as to the extent to which cultural influences impact development and development impacts culture. The book includes several skeptical essays about the slipperiness of the concept of "culture" and attempts to assign major causal forces to cultural influences.
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  That cultural influences do matter is of course the short answer to the question. The debate is really over degree and detail - and the skepticism with which attempts to alter traditional cultures should be viewed. An understanding of those details and uncertainties is clearly a vital factor in evaluating prospects for widespread rapid economic development and establishment of stable democratic governance and social justice in third world nations.
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  Ideological implications inevitably cloud understanding of this issue. Conventional wisdom has flip flopped with the ideological tides, Lawrence E. Harrison notes in tracing its history in "Why Culture Matters."

  • The collapse of communism and socialism have removed the Marxist explanations concerning economic development. (These were always clearly idiotic even decades ago.)

  • The passage of decades has removed the colonial past as an ongoing excuse for the developmental failures of third world nations. A logical "statute of limitations" increasingly makes such arguments untenable - as do the increasing number of developmental successes of liberated colonies.

  • The "racism/discrimination" explanation for black underachievement has lost its viability as blacks in the U.S. move increasingly into the middle class, although some racism and discrimination undoubtedly continues.

  • Explanations based on tropical geography and climate are undermined by an increasing number of exceptions that have succeeded with economic development - like Hong Kong, Barbados and Singapore.

  • Economic policy explanations are undermined by those multicultural nations where certain minorities clearly outperform other groups - including the majority ethnic group. Chinese, Japanese, Basques and Jews are prominent examples of minorities that achieve commercial success in several third world nations. (But the Chinese and Indian peoples who thrived in many foreign lands remained hopelessly impoverished in their own countries until their own governments began to actively facilitate - or at least refrained from overburdening - the people's commerce.)

  • The complaint of "dependency" fails for similar reasons. (However, there can be no question that mercantilist protectionist trade policies that close rich nation markets to poor nation exports heavily impact many third world nations.)

  Nevertheless, the pace of third world development has only marginally improved with the removal of these "victimization" excuses. A variety of techniques have been tried to stimulate development, with little success. These include "land reform, community development, planning, focus on the poorest, basic human needs, appropriate technology, women in development, privatization, decentralization, and now 'sustainable development.'"
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  These, and broader policies like "the emphasis on free market economics and political pluralism, have been useful in varying degrees," but results in many third world countries remain disappointing.
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Huntington emphasizes cultural values such as "thrift, investment, hard work, education, organization, and discipline." Second world developing nations enjoy many of these values - third world undeveloped nations generally lack them.

  In "Cultures Count," Samuel P. Huntington offers a partial explanation for the differing experiences of undeveloped third world nations and those nations (which may be referred to as the new "second world" nations) that are successfully developing. He emphasizes cultural values such as "thrift, investment, hard work, education, organization, and discipline." Second world developing nations enjoy many of these values - third world undeveloped nations generally lack them.

  Isn't it remarkable how much more industrious Mexicans become once they cross their northern border. It must be something in the air.

  Huntington offers a quote from Daniel Patrick Moynihan that succinctly sums up the dispute.

  "The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself."

  Clearly, culture is just one of the interacting influential factors impacting economic and political development - and although important, it is not the most important one. Thus, in this dispute, FUTURECASTS leans to the "liberal" view. Every third world nation that has begun sustained rapid economic development has been responding to some dramatic changes in government economic policies.

  Singapore is the poster child for the good that government can do to change culture for the better and spur development. Singapore (with Chile and Hong Kong) has benefited from authoritarian government that concentrated on economic development through private enterprise and as a result transformed pertinent aspects of culture for the better. Huntington asks: How solid will such cultural transformations prove to be as leadership change occurs?
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There is some ideological opposition to the evaluation of differences in cultures in this way - especially among those romanticizing multiculturalism - "cultural relativists" - but such attitudes can only be sustained by the willful denial of the obvious.

  In his introduction to the book, Harrison summarized and gave his views on five major issues that arose during the symposium.

  • Is there a link between values and progress?

  It is incontestable that some groups do better than others under similar economic and political circumstances. One example is the above mentioned minorities that frequently thrive in a variety of lands where indigenous majorities and other minorities languish. The elimination of communist socialism in China has led to an explosion of economic development, while similar events in Russia have had disappointing results. Some minorities do better than others in the U.S.
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  Harrison cites David Landes' observations on culture in "The Wealth & Poverty of Nations," and those of Tocqueville in "Democracy in America."
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  The problem is complex, Harrison concedes. Culture is a nebulous concept that cannot be quantified. There are myriad contexts - psychological, institutional, political, geographic, and more - in play. Nevertheless, culture is amenable to professional analysis, and some is offered in this book.
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  There is some ideological opposition to the evaluation of differences in cultures in this way - especially among those romanticizing multiculturalism - "cultural relativists" - but such attitudes can only be sustained by the willful denial of the obvious.

A "longer, healthier, less burdensome, more fulfilling life" is desired by all. Education and rule of law empowerment are universally desirable - and feared by all who seek to dominate their fellow men.

  • Is "progress" a universal value or just an aspect of Western "cultural imperialism" that should not be "imposed" on other cultures?

  The logic of those who question the Western definition of "progress" has always been slim, and has collapsed utterly as a result of the communications revolution and the hunger of all peoples for the "progress" they have become increasingly aware of that others enjoy.
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  "Progress in the Western sense has become a virtually universal aspiration," Harrison points out. A "longer, healthier, less burdensome, more fulfilling life" is desired by all. Education and rule of law empowerment are universally desirable - and feared by all who seek to dominate their fellow men.

  • What is the influence of geography and climate on culture?

  The influence is admittedly great, as Jared Diamond emphasized in "Guns, Germs and Steel." However, the exceptions are too numerous to be dismissed. Russia is in the same latitudes as Western Europe and Canada. Singapore, Hong Kong and half of Taiwan are in the tropics. Chinese and Japanese minorities thrive in many tropical nations. Costa Rica enjoys democratic governance in Central America and the various Caribbean Island nations enjoy differing economic and political outcomes. Argentina and Uruguay in temperate South America struggle (while Chile advances).
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  Harrison concedes that there may indeed be important cultural differences due to local factors. Geography, politics, the vagaries of history, and much more, influence cultural development.

  FUTURECASTS stresses the impact on Anglo Saxon nations and their culture of being able to avoid dependency on large standing armies for their military security during the many centuries when they were developing free economic and political systems. Navies cannot march forth to collect taxes or repress dissent among the populace. Japan, on the other hand, was until modern times never a naval power.

  • What are the relationships between culture and institutions?

  Why are democratic institutions so solid in the Anglo Saxon nations and today in Western Europe, but so fragile in Latin America even after 150 years of periodic efforts to establish democratic systems? Do aspects of culture explain the difficulty certain nations have in establishing the institutions of economic and political freedom - of capitalism and democracy?
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Ideology frequently obscures analysis - especially for any initiatives that come from the West. The idea of promoting cultural change has been taboo at the World Bank, USAID, and similar institutions.

  Culture can change - albeit usually slowly. Attitudes can change more swiftly - especially under dramatic circumstances as in the Axis nations after their defeat in WW-II - and in Spain after the recent establishment of democracy. Should cultural change thus be included in development planning?
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  Ideology frequently obscures analysis - especially for any initiatives that come from the West. The idea of promoting cultural change has been taboo at the World Bank, USAID, and similar institutions.
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  Within the U.S., the subject has also been taboo when dealing with ethnic group underachievement. Approximately 50% of Hispanic high school students were dropping out of school as of the end of the 1990s. Should cultural factors be addressed in dealing with this? Will this problem decline naturally with subsequent generations?
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  Cultural values of work, education, merit and frugality clearly aid development and prosperity. The question arises as to how such positive value and attitude changes can be integrated into economic and political development planning and policies.
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  This question deserves extensive research with a goal of implementing the results to promote economic and political development, the symposium concluded. The difficulties and likely results of such efforts must also be evaluated.
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  Harrison sums up his views.

  "The role of cultural values and attitudes as obstacles to or facilitators of progress has been largely ignored by governments and aid agencies. Integrating value and attitude change into development policies, planning, and programming is, I believe, a promising way to assure that, in the next fifty years, the world does not relive the poverty and injustice that most poor countries and underachieving ethnic groups, have been mired in during the past half century."

Culture and economic development:

 

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  Culture makes almost all the difference in development outcomes, David Landes asserts. He cites the enterprise of expatriate minorities - Chinese, Lebanese, Jews and Calvinists - and others - in various geographic regions and climates and even under various political regimes. However, ideology blocks examination of this vital subject.
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Improve economic governance, and development blooms.

  Experience in China shows that governance is also vital, he concedes. With socialist governance that smothers enterprise, not even the Chinese can prosper. Improve economic governance, and development blooms.

  "Monocausal explanations will not work. The same values thwarted by 'bad government' at home can find opportunity elsewhere, as in the case of China."

  Indeed, enterprising emigrants have thrived even amidst indigenous peoples who lack both enterprise and economic development.
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  Recognizing the need, cultures are in fact changing. The Thai now impose much shorter periods of spiritual learning on their young. Time is money, after all. Following the example of their Chinese inhabitants, economic learning and experience has become paramount.
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  However, in Russia, seventy five years of communism have left a culture of anti-entrepreneurial attitudes, corruption and criminality that is still frozen in place.
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  Victimization attitudes encumber Argentina and other Latin American nations that have repeatedly failed at democratization and development efforts. They believe that their failures are all the fault of those nasty Western European and North American capitalists who exploit local resources for their own purposes with no benefit accruing to the mass of the local people.
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  The result has been periods of autarkic protectionism that "cut Argentina off from competition, stimuli, and opportunity for growth." Dependency doctrines spread throughout Latin America, blighting chances for economic development (and providing fertile soil for demagogic politics).
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  By 1999, that had changed. Capitalism and open markets had become recognized as absolutely essential. (However, capitalism and open markets - although essential - are not sufficient. Argentina and other Latin American nations suffered serious relapses after 2000.)
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A century earlier, the Japanese chose to question their own policies and culture, and proceeded to make changes that launched them into the modern developed world.

 

The Protestant ethic breeds success, and success breeds optimism - and enterprise. Optimism is on occasion wrong - but only "educated, eyes-open optimism pays."

  Latin America chooses conspiracy theory and paranoia to explain its problems, and suffers interminable failures. A century earlier, the Japanese chose to question their own policies and culture, and proceeded to make changes that launched them into the modern developed world.
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  Landes provides an account of the Meiji Restoration in Japan and contrasts it with more disruptive revolutions and responses to modernity that occurred elsewhere. Japanese culture - work ethic, effective government, self discipline, nationalism - made the difference. The Japanese determined to learn and adopt the best practices in the European world and the U.S. They were spectacularly successful.

  "Other countries imported foreign technicians to teach their own people; the Japanese largely taught themselves. Other countries imported foreign equipment and did their best to use it; the Japanese modified it, made it better, made it themselves."

  The difference was cultural - a deep sense of national responsibility. The new imperial state and its educational system brought the Japanese people a strong sense of nationalism and duty to the nation. It was a Japanese version of the "Protestant ethic" of work and responsibility described by Max Weber in "Economy and Society." It is the basis for the explosive growth of Japanese human capital.
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  Landes unabashedly reaffirms the wisdom of the Protestant ethic - lately so much out of ideological fashion. Education, work, thrift, honesty, patience, tenacity - these are characteristics that breed  success - and the Protestant ethic spread them widely throughout Protestant nations. These are not just platitudes. They are the wisdom behind modern economic development. The Protestant ethic breeds success, and success breeds optimism - and enterprise. Optimism is on occasion wrong - but only "educated, eyes-open optimism pays."
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  The role of attitudes and beliefs - of "culture" - in human behavior and progress was emphasized by Michael E. Porter in "Attitudes, Values, Beliefs, and the Microeconomics of Prosperity." Understanding that role, "in the context of the broader determinants of prosperity," is the task of this symposium. Porter concentrates on the cultural influences that impact economics. He emphasizes the importance of how these cultural virtues are directed.

  • Hard work is not enough. It must be productively directed.
  • Initiative is not enough. It, too, must be productive.
  • Education is crucial. However, it must be practical.
  • Savings are not enough. They must be productively deployed.

Hong Kong and Chile prosper and compete in North American markets across vast distances. Hong Kong has no natural resources.

  Development is intimately connected to productivity growth. In the modern global economy, prosperity does not depend on what a nation produces. Only the productivity of its production matters. It doesn't matter whether firms are foreign owned or domestic - as long as they are productive relative to the competition. It doesn't matter if the industries are in international markets or are just domestic. The productivity of domestic industry affects living standards and has an impact on the efficiency of export industries.
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  National resources, cheap labor, even geographic location near markets no longer matter. Hong Kong and Chile prosper and compete in North American markets across vast distances. Hong Kong has no natural resources.

  "Comparative advantage has given way to competitive advantage residing in superior productivity in assembling resources to create valuable products and services. Countries that improve their standard of living are those in which firms are becoming more productive through the development of more sophisticated sources of competitive advantage based on knowledge, investment, insight, and innovation."

Economic development is the process of building an "array of interdependent microeconomic capabilities and incentives [that] support more advanced forms of competition."

  And the sources of  competitive advantage are all local, since all competitors can source global markets. Relationships with local customers and suppliers - insights about local markets - access to technology and knowledge from local institutions - flexibility afforded by nearby suppliers - are all local advantages.

  "Since many of the external sources of advantage for a nation's firms have been nullified by globalization, potential internal sources of advantage must be cultivated if a country wishes to upgrade its economy and create prosperity for its citizens."

  Sound macroeconomic policies are of course vital, as are infrastructure and legal and political environments that facilitate commerce. International capital markets will punish unsound macroeconomic policies. The microeconomic environment, however, is also vital.

  "The business environment has much to do with the types of strategies that are feasible and the efficiency with which firms can operate. For example, operational efficiency is unattainable if regulatory red tape is onerous, logistics are unreliable, or firms cannot get timely supplies of components or high-quality service for their production machines."

  Weaknesses anywhere in the domestic business environment will reduce the competitiveness in international markets of a nation's exporting firms. Economic development is the process of building an "array of interdependent microeconomic capabilities and incentives [that] support more advanced forms of competition."
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Continuous improvements in quality and specialization of a nation's inputs are required for economic development.

 

Consumer choice empowered by competitive domestic markets forces broad-based efforts at raising productivity and improving product and service quality.

 

A firm that can't compete at home will be unable to compete abroad. A domestic monopoly will never be nimble enough to keep up with foreign rivals.

  Factor conditions - determining the availability and cost of inputs for production of goods and services - are discussed by Porter. Quality and specialization are more important than quantity, he notes - especially with respect to human capital - both labor and management. Continuous improvements in quality and specialization of a nation's inputs are required for economic development.
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  Consumer empowerment - "the quality of local demand" - is also vital. Competitive markets empower consumer choice. Consumer choice assures broad-based efforts at raising productivity and improving product and service quality. It increases the competitiveness of domestic products and services in international markets.

  "Demanding customers educate local firms about how to improve products and services and force them to upgrade these products and services in a way that will translate directly into higher value for customers and higher prices. On the other hand, if local demand is unsophisticated and a firm is simply imitating products developed elsewhere, productivity and international market prices will suffer."

  Thus, protectionism is a losing strategy. A firm that can't compete at home will be unable to compete abroad. A domestic monopoly will never be nimble enough to keep up with foreign rivals.

  "Anti-monopoly legislation and policies that support entrepreneurship and new business development are examples of tools that a nation can use to foster healthy local rivalry."

  The development of clusters of supporting suppliers and related industries is vital if development is to advance beyond basic levels. Silicon Valley and Hollywood are American examples, but such clusters now exist for many industries all over the world. Local clusters are more productive and more innovative than solitary firms that rely on distant suppliers and compete in distant markets.
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  Government's role is indirect - to provide the indirect support needed for successful commerce. Direct supports are counter-productive. Targeting industries for support - choosing the winners and losers - is a losing policy for the economy as a whole.

  "Government responsibilities begin with creating a stable and predictable macroeconomic, political and legal environment in which firms can make the long-term strategic choices required to boost productivity. Beyond this, government must ensure that high-quality factors - inputs - are available to firms - e.g., educated human resources, efficient physical infrastructure; establish overall rules and incentives governing competition that encourage productivity growth; facilitate and encourage cluster development; and develop and implement a positive, distinctive, and long-term economic upgrading program for the nation that mobilizes government, business, institutions, and citizens. Government and other institutions such as universities, standards agencies, and industry groups must work together to ensure that the business environment fosters rising productivity."

  Porter summarizes what is needed to reach and maintain the most advanced levels of development.

  "To reach the level of an advanced economy, the country must develop innovative capacity at the world technological frontier, on which firms can draw to create unique goods and services that can command high wages for citizens. This involves steps such as  increasing investment in basic research, developing a growing pool of scientific and technical personnel, and expanding the availability of venture capital."

  These are complex tasks for undeveloped and developing nations to undertake. The good news is that perfection is not required - and nowhere exists. China continues to demonstrate that any substantial effort at implementing appropriate economic reforms and supportive economic policies will rapidly reap a cornucopia of benefits.

Business culture must focus on competitiveness - on productivity - not on "control of resources, scale, government favors, or military power."

 

Approaches that encourage rent-seeking and monopoly seeking practices produce parasitic development.

  Which brings the story back to culture and attitudes. Business attitudes are central to this process, Porter points out. Business culture must focus on competitiveness - on productivity - not on "control of resources, scale, government favors, or military power." (However, there must be sufficient military power to fend off threats and physical attacks against international commerce.)
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  Concentration on productivity is good for competitiveness - good for development - and good for society. Approaches that encourage rent-seeking and monopoly seeking practices produce parasitic development, Porter notes.
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  Economics is not a zero sum game. With policies that facilitate commerce, there is no limit to how much the economic pie can grow.

  "The productivity paradigm gives rise to a whole series of supportive attitudes and values: Innovation is good, competition is good, accountability is good, high regulatory standards are good, investment in capabilities and technology is a necessity, employees are assets, membership in a cluster is a competitive advantage, collaboration with suppliers and customers is beneficial, connectivity and networks are essential, education and skills are essential to support more productive work, and wages should not rise unless productivity rises, among others. These can be contrasted with unproductive attitudes and values: Monopoly is good, power determines rewards, rigid hierarchy is needed to maintain control, and self-contained family relationships should determine partnership."

Central planning, import substitution, factor accumulation and similar stupidities have all succeeded in influencing economic policies and undermining economic development at various times and in various nations.

 

Repeatedly, "cultural constraints" to prosperity are revealed to be fallacious  by expatriates who thrive in foreign economic systems.

  However, widespread ignorance about economic fundamentals is a particularly serious weakness. It allows all manner of invalid rationalizations to prosper and even to be taught in the schools and provide the basis for disastrous economic policies. Central planning, import substitution, factor accumulation and similar stupidities have all succeeded in influencing economic policies and undermining economic development at various times and in various nations.
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  Flawed theories are sometimes the product of ideology. Despotic regimes favor policies that increase their control - like socialism, import substitution and self-sufficiency.
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  Cultural  heritage can support flawed economic beliefs. However, people seldom consciously act in unproductive ways, Porter asserts. More often, unproductive behavior is a response to unproductive incentives in their commercial environment. Why work hard if it is not rewarded? Why compete if political influence is the route to success? Why build wealth if it can be taken away? Rent-seeking by individuals and business entities occurs in systems that reward it.
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  Many cultural influences are actually responses to economic influences. Porter mentions the high savings rates of the Japanese - stimulated by early retirement policies, inadequate pension systems and high costs of home ownership. Repeatedly, "cultural constraints" to prosperity are revealed to be fallacious  by expatriates who thrive in foreign economic systems. Economic and social policies strongly influence pertinent cultural attitudes.
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  However, there are exceptions, Porter concedes. Attitudes and values derived from moral, social and religious beliefs can shape economic culture. They may reinforce either productive or unproductive economic culture.
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  Recent experiences support Porter's view that unproductive culture can change - often dramatically. Indeed, globalization is forcing such change - by offering copious benefits for policies supporting productivity and increasing penalties for those that don't - and disseminating knowledge of such successes and failures widely amongst the peoples of most nations.

  "[The] convergence of economic ideas and the pressures of the global market have arguably reduced the scope for cultural variables to influence the economic paths societies choose."

Ignorance of the benefits of competition empower vested interests and demagogues to undermine development.

  Appreciation for productivity-enhancing policies must spread throughout a nation's business, intellectual and civil society, Porter warns, to assure the political support required to fend off challenges from the vested interests threatened by competition. Ignorance of the benefits of competition empower vested interests and demagogues to undermine development.
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  Unproductive cultures have complex foundations. Individual interests can be different from societal interests, short-term influences can undermine long-term interests.
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  Cultural differences will remain -
but these will mainly be the distinctions that support some economic competitive advantage - like Costa Rica's passion for ecology, Japan's fascination with games and cartoons, and the U.S. demand for convenience.
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  Other determinants of economic development do still exist, Jeffrey Sachs reminds us in "Notes on a New Sociology of Economic Development."
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  Geography still plays a major role, despite advances in transportation and communications.
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  Temperate regions have major advantages over tropical regions. In the tropics, only Hong Kong and Singapore - two tiny island city-states located advantageously on ocean trade routes - are among the richest thirty states. Sachs provides a brief review of the familiar disadvantages of most tropical regions.
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  Easy access to the seas also makes an obvious difference. Landlocked and mountain states - except in Europe in the midst of the wealthy European market - are almost uniformly poor.
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  These factors do not evolve naturally, Sachs points out. Societies that are lagging in economic development often require the shock of interactions with advanced nations that starkly reveal their inferiority. Sometimes, the result has been change conducive to development - and sometimes it has been collapse. Sachs, too, refers to the seminal work of Max Weber.
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  Sachs notes three broad categories of political and social development that undermined economic development in the 20th century. These were socialism, colonialism, and instances of social collapse. He asks why some nations fared better than others in developing the institutions of capitalism? He suggests some answers.

  • Elites - with interests vested in traditional conditions - resist institutionalization of rule of law legal systems, norms of social mobility, and capitalist markets - all of which threaten their elite status. Sachs identifies several types of obstructive elites: the elites of highly stratified societies; political elites that lack broad popular support; and, colonial elites.
  • Social and political collapse - can lead to a bewildering variety of outcomes - from Haiti to the Soviet Empire.
  • Geographic and cultural factors - some of which seem to favor the development of capitalist institutions, and some of which seem to hinder it.

  Sachs provides a broad brush review of how these factors applied in determining the diffusion of capitalist systems around the world and the obstacles to that diffusion. "As late as 1965, only about one-fifth of the world could be counted as operating according to capitalist social institutions."
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  Political and social factors are also of obvious importance.

  "As an empirical matter, economic growth has been related to political, cultural, and economic factors and has been intimately connected with capitalist social institutions characterized by a state subject to the rule of law, a culture that supports a high degree of social mobility, and economic institutions that are market based and support an extensive and complex division of labor."

  This leaves unexplained the failures of economic development in Islamic nations and in the southern temperate zone states of Argentina and Uruguay. The latter is landlocked, but Argentina enjoys vast geographic advantages and the culture of its southern European immigrant population. Sachs notes the unfortunate political history of these two nations. He leaves open the possibility that Islamic culture restrains development in the Middle East and Northern Africa.
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  Among tropical states, aside from the major oil exporting nations and the city states, as of 1995, only Malaysia, Mauritius, Columbia, Costa Rica and Thailand seemed on their way towards economic development. Cultural factors - principally the activities of the Chinese diaspora - seem to play a decisive role in Southeast Asia. However, the experience of China, itself, demonstrates the primacy of political factors - first in China's lagging performance prior to 1978, and thereafter in its rapid advance. Even among the Islamic states, political factors may predominate over cultural factors in explaining the failure of economic development.

  Sachs fails to mention the lack of national unity and the failure of dominant immigrant minorities to assimilate. Without that, there generally is no development of a legally, economically and politically empowered civil society concerned with the welfare of the entire nation and all its people. Nations in Central Asia and Africa that are enmeshed in tribal politics, and nations in Southeast Asia and Latin America that have a large indigenous underclass, are inherently unstable. See, Chua, "World on Fire."
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  The results are particularly evident today in Afghanistan and Iraq, and in Argentina and Venezuela.

Government economic policies:

 Good governance that  implements economic policies that facilitate the commerce of the people - and the temptations for political authorities to go astray - are stressed by Mariano Grondona in "A Cultural Typology of Economic Development."
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Short term considerations will win unless some cultural value intervenes to sustain the long term development interests.

  Grandiose monuments to leaders, demagoguery, wars, corruption, utopian welfare plans, socialist policies, protectionism, levels of taxation and regulation that discourage enterprise - these are some of the ways that governments retard economic development or even condemn their people to hopeless poverty.
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  Economic development is a long term process. Even nations that succeed at some level of economic development may not be committed to continue favorable policies. Once having achieved some wealth, they may succumb to temptations and adopt policies that inhibit further development or that even reverse previous gains. There is always temptation to put short term gains ahead of the long term benefits of economic development.
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  To the extent that a nation gets the governance that it deserves, these decisions will be based on cultural values. Short term considerations will win unless some cultural value intervenes to sustain the long term development interests.
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  In the absence of war or colonialism, Grondona asserts, a nation's economic development depends on the cultural choices of the nation itself.

  This is true, but simplistic. The dominant cultural choices may not be those of the entire nation, or even of the majority of the people. They might be those of a dominant power elite intent on maintaining and benefiting from power. This is a widespread problem that Grondona does not address.

Societies that denigrate competition try to substitute utopian equality, but generate widespread envy. They try to substitute solidarity, loyalty and cooperation, but get corporatism, political despotism, and intellectual dogma. Actually, competitive systems generate far more cooperative conduct as myriad alliances and associations form for particular purposes and all recognize their stake in the overall success of the system.

  Twenty cultural factors that can support or retard economic development are briefly described by Grondona. Several overlap and are combined in the following list.

  • Religion - may either reinforce enterprise or burden it - or even condemn it.
  • A society's ability to trust individuals - releases entrepreneurial and productive aspirations and can support an ethic of trustworthy conduct. Policies of physical and mental control - of dealing with the population as "masses" or "peoples" - that need guidance and must be controlled - undermines the sense of individual responsibility, induces people to blame others for their plight, and leaves only the stark choice of obedience or resistance (or corruption).
  • Pragmatic concepts of morality and law - are concepts that are not so utopian - so elevated - that they are beyond reasonable expectations. Grondona mentions Marxist expectations and Catholic insistence on clerical chastity as the type of cultural values that lead to hypocrisy and avoidance, corruption and even the law of the jungle. Pragmatic levels of morality and law are realizable and broadly acceptable as in the individual's enlightened self interest. They induce the individual to engage in conduct that is "neither saintly nor criminal behavior" - conduct that reasonably pursues "his or her own well-being within the limits of social responsibility and the law."
  • Attitudes towards wealth - turns the obtaining of wealth into a zero sum game in societies resistant to capitalism. In capitalist nations, wealth is something anybody can create for himself. In English colonies in North America, land was readily available to those who would work it. In Spanish and Portuguese colonies in Latin America, all land belonged to the Crown and was available only to those who could obtain royal favor.
  • Competition is widely beneficial - not just in economics, but also in politics, religion, the professions and in intellectual life. Societies that denigrate competition try to substitute utopian equality, but generate widespread envy. They try to substitute solidarity, loyalty and cooperation, but get corporatism, political despotism, and intellectual dogma. Actually, competitive systems generate far more cooperative conduct as myriad alliances and associations form for particular purposes and all recognize their stake in the overall success of the system.
  • Social justice - involves only the immediate distribution of benefits in "resistant societies." In capitalist societies, the emphasis on immediate benefits is mitigated by substantial incentives to build for the future.
  • The prestige of hard work and enterprise - was elevated by the Protestant Reformation - especially in its Calvinist branch. Western Europe and North America benefited. East Asia benefits from its own version. The relative poverty of Latin America and third world nations is explained in substantial part by the low prestige of those who work hard, especially when compared with the prestige of politicians, intellectuals, artists, clerics and generals.
  • The essential role of heresy - is to question orthodoxy and to stimulate pluralism, innovation, and thus economic development. Orthodoxy - whether religious or ideological - smothers innovation and economic development.
  • Education that stimulates intellectual individuality - rather than just transmitting conventional wisdom and dogma - generates heretic and innovative individuals rather than conformists and followers.
  • Skepticism towards  unverifiable theories, and the appreciation of utility - stimulates practical scholarship and endeavors - but can be carried to despotic extremes.
  • The "lesser virtues" - such as good workmanship, tidiness, courtesy, punctuality - contribute to efficiency and harmonious relations, and are "characteristic of societies in which people are more respectful of the needs of others." The "higher virtues" of traditional societies with resistant cultures - love, justice, courage, magnanimity - are always desirable, but can crowd out the essential "lesser virtues" of productive societies.
  • Focus on the future that is within reach - is the productive alternative. Traditional cultures obsess over the past and await in immobility some "distant, eschatological future" - the end of days.
  • Rationality in economic planning - achieves great success by reaching one achievable goal at a time, while "progress-resistant countries" expend their energies on monumental projects - pyramids, cathedrals, heavy industry, grand hotels - often left unfinished or, when finished, poorly maintained.
  • Rule of law - permits rational planning. Rule of the monarch or other autocratic ruler stifles enterprise with unpredictable, arbitrary and capricious actions and requirements.
  • Individual opportunity - is offered in advanced societies that allow individuals to approach life optimistically as an adventure full of possibilities. In resistant societies, there is no individual opportunity - life is something that happens to the individual - leaving individuals to choose either resigned cynicism or fanatical crusading.
  • Utopian visions - in capitalist systems are distant objectives to be achieved by immediate practical steps. In resistant societies, they are immediate imperatives that are beyond reach - again breeding fanaticism and cynicism. 
  • Democracy in advanced nations - disperses power among different sectors and interests. It is the chaotic, unstable popular democracies of Rousseau or - ultimately like the "peoples democratic republics" of the Soviet Empire - that create macabre absolutist political frauds.
  There are, of course, no absolute examples of societies on one side or the other of this list. However, the closer a society comes to the favorable values, the more likely it is to achieve sustained economic development. Nor is culture static. Cultural shifts are occurring - albeit usually slowly - all the time.
 &

Development failure in Latin America:

  The reasons for two centuries of repeated failure in Latin American efforts at democracy and economic development are discussed by Carlos Alberto Montaner in "Culture and the Behavior of Elites in Latin America."
  • Political corruption - not just tolerated but widely expected - is a widespread practice. There is little notion of "the common good."
  • Military leaders - lack respect for both law and democracy. They provoked numerous civil wars in the 19th century, and established prolonged dictatorships during the 20th century. Instead of protecting their nations from foreign threats, they frequently acted in an authoritarian manner to save their nations from the failures of politicians. They in turn invariably suffered from corruption and inept policies that were economically disastrous and of course destructive of democratic institutions.
  • Businessmen who prosper through political influence rather than enterprise - deal with corrupt politicians to gain mercantilist protection, subsidies, preferential interest rates and tax privileges, etc., - while providing consumers with costly low quality goods and services. These tendencies are not unique to Latin America, but the frequency and intensity of these practices and the "indifference and impunity" that accompanies them, is especially notable in Latin America. The people seem ignorant of the extent to which these practices come at their expense.

  "The fact is, with few exceptions, Latin America has never experienced the modern capitalism combined with political democracy that has produced the high levels of human well-being that are found in the prosperous nations of the West and increasingly of East Asia."

The "liberation theology" clergy condemn and struggle against all the virtues and policies needed for economic success. With the best of intentions, they condemn their people to irremediable poverty.

  • The Catholic clergy - especially the "liberation theology" clergy - condemn and struggle against all the virtues and policies needed for economic success. With the best of intentions, they condemn their people to irremediable poverty.
  • An influential intellectual and academic community - is irrationally wedded to leftist, anti-Western, anti-Yankee, and anti-market views, that weaken democracy and undermine the accumulation of productive capital.
  • Left wing political labor unions and revolutionaries - oppose market economics and private property - without which economic development is impossible.

  These elite groups are among the most influential factors that keep Latin America "in a state of poverty and injustice."

Africa:

 

&

  The myriad cultural obstacles to African development are emphasized by Daniel Etounga-Manguelle in "Does Africa Need a Cultural Adjustment Program?" His long detailed bill of particulars of cultural weaknesses in African nations constitutes a damning indictment of cultural relativism.
 &

  Tribal hereditary hierarchies, fatalist acceptance of current conditions, inability to defer gratification or even consider future possibilities, passive acceptance of existing authority, individuality smothered by communitarian traditions, negation of the individual and the concepts of individual autonomy and responsibility, lack of competitive spirit and willingness to contest for legitimate goals, denigration of productive responses to economic incentives, pervasive mysticism and superstition, and most important of all, wretched governance by leaders who lack any sense of responsibility for the welfare of their people or the future of their nations, amount to huge obstacles to modern economic and democratic political development.
 &
  Cultural change must start with education of the young - including girls - to appreciate the attributes needed for success. The building and maintenance of schools must receive higher priority than the building and maintenance of palaces and religious institutions. Modern education must be substituted for education in tribal and communal norms.

  "This means critical thinking, affirmation of the need for sub-regional and continental unity, rational development of manual as well as intellectual methods of work, and, in general, the qualities that engender progress: imagination, dissent, creativity, professionalism and competence, a sense of responsibility and duty, love for a job well done."

  Such basics as the value of time and the importance of maintenance of facilities are essential. The education and emancipation of women is essential.
 &

No institutional reform can work in the current African cultural environment.

  Reform of institutions is useless without cultural changes, he insists. He reminds us that "culture is the mother and - - - institutions are the children." No institutional reform can work in the current African cultural environment.
 &
  There are, of course, many good aspects to African cultures. However, the cultural obstacles to the development of modern economic and political institutions must be recognized and appropriate changes must be encouraged if the military, political and economic horrors of African life are to be eliminated.
 &
  Modern political systems will then naturally emerge, Etounga-Manguelle asserts. They will support the individual and his commercial efforts, cultivate tolerance and emphasize individual merit over hereditary status.
 &
  Economic development requires acceptance of economic incentives - the profit motive, competitive open markets, property rights, a work ethic, etc.
 &
  A civil society must develop that insists on trustworthy conduct and is concerned with facilitating the commerce of the people and the welfare of the nation.
 &

Culture and democracy:

  Cultural influences that support or undermine systems of political freedom are discussed by Ronald Inglehart in "Culture and Democracy."
 &

  Economic development predictably undermines "absolute social norms" of traditional society in favor of "increasingly rational, tolerant, trusting, and postmodern values," he concludes. Nevertheless, he notes, there are traditional norms that are particularly resistant to change that leave persistent highly distinctive value systems in place even after economic development. These have major social and political consequences.
 &
  "Culture is path dependent." Historical experience such as subjugation under colonial or communist rule causes cultural shifts but does not obliterate these traditional cultural traits.
 &
  Inglehart characterizes modern cultural change tendencies as a shift from traditional "survival values" to "self-expression values." The latter support democratic systems. Individual liberty and democracy are mutually reinforcing, but Inglehart believes that a culture that supports individuality is a primary factor in shaping democracy.
 &

  Traditional "survival values" include the importance of family ties, religion, deference to authority, avoidance of political conflict, emphasis on consensus over confrontation, national or tribal loyalty, and the desire for large families. Social conformity is valued above individual achievement. These values hinder economic development and render unstable any democratic systems that may be attempted.
 &
  Inglehart plots key groups of productive cultural traits on graphs - two dimensional maps - that correlate well with economic development and systems of political freedom, but also indicate the ability of economic development to shift cultural values somewhat away from their traditional roots. (Ireland's recent surge of economic development apparently indicates that this positive cultural shift can be quite substantial.)
 &
  The bad news is that providing democratic institutions for traditional societies has dubious prospects. The good news is that prospects for stable democratic systems improve in all societies as economic development gradually brings positive cultural shifts.
 &

Trust:

  Truth telling, meeting obligations, and reciprocity" are the kinds of social virtues that support capitalism, prosperity and democracy, Francis Fukuyama explains in "Social Capital."
 &

Max Weber noted that the Protestant ethic for the first time extended the productive virtues of honesty, reciprocity and thrift outside the family unit.

  Where trust does not exist - or is narrowly confined to family or tribe - capitalism cannot function efficiently and democracy is unstable at best. Fukuyama cites the social norms of Sicily and southern Italy as an example of how dysfunctional social attitudes can reduce economics to a zero sum game and entrench poverty. China and Latin America are regions where family bonds are strong but "it is hard to trust strangers." Nepotism and government corruption as a result are pervasive. Max Weber noted that the Protestant ethic for the first time extended the productive virtues of honesty, reciprocity and thrift outside the family unit.
 &
  Civil society - empowered legally, economically and politically and concerned with the welfare of the entire society - cannot exist without the productive virtues of social capital. Fukuyama explains at some length the complex attributes of both positive and negative aspects of social capital - serving to increase or reduce transaction costs. He also explains the subject's scholarly methodology - its difficulties and disputes.
 &

When loyalty is limited to family or tribe rather than to society as a whole, corruption levels are higher.

  The impact on economic growth of official corruption is discussed by Seymour Martin Lipset and Gabriel Salman Lenz in "Corruption, Culture, and Markets." Overall growth rates and particular factors related to growth - like education facilities and investment - decline in line with perceived increases in corruption rates.
 &
  Corruption and income levels are mutually interacting. Corruption hinders income growth, but higher general income levels reduce the incentives and increase the penalties for corruption. Indeed, a whole host of relationships exist between higher levels of economic development and democracy and low levels of corruption.
 &
  There are also relationships between low corruption levels and the Protestant religion and British colonial history. The British heritage includes democracy and rule of law legal procedures - both of which correlate with low levels of corruption.
 &
  Protestant nations have lower levels of corruption. Protestant sects emphasize personal responsibility for avoidance of sin, whereas Catholic, Anglican and Orthodox doctrine accepts inherent human weakness and the need for the intervention of a forgiving Church.
 &
  A wide variety of factors have been identified as conducive to higher corruption levels, especially when there is a high level of social motivation for economic achievement in a nation that offers only limited means. Also strongly correlated with high corruption levels is the narrowness of loyalty circles. When loyalty is limited to family or tribe rather than to society as a whole, corruption levels are higher.
 &

  Rule of law and established prosperous market economic systems serve to reduce corruption. The authors note that Singapore, Hong Kong and Taiwan score well on corruption indices - considerably better than China. Capitalist economic freedom correlates well with reduced levels of corruption.

  "The emergence of developed economies was facilitated by emphasis on rationality, small family size, achievement, social mobility, and universalism -- elements that characterize modernity as distinct from traditionalism. Ideally, they were marked by the decline of familism, of values that sustain particularistic mutual-help systems, which run counter to those functional for a market economy. Values that sustain and express the logic of the markets followed on the breakdown of feudal-type stratification systems that stressed obligation and loyalty."

  Capitalism is inherently the most ethical of economic systems. It depends crucially on trust and mutually supporting market relationships extending broadly throughout society.

The slipperiness of cultural influences:

  Cultural relativism is well skewered by Robert B. Edgerton in "Traditional Beliefs and Practices -- Are Some Better than Others?"
 &

The happy noble savage, upon close examination, all too frequently turns out to be neither noble nor happy - if less savage than old Western ethnocentrist scholars presented him.

  He explains the obvious. The happy noble savage, upon close examination, all too frequently turns out to be neither noble nor happy - if less savage than old Western ethnocentrist scholars presented him.

  "Humans in various societies, whether urban or folk, are capable of empathy, kindness, even love, and they can sometimes achieve astounding mastery of the challenges posed by their environments. But they are also capable of maintaining beliefs, values, and social institutions that result in senseless cruelty, needless suffering, and monumental folly in their relations among themselves as well as with other societies and the physical environment in which they live. People are not always wise, and the societies and cultures they create are not ideal adaptive mechanisms, perfectly designed to provide for human needs. It is mistaken to maintain, as many scholars do, that if a population has held to a traditional belief or practice for many years, then it must play a useful role in their lives. Traditional beliefs and practices may be useful, may even serve as important adaptive mechanisms, but they may also be inefficient, harmful, and even deadly."

  This view opens the way past the obstacles of current politically correct dogma to examine particular cultural obstacles to economic development.
 &

  Economic development and political pluralism in sub-Saharan Africa is not foreclosed by African cultural traits, Thomas S. Weisner insists in "Culture, Childhood and Progress in Sub-Saharan Africa." He does not view culture as the determinant of institutions, but instead insists that both impact each other in complex ways.
 &
  Culture is not immutable. It changes, and these changes are impacted by adaptive imperatives. While certain prevalent characteristics are recognizable, there is a great deal of variety and capacity to change. Indeed, studies demonstrate that there is a great deal of ongoing change. What the African people need are the basics.

  "[What is needed is] a foundation that establishes any culture's ability to provide well-being for children: the basic social supports of security, stability, health, and resources that permit families to achieve for their children a sustainable daily routine in their community that meets their goals. That is progress."

  Weisner is partially correct. The African people cannot provide these things for themselves because despotic governance is unconcerned with their well being, and does not provide the institutional and physical infrastructure that facilitates their economic endeavors. Indeed, African governments often actively repress all signs of development of civil society, and keep their peoples impoverished.
 &
  Without changes in governance, efforts to alter culture in productive ways are futile. Taking the initial steps away from despotic uncaring government will require leadership in each individual nation.

Judgmental views are frequently the "ethnocentric misunderstanding and moral arrogance" of "cultural developmentalism." Shweder charges that it is a return to the "White Man's Burden" beliefs of the Western imperial era.

 

There will remain many distinct cultural characteristics among developing nations even as they reach first world economic status. They may adapt as needed for economic development, but their culture will remain largely their own.

  A critique of judgmental views of culture based on developmental attributes is provided by Richard A. Shweder in "Moral Maps, 'First World Conceits, and the New Evangelists.'" He asserts that these judgmental views are frequently the "ethnocentric misunderstanding and moral arrogance" of "cultural developmentalism." He charges that it is a return to the "White Man's Burden" beliefs of the Western imperial era.
 &
  The developmental standards against which cultures are currently judged are slippery, he points out with ample examples. There is much in Western culture that is questionable, and much in third world culture that is laudable. He is skeptical about current views on the causation of economic development. He notes that different cultures have been wealthy and powerful at different historic times. (But only modern market capitalism has lifted not just the politically influential but broad masses of ordinary people out of poverty.)

  Shweder's skepticism about efforts at judgmental culture mapping is certainly warranted - but his views conflict with one overwhelming objective standard of evaluation. As Carlos Alberto Montaner points out, there are literally tens of millions of people voting with their feet - leaving their home cultures and native lands for the material opportunities of developed nations in Europe and North America - and there are hundreds of millions more who would like to do the same if they could. There is no doubt whatsoever that the vast majority of third world peoples would opt for first world lifestyles if they could.
 &
  Shweder responds to this point by noting that emigrants are affected by material aspirations, not cultural aspirations. This misses the point that the attractive material possibilities could not exist without certain cultural norms.

  Shweder correctly notes that there will remain many distinct cultural characteristics among developing nations even as they reach first world economic status. They may adapt as needed for economic development, but their culture will remain largely their own.
 &
  His concluding opinion is that, if radical cultural change is indeed required for economic development, third world cultures will opt for their culture and will not converge economically or culturally.

  Moslem militants are today fighting this battle to prevent cultural convergence in Islamic lands. To accomplish this, they will have to kill many people - the vast majority of whom will be Moslem - and they will have to terrorize almost all the people they succeed in dominating.

Crossette cautions that cultural studies and disputes have often become ideological and political footballs where the truth is deemed of no consequence.

  The complexity of disputes over cultural influences is emphasized by Barbara Crossette in "Culture, Gender and Human Rights." She covers the familiar cultural restrictions on the lives of women and the benefits of women's education and legal empowerment. She also cautions that cultural studies and disputes have often become ideological and political footballs where the truth is deemed of no consequence.

  "The way Americans deal with complex ethnic conflicts abroad -- or political conflicts in ethnic trappings -- often seems to indicate that our cultural sensitivity stops at the water's edge. Ironically, campaigns waged with the best of intentions are often shallow or poorly informed, and they are as much politically motivated by their leaders in this country as by their counterparts in distant societies."

The need for cultural changes:

  The status of women in Latin America is sufficiently varied within the different nations to support the conclusion that their status is not culturally dependent. "When gender relations change, culture moves in response," Mala Htun concludes in "Culture, Institutions, and Gender Inequality in Latin America."
 &

  However, culture clearly colors the sustainability and scope of advances in women's rights, she notes. "Cultural attributes modulate the movement toward gender equality in different societies, prioritizing some issues over others and  casting a distinct tone to national debates on women's rights."
 &
  In particular, there are wide gaps between law and practice in Latin American nations, and that applies to the law of women's rights as well as to law in general. For example, Brazilian juries continue to accept the defence of "honor killings" of adulterous wives. Cultural change is thus "indispensable for guaranteeing the implementation and sustainability" of advances in women's rights. Political leadership will have to play a major role in encouraging appropriate cultural changes.
 &
  The ideological wars over the impact of culture on various economic achievement factors is reviewed by Orlando Patterson in the context of Afro-American economic status in "Taking Culture Seriously: A Framework and an Afro-American Illustration."
 &

  The Afro-American illustration is important because it is the one area where liberal orthodoxy accepts culture as the primary determining factor responsible for achievement gaps - particularly in intelligence tests. The alternative - that it is innate or genetic - is simply politically incorrect and unthinkable.

  "Afro-Americans and their academic supporters simply cannot have it both ways. If cultural factors are to be given prime explanatory status in the IQ wars, they cannot be reduced by multicultural and liberal sociological critics to what Margaret Archer has called 'a position of supine dependency.' This selective censorship of the causal use of the culture concept has distorted the study of Afro-American social history and contemporary issues."

  There are, of course, social as well as cultural causes for various aspects of human behavior. Culture may help explain these aspects but does not fully determine them. More to the point, Patterson emphasizes the importance of cultural factors by demonstrating that they are more malleable than many social factors - like class. Policies designed to encourage cultural change thus offer more hope for improvement than policies designed to change many social factors.
 &

Jewish religious culture has little relevance to the success of Jewish immigrants, and Confucianism has little relevance to the success of Chinese immigrants.

 

Education is the most reliable variable in explaining economic success. However, close examination demonstrates how difficult it is to discern the particular cultural attributes that stimulate broad educational excellence.

  A culture is a slippery concept. It includes wheels within wheels. It includes varying subcultures based on localities and classes and religions within the larger "culture," Nathan Glazer warns in "Disaggregating Culture."
 &
  Indeed, many immigrant groups come from subgroups only tenuously connected with the high culture of their country of origin or religion. Glazer points out that Jewish religious culture has little relevance to the success of Jewish immigrants, and Confucianism has little relevance to the success of Chinese immigrants.
 &
  However, sub-cultural characteristics may be more precise and have more explanatory power. A work ethic or commercial tradition is directly related to economic success. Education is the most reliable variable in explaining economic success. However, close examination demonstrates how difficult it is to discern the particular cultural attributes that stimulate broad educational excellence.
 &
  Commercial development requires an ethic of trust. Dwight H. Perkins, Jr., in "Law, Family Ties, and the East Asian Way of Business," emphasizes how this is accomplished in East Asia in the absence of independent judiciaries and a reliable rule of law system. Only in Hong Kong did a colonial legal system take root among the people of that region. In the rest of China, the Communist Party is still above the law. "Elsewhere in the region, the tendency was for the legal system to come increasingly under the discretionary authority of the political leadership."
 &

  Close personal - often geographic - relationships, including social ties and ties to an extended family, substitute for rule of law and arms-length relationships of trust for long distance commerce in Asian nations.
 &
  With the end of the colonial era, both Chinese and indigenous Asian businessmen extended their ties to local governments to assure security for their transactions. Monetary support from the businessmen cemented these political ties. Major indigenous business entities frequently offered high positions to retired government regulatory officials to cement ties and gain needed political support.  Control of business entities lay variously in families or political agencies. Only Western and Japanese firms were run by professional managers. Although some family enterprises grew to great size, they were essentially limited in geographic and financial size and generational timeframe.
 &
  Such arrangements pragmatically provided sufficient security to attract large flows of domestic and foreign investment for the rapid development of the region. However, they had many weaknesses that became evident during the Asian Contagion crisis. Tolerance of incompetent management and "moral hazard" risks undermined the system. Businessmen expected government support whenever that might become necessary, and thus the risk side of the risk/reward ratio was widely ignored. In the event, the crisis temporarily collapsed national currencies and whole national economic systems.
 &

Informal relationships that work efficiently when times are good are prone to collapse when hard times arrive.

  The Asian way of business was an initially successful adaptation in the absence of rule of law legal systems. It was not considered inherently "corrupt" within Asian value systems. This was just the way all commercial and political life was conducted in Asia. However, informal relationships that work efficiently when times are good are prone to collapse when hard times arrive.
 &
  Perkins notes that, with just modest reform efforts, the Asian tiger economies were again roaring back into rapid growth. He discusses the reform measures needed to assure stability going forward. Chief among them are transparency, rule of law legal systems, and independence from government economic intervention.
 &

  The nature of "Asian values" and their relationship to modern economic development are examined by Lucien W. Pye in "'Asian Values': From Dynamos to Dominoes." He explains the initial successes - with their blind expansion of capacity and numerous growing financial bubbles - and then summarizes the Asian Contagion crisis.

  "In time, however, the approach proved disastrous because indebtedness piled up, and the compulsive drive to capture a greater share of the market produced gross excesses in capacity. The lack of transparency and legal norms in bank lending allowed for huge expansions of loans based on unrealistic expectations of what expanding production might bring. It turned out that the approach provided no effective checks on whether capital was being allocated rationally. In industry after industry, surplus capacity became the norm. It was strange that the world did not recognize that a crisis was in the making in 1995 when a leading Korean chaebol declared with exuberant hubris that it planned to invest $2.5 billion in a new steel complex, at a time when the world was already awash in more steel than it could use."

  Pye, too, closes by cautioning about the slipperiness of trying to draw causal connections between cultural attributes and economic development.
 &

Western characteristics adopted have been reshaped in fundamental ways to adapt them to traditional local customs.

  The variety of cultural norms that persist in modernizing nations and the variety of cultural norms that remain "active agents" in modernizing societies are examined by Tu Wei-Ming in "Multiple Modernities: A Preliminary Inquiry into the Implications of East Asian Modernity."

  "As a norm, traditions continue to exert their presence as active agents in shaping distinctive forms of modernity, and, by implication, the modernizing process itself has continuously assumed a variety of cultural forms rooted in specific traditions."

  The remarkable East Asian adoption of a wide variety of Western cultural aspects in the effort to rapidly modernize has been neither total nor uniform. The Western characteristics adopted have been reshaped in fundamental ways to adapt them to traditional local customs.
 &
  Confucian traditions have been reconfigured, not supplemented. They cut across "the great divide" between Western and Asian forms of modernization. Wei-Ming outlines the ethics of Confucian modernization. Unfortunately, many of these Confucian ethics are hard to find in many East Asian nations, he concedes. Instead, the negative aspects of Western modernization can all too frequently be found. "[Exploitation], mercantilism, consumerism, materialism, greed, egoism, and brutal competitiveness," are all too evident.

  "The success of Confucian East Asia in becoming fully modernized without being thoroughly westernized clearly indicates that modernization may assume different cultural forms. It is thus conceivable that Southeast Asia may become modernized in its own right, without being either westernized or East Asianized."

  The same is true for Moslem, Buddhist and Hindu lands, Latin America, Africa and Central Asia. Instead of cultural convergence, all may instead adapt existing traditions to the needs of modernization. "Cultural traditions continue to exert powerful influences in the modernizing process." There must be a dialogue between civilizations rather than a conflict between them.
 &

Mental models:

  The "mental models" attributes conducive to economic development and how to instill them is discussed by Michael Fairbanks in "Changing the Mind of a Nation: Elements in a Process for Creating Prosperity."
 &

It all comes down to governance that is concerned with facilitating the commerce of the people and opening the nation to world trade. Without that, nothing succeeds. With that, plans can succeed and development is unavoidable.

  The complex process of determining the factors holding a nation back and what is required to stimulate development is analyzed by Fairbanks. However, it all comes down to governance that is concerned with facilitating the commerce of the people and opening the nation to world trade. Without that, nothing succeeds. With that, plans can succeed and development is unavoidable.
 &
  The list of requirements for economic development is oft repeated. Security for persons and property, rule of law legal system, education, infrastructure, free competitive markets, international trade, government that is not corrupt and does not pick the winners and losers, civil society that is legally, economically and politically empowered, are some of the obvious factors. It helps mightily if government is dependent for its revenues on the prosperity of the people's commerce rather than on sale of valuable natural resources.
 &
  Fairbanks sets forth a complex program of specific steps, but no consultant program can succeed without good governance. Fairbanks' program is good, but his presentation assumes reasonably good governance - a fact all too often not in evidence in real third world nations. However, he correctly asserts that, given reasonably good governance, a society's prevailing "mental model" makes a big difference in economic development. (When China's Communist government shifted from "all profit is theft" to "to get rich is glorious," economic miracles began to happen, and development plans began to succeed.)
 &

  Cultural beliefs "that influence the way people behave" - their "mental models" - have obvious impacts on the economic progress of individuals, communities and nations. They are a "micro-variable," Stace Lindsay explains in "Culture, Mental Models, and National Prosperity."
 &

  Culture reflects the aggregated mental models of people and evolves as people alter their mental models. Changing individual mental models about wealth creation does not necessarily force "homogenization of global culture." However, peoples in undeveloped third world nations resist productive changes in their mental models. Lindsay asks why such changes are so difficult?
 &
  Typically lacking is a "competitive mindset." Businesses that are successful because they have the political influence to produce for protected markets will not change until government policy changes, but political leaders claim they can not change pertinent government policies until their businessmen become competitive. However, without competition, innovation and productivity languish, and businesses remain uncompetitive. They remain confined to low margin commodity production and low wage commodity manufacturing. The international markets for these can be brutally competitive.

  Businesses can take the initiative and break this cycle by developing more complex business products and more sophisticated business strategies that create higher margin business supporting more investments in physical and human capital. However, third world businesses and governments remain resistant to embarking on this course. Lindsay blames the culture.

  FUTURECASTS blames the governance. Often, governments are concerned only with the maintenance of power. Often, governments care only about the welfare of some ruling elite or supporting dominant ethnic minority. Often, the easy availability of substantial quantities of natural resources provides government with sufficient revenues independent of the prosperity of the commerce of the people.
 &
  These governments often don't give a damn about the welfare of their people and smother all entrepreneurial initiative. They make it impossible to conduct business on any basis other than political influence. They also induce cultural responses that favor neither market competitiveness nor productivity.

  Thus, while there are many variations on the theme of dysfunctional economic politics, the underlying cultural responses appear very similar.

  "The way people think about business, economics or competition shapes the quality of the strategic choices that they make."

 Lindsay thus concentrates on  the importance of changing the mental models of individual businessmen as a means of developing competitive mindsets and companies. (This is a futile endeavor as long as profits through political influence remain easier.)

  Lindsay refers to studies of government and business leader mental models in Columbia, Venezuela and El Salvador, without mentioning the ongoing conflicts, the discontent of their large indigenous underclass, and the lack of real interest in economic progress of some of the political leaders and influential business leaders.
 &
  All recent economic development success stories began with changes in government policies that at least removed some of the burdens that suppressed the people's commercial endeavors. Steps that facilitated the commerce of the people were also commonly taken. Mental models and culture in general then adapted in appropriately productive ways.

Cultural change:

 

 

 

 

  Harrison concludes in "Promoting Progressive Cultural Change" by noting an increasing acceptance of a "culture-centered paradigm" and efforts to act upon it in third world countries.

  There have in fact been some modest economic and political success stories in Latin America and in some other third world countries since 1999, but economic success remains geographically limited and fragile, and is sometimes explained predominantly by high commodity prices.

  The likelihood of stable reasonable government policies depends critically on public acceptance and support - on the predominant mental models of the people, Harrison correctly points out. Given reasonable governance, productive cultural adaptations take place. Only as both become aligned does sustainable economic development take place.
 &
  Harrison ends with a familiar list of ten groups of "generalized and idealized" productive and unproductive mind-sets, attitudes and values. He emphasizes the many third world nations where ethnic immigrant minorities have achieved economic success amidst persistently backwards indigenous  majorities. Costa Rica, with reliable democratic governance, remains a third world economy (as does most of India).

  There are often other factors involved that complicate this picture. Immigrant minorities often have foreign commercial connections and the wherewithal to buy political influence. However, even after extensive affirmative action programs in their favor, indigenous Malays still under-perform in comparison to their domestic Chinese minority.
 &
  Is the difference cultural? Genetic? Dare we objectively inquire?

  Harrison accepts the view that even if children learn a progressive ethic, they may find it irrelevant in their lives in economic systems pervaded by corruption, nepotism and influence peddling. However, Harrison views corruption, too, as "in significant part a cultural phenomenon." He cites an increasing "intellectual current" of Latin American professional and civic organizations dedicated to progressive ethics and education.

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  Copyright 2007 Dan Blatt