When It Comes to National Prosperity, Don’t Forget the Culture
The late Douglas North was correct to assert that institutions are a determinant of long-term economic growth. However, despite his genius in perceiving connections between economics and other fields, North wrote little on culture. Although leading economists are now beginning to take culture seriously, there is still a strong perception that all people are basically the same.
Unlike the legendary David Landes, who fearlessly classified some cultures as detrimental to progress, most economists jettison value judgments by arguing that culture is either functional or maladaptive. For instance, in a preindustrial setting where people are primarily concentrated in rural communities, sharing resources helps to insure against risks. However, in a post-industrial context where individualistic and commercial values are paramount, sharing could be perceived as a burden or an impediment to entrepreneurship. Hence, cultures that were once useful can inhibit progress and essentially become negative.
Therefore, countries and individuals would be better off if they shelved some practices. Without cultural change, modernization is impossible, but out of fear of arousing the anger of politically correct mobs, most economists are unwilling to recommend cultural change. Telling people that their culture is an obstacle to progress could invite charges of racism, and being a racist is the worst sin one can commit in our present climate.
But cultural evolution is just a path on the road to modernity, as the sociologist Georg Oesterdiekhoff reminds us in several articles and books. Premodern Europeans believed in magic and animism, but the advent of the Enlightenment and better schooling made such beliefs obsolete. Rejecting long-held cultural beliefs is hard but necessary in order for lagging countries to attain higher levels of development.
Japan became the first non-Western country to modernize because its intellectual elites had the intelligence to recognize that
Article from Mises Wire
