Reading
- і. Read the text and decide whether these statements are True (T) or False (F).
- The economic productivity and dynamism of the group is reflected in better financial outcomes or in higher growth rates.
- Culture does not influence or determine the economic and social objectives.
- Casson considers that economic analysis can make progress in identifying the influences that culture has on economic performance and in quantifying their effects.
- Such factors as religion, family attitudes, patterns of cooperation have shaped the public and corporate institutions of the European countries.
- A means of bringing economic and cultural concerns together is to return to the minor notion of value creation.
Culture in Economic Performance
- Throsby
If we accept the broadly based definition of culture — that culture can be seen as a set of values, beliefs, traditions, customs, etc.
which serve to identify and bind a group together — then it is not difficult to propose that culture will affect the way individuals in the group think and act, and will also have a significant effect on the way the group as a whole behaves. Such a proposition can be put forward for a small group such as a corporation, where the group identity is built around a corporate spirit, or for a large group such as a nation, where shared values may include religious beliefs, social customs, inherited traditions and so on.In either case, an economic version of this proposition might be phrased in terms of the ways in which the group’s identity and values shape individuals’ preference patterns, and hence their economic behaviour.
It is then possible to suggest that culture may effect economic outcomes for the group in three broad directions.
First, culture will perhaps affect economic efficiency via the promotion of shared values within the group which condition the ways in which the group’s members undertake the economic processes of production.For example, if these cultural values are conducive to more effective decision-making, -to more rapid and varied innovation and to more adaptive
behaviour in dealing with change, the economic productivity and dynamism of the group will eventually be reflected in better financial outcomes (in the case of the corporate enterprise) or in higher growth rates (in the case of the economy).
Secondly, culture may affect equity — for example, by inculcating shared moral principles of concern for others and hence encouraging the establishment of mechanisms by which that concern can be expressed. In the case of society as a whole, one significant aspect of this might be seen in intergenerational equity, if a moral obligation to provide for future generations is an accepted cultural value. In general, the effect of culture on equity will be seen in resource allocation decisions of the group directed at achieving equitable outcomes for its members.
Thirdly, culture may be seen as influencing or even as determining the economic and social objectives that the group decides to pursue. At the small group level, say that of the individual firm, the corporate culture may be one of concern and care for employees and their working conditions, and these values may mitigate the importance of profit-seeking or other economic goals in the firm’s objectives. At the societal level, cultural values may be entirely in tune with the pursuit of material progress, enabling criteria of macroeconomic achievement to be used to distinguish ‘successful’ from ‘unsuccessful’ societies. The culture of other societies, on the other hand, may be such as to temper the pursuit of material reward in favour of non-material goals relating to various qualities of life, thus affecting the pace and direction of economic growth; in such cases the criteria defining ‘successful’ and ‘unsuccessful’ will be different from the former case.
By these three avenues, the effect of culture on individual behaviour will be reflected in collective outcomes.
Thus, for example, at an aggregate level, we might observe the influence of culture on macroeconomic outcomes in terms of efficiency indicators such as the rate of growth of per capita GDP, rates of technological change, employment levels, rates and directions of structural change and so on, and in terms of equity indicators such as patterns of income distribution, social welfare programmes (especially care for the aged and sick), the supply of community services and (reflecting concern for intergenerational equity) the willingness to undertake long-term public investment programmes which may not be of much direct benefit to the present generation. How far has economics come in viewing economic performance as being mediated by cultural influences along the lines sketched out above? Mark Casson has suggested that:
“Economics is making progress in coming to terms with culture. Just a few years ago an economic theorist would typically claim that culture simply does not matter so far as economic performance is concerned; everything that matters is explained by prices — real prices in external markets and shadow prices in internal ones. Today the theorist is more likely to admit that culture matters, but to argue that it is something that economics cannot, or should not, attempt to explain.”
Casson goes on to argue that such defeatism is unwarranted, and that indeed economic analysis can make progress in identifying the influences that culture has on economic performance and in quantifying their effects. His own work attempts to specify cultural variables that affect interfirm relations such as cooperation and competition, and interfirm relations such as organisational behaviour, and to postulate their effects on economic outcomes in different cultural settings.
Nevertheless scepticism among economists still persists, especially at the macroeconomic level where there remains considerable speculation as to whether and to what extent cultural factors have played a role in determining economic performance in different countries.
For example, the sources of post-war growth in Japan, and more recently in South Korea, Taiwan, Hong Kong and Singapore, have been widely contested.It is undeniable that economic factors in these countries have contributed significantly to their rapid growth, including stable macroeconomic management (“getting the fundamentals right”), promotion of competition, strong export orientation, pressure for “catch-up” technological change, investment in human capital and so on. Even so there is disagreement among economists as to how far targeted industrial policies and strategic government interventions, which have been markedly contrary to the precepts of neo-classical orthodoxy, have been influential in promoting accelerated economic performance. Yet underlying all this, a more fundamental and pervasive role is proposed, which certain cultural principles, derived to a significant extent from Confucianism, have helped to create the conditions for economic success. These factors include concern for the welfare and mutual esteem of the group, an achievement-oriented work ethic, regard for the importance of the family, a belief in the need for education, a respect for hierarchy and authority and so on. Looking specifically at the Japanese case, we can observe that such factors as religion, family attitudes, patterns of cooperation within a culturally homogeneous society and so on, have shaped the public and corporate institutions of Japan and the manner of their operation; only in this way can the cultural foundations of Japanese society be seen to have permeated all aspects of Japanese economic life.
Within such a broadly based development framework we can suggest, as before, that a means of bringing economic and cultural concerns together is to return to the basic notion of value creation, where the generation of both economic and cultural values can be discerned as outcomes of a development process which balances the desire for material goods and services with the deeper needs and aspirations of human beings for cultural recognition, expression and fulfillment.