I am covering in my Ph.D. development class today a fascinating new body of research by economists that studies the effects of cultural values on economic development (see some references at the bottom).
To drastically oversimplify, values across different cultures lie along a spectrum between two separate poles: (1) valuing individual autonomy, believing in equal treatment of individuals, reliance on formal law, the same moral standards apply to all, enforcement of morality is between individuals vs. (2) seeing the individual mainly or only as part of the group, different standards of treatment for group insiders and outsiders, morality only applies to interactions within the group, group enforcement of moral standards, reliance on informal rather than formal institutions.
To continue the drastic oversimplification, the values closer to the first pole are more consistent with the kind of good government associated with democratic capitalism, while values closer to the second pole are more associated with authoritarian and collectivist politics and economics. Measurement of all this stuff is a tricky issue, but here are two illustrative associations:
Then it also turns out this same measure can predict which countries are richer or poorer:
I’m sure there are several issues that occur immediately to readers: (1) the huge variance around the fitted line, and (2) possible reverse causality from development/democracy to values.
On (1), in defense of the statistical associations shown, scatter plots always look terrible if you are not used to them. This is a remarkably strong statistical association by normal standards. However, it certainly is true that culture is not destiny as there is a huge variance of outcomes for the “group values” cultures. Singapore succeeds despite collectivist values, for example. One interesting bit of research suggests that “group values” cultures will export products that don’t require as much impersonal contract enforcement, and thus values is part of what makes you specialize, and specialization is away of getting around cultural “disadvantages.”
On (2), the research suggests that values are determined by more long run factors, such as a long history of despotic rule (yes there is reverse causality from despotism to values but it operates over a very long time), and also intriguing clues about long run cultural values that are contained in linguistic structure within each culture (do you have to say the subject pronouns “I” and “he/she”, as in English, or can you drop them, as in Spanish, along with whether there are different forms of “you” depending on the status of the person you are addressing). Using these determinants of values, researchers have made some progress on establishing a causal link from values to development/democracy.
So the bottom line (again drastically oversimplified) could be something like “the value of individual liberty promotes prosperity.”
So all of the discussion we have already had on this blog on how aid agencies seem to have so little respect for the poor as individuals seems more relevant than ever.
References (not responsible for my simplifications!):
Guido Tabellini, Institutions and Culture, Presidential lecture presented at the meetings of the European Economic Association,Budapest, August 2007. (Tabellini talks about “generalized vs. limited morality” and “trust & respect”)
Licht, Amir N., Chanan Goldschmidt, and Shalom H. Schwartz (2007), Culture rules: The foundations of the rule of law and other norms of governance, Journal of Comparative Economics, 35 659–688.
13 Comments
I’m sure there are several issues that occur immediately to readers: (1) the huge variance around the fitted line, and (2) possible reverse causality from development/democracy to values.
How about (3) a wholly different causal mechanism?
If prosperity is promoted by the efficient distribution of scarce resources, then a culture that values autonomy may find it easier to adopt the institutions (private and public) that permit for decentralized coordination of activity, which is necessary for a culture to grow beyond modest geographical and temporal limits.
But by the same token, centralized control of activity may effect a more efficient (if not more equitable) distribution of resources when there is no need for decentralized coordination.
Thus one might ask whether the so-called “less democratic” cultures are not, in fact, less evolved to value autonomy because their groups tended to be smaller, more dispersed, and more isolated from one another.
In other words, perhaps the ease of cultural commerce drives the differences in cultural values that are correlated with development.
(4) The dependent variable in development – i.e. “GDP” – is a culturally defined metric and so the relation is spurious.
What matters is welfare and if, given your culture, you derive more utility living as a Yanomami in a communal hut than as a middle class suburbanite in Des Monies, then you have selected on the dependent variable.
That is to say, we, rich individualist societies, measure progress according to income per capita, and so not surprisingly we do well in that respect.
Suppose the Yanonami place more value on sustainability, spirituality over material concerns, etc.. Then we would seem much underdeveloped according to their standard.
The catch 22 is the Durheim-Quine problem of analyzing culture from a culture neutral perspective.
Individualism, Institutions, and Growth
William Easterly writes, values across different cultures lie along a spectrum between two separate poles: (1) valuing individual autonomy, believing in equal treatment of individuals, reliance on formal law, the same moral standards apply to all, enfo…
It’s interesting that according to those graphs, social democratic Western European countries all appear to be more ‘individualist’ than the United States.
There have been only a few real breakthroughs in human thought over the past two millennia. The most recent being: “All men are created equal”.
This got rid of the idea that there were preordained classes of people (royalty and priests vs peasants) and that, therefore, people were capable of governing themselves. This breakthrough is still not widely accepted even three centuries later.
Now coupling democracy with capitalism is something that has a spotty intellectual history. During the early industrial revolution the UK was far from a functional democracy, yet it had robust growth and the creation of all sorts of capitalist institutions over a fairly short period of time.
So one can have capitalism without democracy and still have high growth.
I forget whose recent book focused on luck as a factor. High growth, democratic societies have tended to be those with abundant natural resources, good agricultural land and decent climate. Transport Manchester in the 19th Century to sub-Saharan Africa and I doubt you would have seen the same amount of economic development.
One should argue for democratic governance from the usual ethical principles, John Rawls can serve as the model for the appropriate arguments.
But if a society which governs itself choses not to pursue materialism then it should not be considered as a failure and deficient in development.
I keep claiming that the impending shortages of natural resources and the pressure of overpopulation will force many advanced societies into reconsidering this pursuit of materialism and what should substitute for it.
I have several essays on my web site with my 2 cents on what these alternative societies might look like.
oh why oh why do we have such a split up social science?
hasn’t this been in sociology literature for at least 100 years? if not, from the initial theorists?
But whether you are a Yanomami or a middle class suburbanite in Des Monies it should be clear that nothing which does not respect the individual could be called prosperity?
Where do you stand on the Ronald Inglehart stuff on the “human development sequence”? His work points to not one values dimension but two: a survival vs. self-expression dimension and a traditional vs. secular-rational dimension. These overlap with the individualist vs. group distinction, but may be provide slightly more rigour about what these values mean and where they come from.
But his work would also suggest that the direction of causality goes something like “growth – values – democracy”, rather than “values – democracy – growth”. In other words, as people get richer, their values tend to evolve in a predictable direction (towards more emphasis on individual self-determination) and this in turn drives them towards the form of governance that can best guarantee that: democracy.
1. The relation between “values” and other important factors, including economic ones, is, as far as i can understand far from clear, and may interrelate differently in different societies. Hence a cross-country regression seems to me like a bad idea for treating this issue (but I haven’t read the works in question yet, so I may be wrong).
2. The idea of all men equal and individual freedom is strong in my country (Norway). Traditionally, we have lived in micro-groups far away from each other, on scattered farms. Small groups and scattered populations, at least I believe, will enhance believs in individual equity rather than oppose it. Welfare states in Scandianvia is more of an insurance towards external shocks than a culture of group thinking. Remember that we’ve had very open economies for millennias.
3. The relation between democracy and growth is also unclear, however, it may seems as democracies, on average, cope better with external shocks and conflict resolution – both important factors for development, regardless of how you define it.
Another relatively new paper related to thi topic is available at AfroBarometer: http://www.afrobarometer.org/papers/AfropaperNo98.pdf
Note the link to Amartya Sen’s Development as Freedom.
Two questions occur to me:
(1) Is the small dataset a problem? From the look of the graphs above it seems to me that the dataset excludes a lot of states that might alter the data (though I emphasise “might”). I’m thinking particularly of gulf states and Middle Eastern states in general. In the case of a significant number of relatively wealthy states with high levels of development being added will the result still stand?
(2) What is the proposed causal link for this result and has it been / can it be tested?
Can anyone shed some light?
What’s the independent variable here? Not individual values, not democracy, not authoritarianism. Capitalism is trade, entreprenurship, technological change, and individually-based producer/consumer relations. That such a system demands stable governments, respect for law, freedom of individuals, and a desire for material growth is not surprising — those are the essential values of the persons promoting the system. Over time, political reality will, inevitably, bow to those values. This is what we have been seeing over long economic history the world over. Collectivism is the old order, incompatible with an internationalized, information-based world. Capitalism has its occasional crises, often spurred by incompetent government, but it generally promotes peace and freedom. Trade is good. Collectivist redistribution of resources may suit short term populism, always the countercurse to capitalistic freedoms. But markets will rule, and politics will bend. So it has always been, and that is the iron law of cultural/political evolution.
Dr. Easterly
It’s difficult to enlarge the graphics to a readable size but what I can gather is not very convincing. China in the middle of the growth scale? Something must be wrong there. f this is level rather than rate of growth, so many historical factors are excluded as to render a two dimensional discussion useless. Furthermore the correlation even if there is one which I sincerely doubt maybe the inverse, e.g., poor people adopting more communal values to survive and poverty rather thn the value system also engendering less stable governance.
A final point since I’v lived in France for many years, the French while having great respect for the individual also have a very strong collective sense, as is the case in Belgium, the Netherlands and most of continental Europe. Try again this looks really beneath you/
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SS
I just want to relate something that Hayek once said in his book The Fatal Conceit:
“Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within the different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e. of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once.”
The “small band or troop” identities in African countries are prevalent and cause an all or nothing mentality, when it comes to government. Basically, these tribes do not differ in values alone, they attribute most of their identity to heritage. The attempted representation heritage and values, of each tribe, in a democracy would minimize each and ultimately destroy the system.