Sunday, February 19, 2006

Culture over Economics

The New York Times

February 19, 2006
Op-Ed Columnist

Questions of Culture

Once, not that long ago, economics was the queen of the social sciences. Human beings were assumed to be profit-maximizing creatures, trending toward reasonableness. As societies grew richer and more modern, it was assumed, they would become more secular. As people became better educated, primitive passions like tribalism and nationalism would fade away and global institutions would rise to take their place. As communications technology improved, there would be greater cooperation and understanding. As voters became more educated, they would become more independent-minded and rational.

None of these suppositions turned out to be true. As the world has become richer and better educated, religion hasn't withered; it has become stronger and more fundamentalist. Nationalism and tribalism haven't faded away. Instead, transnational institutions like the U.N. and the European Union are weak and in crisis.

Communications technology hasn't brought people closer together; it has led to greater cultural segmentation, across the world and even within the United States. Education hasn't made people moderate and independent-minded. In the U.S. highly educated voters are more polarized than less educated voters, and in the Arab world some of the most educated people are also the most fanatical.

All of this has thrown a certain sort of materialistic vision into crisis. We now know that global economic and technological forces do not gradually erode local cultures and values. Instead, cultures and values shape economic development. Moreover, as people are empowered by greater wealth and education, cultural differences become more pronounced, not less, as different groups chase different visions of the good life, and react in aggressive ways to perceived slights to their cultural dignity.

Economics, which assumes people are basically reasonable and respond straightforwardly to incentives, is no longer queen of the social sciences.

The events of the past years have thrown us back to the murky realms of theology, sociology, anthropology and history. Even economists know this, and are migrating to more behaviorialist and cultural approaches.

The fundamental change is that human beings now look less like self-interested individuals and more like socially embedded products of family and group. Alan Greenspan said that he once assumed that capitalism was "human nature." But after watching the collapse of the Russian economy, he had come to consider it "was not human nature at all, but culture."

During the first few years of life, parents, communities and societies unconsciously impart ways of being and of perceiving reality that we are only subliminally aware of. How distinct is the individual from the community? Does history move forward or is it cyclical? How do I fulfill my yearning for righteousness? What is possible and what is impossible?

The answers to these questions are wildly diverse, and once worldviews have been absorbed, they produce wildly different levels and types of social and cultural capital. East Asians and Jews, for example, seem to thrive commercially wherever they settle.

It turns out that it's hard to change the destinies of nations and individuals just by pulling economic levers. Over the past few decades, America has transferred large amounts of money to Africa to build factories and spur economic development. None of this has worked. As the economists Raghuram Rajan and Arvind Subramanian demonstrated, there is no correlation between aid and growth.

At home, we spend more money on education than any other nation. We have undertaken a million experiments to restructure schools and bureaucracies. But students who lack cultural and social capital because they did not come from intact, organized families continue to fall further and further behind — unless they come into contact with some great mentor who can not only teach, but also change values and behavior.

It all amounts to this: Events have forced different questions on us. If the big contest of the 20th century was between planned and free market economies, the big questions of the next century will be understanding how cultures change and can be changed, how social and cultural capital can be nurtured and developed, how destructive cultural conflict can be turned to healthy cultural competition.

People who think about global development are out in front in thinking about these matters. (I'd recommend rival anthologies: "Culture Matters," edited by Lawrence Harrison and Samuel Huntington, and "Culture and Public Action," edited by Vijayendra Rao and Michael Walton.) But the rest of us will catch up soon.

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