Cultures Merging: A Historical and Economic Critique of Culture

Published by EH.NET (July 2006)

Eric L. Jones, Cultures Merging: A Historical and Economic Critique of Culture. Princeton, NJ: Princeton University Press, 2006. xvii + 297 pp. $30 (cloth), ISBN: 0-691-11737-3.

Reviewed for EH.NET by Avner Greif, Department of Economics, Stanford University.

For some scholars, a society’s culture determines its economic destiny. For others, culture is malleable reflecting deeper political and economic variables and hence is epiphenomenal to economic outcomes. In this interesting book, Eric Jones (author of The European Miracle among other publications, a Professorial Fellow at Melbourne Business School, University of Melbourne and an Emeritus Professor at La Trobe) provides a useful survey of this debate and argues for a middle ground.

Jones views culture — patterns of beliefs, habits, values, ideals, and preferences shared by groups of people — as both sticky and fluid. Because culture reflects habituation which one acquires at young age, it is slow to change. Yet, culture is also fluid; it is often of relatively recent vintage, changes rapidly, and is promoted, or even created by those who stand to gain from it. Culture changes in response to economic, political, and social forces. Cultural change reflects better knowledge of alternative cultures and such knowledge leads to cultural merger, new syntheses in languages, religion, and other domains. Culture therefore exhibits transient fixity.

Culture and the economy interrelate. A given culture influences transaction costs and thereby economic outcomes for a while. Yet, the economy shapes culture because it alters constraints and opportunities and provides knowledge regarding alternative cultures. Indeed, the rate of cultural change has accelerated in modern times because of the decline in information cost and the global reach of goods — such as movies, contraceptives, and cars — which embody alternative cultures. Cultural change also accelerated recently because the modern economy provides individuals with choices and opportunities that were not available in the past. Since culture is malleable, its impact on economic outcomes is less than often asserted. The global economy, however, will not lead to a globally uniform culture as it also enables new cultures to develop and prosper. This is the case because communication and information costs are so low in this new economy.

Culture and institutions also interrelate. The distinction between institutions and culture, according to Jones, is that the latter is informal, socially transmitted, and taken for granted while institutions tend to be conscious, even political constructs. Culture is relatively intangible while institutions have a more rule-bound existence. Institutions can shape culture although informal culture is difficult to alter. Jones asserts, without much elaboration, that a growth enhancing culture must be protected by law and not man. It seems that he means to contrast the European traditional rule of law with some unspecified alternatives.

Following this general discussion, Jones devotes a lengthy discussion to the important controversy in economic history regarding economic growth in China and Europe. While the “California School” of Chinese history claims that Europe was first to industrialize because it had better endowments, Jones argued that institutional distinctions mattered, particularly those influencing the use of resources, motivating technological advances, and enabling complex contracting. Rule of law was the most important principle. More generally, the fragmentation of power led to diversity of institutional development and institutionalized equalities brought peace and prosperity. “The institutions of the West were impersonal and decentralized; its institutional network held out the promise of extension to fresh social groups and new societies; and … it evinced great power of self-correction” (p. 132).

As the discussion of institutions illustrates, Jones does not hold all cultures to be born equal. He emphasizes that cultures are neither chosen rationally nor selected by evolutionary forces according to their functionality. Mediocre — welfare reducing practices — can and do prevail. Yet, competition can eradicate mediocre cultures. When alternative cultures are competing, a materially and emotionally beneficial culture is likely to be adopted, particularly by young adults.

The first five chapters of the book elaborate on the above point and the following three illustrate particular points by providing “cultural commentary.” In this commentary, Jones presents evidence the culture of immigration is uniform — second and third generations tend to exhibit cultural mobility and adopt the local culture while potentially changing it in the process. He then takes issue with the claims that “Asian culture” is underpinning the remarkable growth in Asia, that the resentment to the Western cultural role model is more than a reflection of deeper economic and political problems, and that local cultural protection reflects the will of the local people rather than interest group politics.

Regarding the debate over culture being immutable or epiphenomenal, Jones advances an appealing and intuitively correct assertion: culture is neither immutable nor epiphenomenal. Jones has done a wonderful job of reviewing both sides of the debate while exposing and articulating on the deficiency of the opposing views. Furthermore, Jones exposes various political and economic reasons that motivate the opposing sides to adopt the positions they do. Among these reasons are nationalistic sentiments, the fear of political and social elites that new culture will erode their positions, and the desire of local cultural producers to gain from subsidies. A novel aspect of the analysis is the emphasis on the role of knowledge regarding cultural diversity on cultural change. This enables Jones to link technological changes that reduce information costs and globalization of markets with the rate and direction of cultural change.

The book does not employ quantitative evidence. Yet, Jones draws on an amazing array of anecdotal evidence, both historical and contemporary, to make his point. Indeed, it is relatively easy to knock out the two extreme positions — that culture is either everything or nothing — by providing counter examples. Lacking, however, is good evidence regarding the stronger claims made — explicitly or implicitly — in this work. Among these claims are that all cultures are similarly malleable, that distinct cultures do not differ in their endogenous dynamics, that the interrelationships between culture and institutions cannot undermine the process of cultural change that Jones is describing, that Western institutions were more accommodating to cultural diversity than those of other societies, that the cultural assimilation of immigrants is universal, that mediocre cultures can perpetuate even in the presence of cultural competition, etc.. (For an analysis of how culture and institutions can mutually reinforce each other, see Greif 2006.)

Similarly unsatisfying is the multiplicity, and sometimes contradictorily implicit models that Jones invokes in his analysis. Only the conclusion verbally presents a model of culture and cultural change. This is an evolutionary model of cultural development in which information about alternatives and exogenous economic shocks causes cultural change. Some individuals respond to new information and exogenous shocks by altering their behavior and hence the resulting culture. Because culture reflects historical habituation, such change is often gradual and usually the old are more resistant to change.

No doubt, this individualistic model captures what may indeed be a mechanism for cultural change. Yet, central to it is that individuals can freely choose their culture and a rejection of the importance of culture as social phenomenon. This assertion is in contrast to the recent empirical finding (e.g., Guiso, Sapienza, and Zingales 2006) indicating that culture is a social phenomena. Moreover, it opposes many chapters in the book that consider the social dimensions of culture. These chapters argue, for example, that institutions influence culture, that the powerful attempt to shape culture, and that interest groups manipulate policies regarding culture. The book does not resolve the tension between the individualistic and the social-based models of culture. It does not, for example, elaborate on the factors determining which model is more applicable in a particular time and place.

These reservations notwithstanding, Jones provides an accessible, illuminating, and inspiring book on a complex issue, while providing thought-provoking ideas regarding where more research is warranted.

References:

Avner Greif, 2006. Institutions and the Path to the Modern Economy: Lessons from Medieval Trade. Cambridge University Press, 2006.

Luigi Guiso, Paola Sapienza, and Luigi Zingales, 2006. “Does Culture Effect Economic Outcomes?” Journal of Economic Perspectives 20: 23-48.

Avner Greif teaches economic history and institutional analysis at Stanford University. Among his recent publications are Institutions and the Path to the Modern Economy: Lessons from Medieval Trade (Cambridge University Press, 2006); “The Origin of Impersonal Exchange: The Community Responsibility System and Impartial Justice” (Journal of Economic Perspective, 2006); “Commitment, Coercion, and Markets: The Nature and Dynamics of Institutions Supporting Exchange” (in the Handbook for New Institutional Economics, edited by Claude Menard and Mary M. Shirley, 2005); and “A Theory of Endogenous Institutional Change” (American Political Science Review, 2004.)