I recently read this article in the Guardian, which I found to be suprisingly perspicacious, if excessively verbose. My own PhD research touches on the same question - what is the relationship between culture and economic development? In Chapter 9 of his book Bad Samaritans (entitled "Lazy Japanese and Thieving Germans"), my supervisor, Ha-Joon Chang, persuasively debunks the 'culturalist' answer to this question, viz. that the prevalence of certain culturalist traits is responsible for either poverty or affluence. I wholeheartedly agree with Chang's observation that cultural change tends to follow, rather than lead, economic development, and in my research I apply this insight to patterns of organisation - in particular, the feasibility of cooperative firms in different cultures.
The article prompted me to think of the relationship between culture and economic development in broader terms. It occurs to me that when a country overcomes the real obstacles to economic development, and subsequently adopts certain cultural traits that it previously lacked (e.g. thrift, hard work, and strict time-keeping), it concomitantly adopts a host of new problems inherent in its new culture - 'First World problems', as they have come to be known on the Internet. Although there is clearly a 'virtuous circle' between these traits and continued economic development, this mutually reinforcing relationship can also be a 'vicious circle', when we take into account the diminishing returns of wealth.
It is well-established that increases in GDP (a country's income) do not correlate well with increases in perceived well-being. I would rather not delve into all of the reasons why this is the case; I urge you to read Chapter 5 of Jonathan Aldred's The Skeptical Economist for a user-friendly discussion. In fact, Aldred discusses the idea, submitted by Hirsch and others, that in well-developed economies, increases in wealth can lead to net decreases in welfare. Once a country reaches a certain 'satiation' point, whereby its material needs have been met and absolute poverty has been generally eliminated, relative poverty (inequality) still matters a great deal for wellbeing, in part because people estimate their own wellbeing based on that of others in their society. At this point, increases in wealth amongst the few (perhaps the infamous "one-percent") do not yield any significant improvements in wellbeing (does one more yacht, vacation home, supercar that you will never use really improve your quality of life?). On the contrary, they can lead to a net decrease in wellbeing in society as a whole, because they are detrimental to the wellbeing of others. In other words, economic development becomes zero-sum, and possibly even negative-sum. This is especially true with so-called "positional goods" that are only valued due to their scarcity, and so lose any welfare-enhancing qualities once they become widely adopted, leading to an interminable hamster-wheel of 'keeping up with the Joneses'.
Why do we keep striving towards an unreachable goal - the elusive gold at the bottom of the rainbow - when doing so is clearly making us worse, rather than better off? After all, Keynes famously postulated in his Economic Possibilities for Our Grandchildren that, once societies reached a certain point of economic development (perhaps the 'satiation point' aforementioned), they could 'step off the gas' and simply enjoy and maintain the level of wealth that they had accumulated. Working hours, for instance, could be dramatically reduced. There are many possible explanations for why this has not occurred, such as the Marxian argument that capital must continually accumulate in order to survive. Another piece to the puzzle is inherent in the aforementioned idea of positional goods and relative poverty. Essentially, it may be rational for each individual to continue striving for increases in income, even if it is collectively irrational from the perspective of society as a whole.
I think, however, that culture also plays a role: once societies reach their 'satiation point', they still possess the cultural traits geared towards continued economic development. The current standard of living enjoyed in Western economies is largely a product of the Industrial Revolution; but for the average worker, it was not an enjoyable time in which to live, to say the least. We continue to toil away in the mind-sets and traditions established by the requirements of factory labour, including our fixation on time-keeping and productivity (even our 'three meals a day' derives from this time), without yielding any further benefits in wellbeing. Moreoever, not only does all of the hard work, thrift, and so on yield little in the way of additional happiness, but also incurs costs of stress, alienation, and so on. Combined with the relentless obsession with material consumption that accompanies it, this relentless obsession with work represents, in my opinion, a real 'poverty of culture', even if it is (or at least was, at one time) the antithesis of a 'culture of poverty'. This cultural explanation for irrational levels of work behaviour finds support in the fact that people work excessively, sacrificing their health, family time, and overall quality of life, even when doing so doesn't yield any further benefits in wealth, let alone happiness - a conundrum that cannot be easily explained by the Marxian or relative poverty explanations alone.
What kind of economic change needs to occur for this culture to change, and would it be feasible given the current configuration of ideologies and interests? Both questions are open to debate, and hopefully, experimentation.
The article prompted me to think of the relationship between culture and economic development in broader terms. It occurs to me that when a country overcomes the real obstacles to economic development, and subsequently adopts certain cultural traits that it previously lacked (e.g. thrift, hard work, and strict time-keeping), it concomitantly adopts a host of new problems inherent in its new culture - 'First World problems', as they have come to be known on the Internet. Although there is clearly a 'virtuous circle' between these traits and continued economic development, this mutually reinforcing relationship can also be a 'vicious circle', when we take into account the diminishing returns of wealth.
It is well-established that increases in GDP (a country's income) do not correlate well with increases in perceived well-being. I would rather not delve into all of the reasons why this is the case; I urge you to read Chapter 5 of Jonathan Aldred's The Skeptical Economist for a user-friendly discussion. In fact, Aldred discusses the idea, submitted by Hirsch and others, that in well-developed economies, increases in wealth can lead to net decreases in welfare. Once a country reaches a certain 'satiation' point, whereby its material needs have been met and absolute poverty has been generally eliminated, relative poverty (inequality) still matters a great deal for wellbeing, in part because people estimate their own wellbeing based on that of others in their society. At this point, increases in wealth amongst the few (perhaps the infamous "one-percent") do not yield any significant improvements in wellbeing (does one more yacht, vacation home, supercar that you will never use really improve your quality of life?). On the contrary, they can lead to a net decrease in wellbeing in society as a whole, because they are detrimental to the wellbeing of others. In other words, economic development becomes zero-sum, and possibly even negative-sum. This is especially true with so-called "positional goods" that are only valued due to their scarcity, and so lose any welfare-enhancing qualities once they become widely adopted, leading to an interminable hamster-wheel of 'keeping up with the Joneses'.
Why do we keep striving towards an unreachable goal - the elusive gold at the bottom of the rainbow - when doing so is clearly making us worse, rather than better off? After all, Keynes famously postulated in his Economic Possibilities for Our Grandchildren that, once societies reached a certain point of economic development (perhaps the 'satiation point' aforementioned), they could 'step off the gas' and simply enjoy and maintain the level of wealth that they had accumulated. Working hours, for instance, could be dramatically reduced. There are many possible explanations for why this has not occurred, such as the Marxian argument that capital must continually accumulate in order to survive. Another piece to the puzzle is inherent in the aforementioned idea of positional goods and relative poverty. Essentially, it may be rational for each individual to continue striving for increases in income, even if it is collectively irrational from the perspective of society as a whole.
I think, however, that culture also plays a role: once societies reach their 'satiation point', they still possess the cultural traits geared towards continued economic development. The current standard of living enjoyed in Western economies is largely a product of the Industrial Revolution; but for the average worker, it was not an enjoyable time in which to live, to say the least. We continue to toil away in the mind-sets and traditions established by the requirements of factory labour, including our fixation on time-keeping and productivity (even our 'three meals a day' derives from this time), without yielding any further benefits in wellbeing. Moreoever, not only does all of the hard work, thrift, and so on yield little in the way of additional happiness, but also incurs costs of stress, alienation, and so on. Combined with the relentless obsession with material consumption that accompanies it, this relentless obsession with work represents, in my opinion, a real 'poverty of culture', even if it is (or at least was, at one time) the antithesis of a 'culture of poverty'. This cultural explanation for irrational levels of work behaviour finds support in the fact that people work excessively, sacrificing their health, family time, and overall quality of life, even when doing so doesn't yield any further benefits in wealth, let alone happiness - a conundrum that cannot be easily explained by the Marxian or relative poverty explanations alone.
What kind of economic change needs to occur for this culture to change, and would it be feasible given the current configuration of ideologies and interests? Both questions are open to debate, and hopefully, experimentation.
