The idea of homo oeconomicus and the role of culture in the economy
3. Cultural Context to economic management
The influence of culture on economic management can be studied in many ways. It is obvious, and consistent with the national accounts methodology (System of National Accounts, SNA), that culture con-tributes to GDP as one of the national economy’s sectors and the share of culture in GDP grows with GDP [Noga, 2009, p. 268].
What is culture? As a sector of the economy it includes the cinema, theater, graphic arts, museums, sculptures, etc. In contrast, the scien-tific definition of the term needs to embrace the whole spectrum of human activities. The science dealing with the study of culture is soci-ology.
We can encounter many definitions of “culture” in the literature re-garding this subject. Here I will present examples taken from the so-called “historical” school of defining the scientific category of “cul-ture” and then I will share my own thinking on the subject.
Johann Gottfried Herder (17441803), a German philosopher and writer, claimed that each person is born twice: once as a product of nature and once as a creation of nurture. The man has the ability to create and transmit culture. Herder perceived the passing of culture as the source of humanity.1 Further, Herder and Samuel von Puffendorf (16321694) maintained there were no cultured and uncultured peo-ples. Each nation, person or community can have its own culture that should not be criticized unless it is aimed against the good of other people.
Edward Burnett Tylor, a social anthropologist, defined culture as the following in 1871: “Culture, or civilization, taken in its broad, ethnographic sense, is that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society” [Tylor, 1920, p. 1].
This is what Heinrich Rickert wrote about culture in 1929: “These (culture) sciences are not about what or how individuals experience (which is a subject of interest to psychology, which, besides, can be practiced as a natural science); it is about what is meaningful to them or remains in a tangible relationship with values that do not exist in any empirical, physical or psychological meaning of the word ‘exist’
1 www.socjologia.xmc.pl/definicjekultury/ (17/07/2013).
but are nonetheless absolutely valid, providing landmarks for both historical people and a historian describing and trying to understand their behaviors” [Szacki, 2004, p. 429].
I believe culture can be defined as follows, drawing from the vast resources of definitions provided in the literature on the subject: the entirety of the material and spiritual heritage of humanity gathered, preserved and expanded augmented from one generation to another [Noga, 2009, p. 267].
Talcott Parsons claims that a social system meaning the whole “so-cietal entity” is divided into subsystems or lower-ranking systems:
(1) economy, (2) policy and (3) culture [Parsons, 1964].
The relationships between these subsystems have not been studied in depth yet. While the relationships between the economy and politics or politics and culture are the object of very inspiring research and the literature on the subject abounds in interesting results of these studies, the study of the economy-culture is just making its first steps. This has many causes, with the neglect of the cultural context as part of the economic human construct mentioned above being without doubt one of them.
While viewing the influence of culture on the economy, we cannot forget the subject of the effect of culture on man as the source of all economic activity. In my opinion, Sigmund Freud presented an inter-esting view on the interaction between man and culture. In his work, The Uneasiness in Culture, he referred to the relationships between the microcosmos of individual experience and the macrocosmos of the society. After studying these interactions, he concluded that “culture describes the sum of the achievements and institutions which differen-tiate our lives from those of our animal forebears” [Freud, 1998, p. 185]. Based on this view, Freud distinguished the following two aspects of culture:
1) on one hand, culture is repressive as it enforces specific behav-iours on an individual,
2) on the other hand, culture is sublimational since the history of civilization is a tale of fulfillment of human wishes in a more sublime way [Freud, 1998, p. 185].
In both cases, culture subjects the man to restrictions, remains a source of “uneasiness” and has not offered humanity the happiness promised by the theoreticians of progress.
What is the aftermath of the Freud’s study to the science of the economy?
I believe that the father of psychoanalysis pointed out clearly that an economic entity has to pay attention to the cultural context of its actions, whether willingly or not, consciously or subconsciously. This, naturally, has further consequences. For instance, methodological individualism is not sufficient to study the economic realties and a complementary methodological “holism” should be applied in paral-lel. This means that also, in practice, the group rationality should be considered next to the individual one.
Now, if we look at the philosophical foundations of the culture of the East, such as Taoism or Confucianism, we will see that culture has an indirect effect on the ways how people do their business. Here, culture is the supreme determinant of man’s economic activity [Geste-land, 1999]. It has forged a unique approach to foreign nationals and a business culture of a network of contacts and relationships (guanxi).
The economies of China, Japan and Far East countries including South Korea, Singapore, Taiwan, the Philippines and Malaysia are the manifest examples of the culture’s direct influence on the economy.
The social teachings of the Catholic Church are another interesting example of shaping the economy by means of influencing culture. The Pope Leo 13th’s encyclical, “Rights and Duties of Capital and Labour,”
defined the foundations of these teachings. These were elaborated upon and updated by John Paul 2nd’s encyclical, “The Hundredth Year,” published on the 1st of May 1991, the 100th anniversary of the former publication [Centesimus…, 1991]. Naturally, the latter con-tained references to the economy and the influence of culture on eco-nomic management. I believe “The Hundredth Year’s” important points relevant to my discussion in this paper include the following:
– economy inefficiencies caused by the failure to address the cul-tural and national dimensions in economic management;
– the mainstream economy, founded on the economic human paradigm, completely fails to grasp the idea of group rationality because, according to the paradigm, all rationality should be de-rived from the rational actions of individuals. The social teach-ings of the Catholic Church postulate an idea of common good, collaboration and solidarity between people and thus, group ra-tionality expressed in the form of working for the common
good, which is consistent with my belief that group rationality exists in parallel to the individual one;
– “The Hundredth Year” elaborates on the author’s points con-tained in the “On Human Work” encyclical (Sep. 14, 1981) and elevates work to a religious dimension. This means the Catholic teachings have taken account of the cultural context as part of their thinking about economic management.
To conclude my discussion on the relationships between culture and economy, I will refer to the two following approaches to the inter-action:
– Approach 1: a given economic policy has to produce the same result in different countries regardless of their cultural differ-ences. According to this approach, represented by liberals, poli-tics can change culture. This is why it is policy and not culture, that drives social and economic growth.
– Approach 2: according to conservatives, it is culture, and not politics, that is crucial to social and economic growth since economic management is not always positioned in a defined cultural context and culture has a strong influence over the economy [Centesimus…, 1991].
The first approach has prevailed in the highly developed Western European countries and the USA, while the other is popular in many Asian countries. Some researchers relate this fact to the differences between Western and Asian cultures or systems of values. The values of Western culture, such as instrumental rationality, freedom, aware-ness of empowerment, legal procedures and individualism are rela-tively weak influences. In contrast, the Asian/Confucian values includ-ing the ritual, distributive justice, call of duty, shared spiritual life, family ties and community orientation gave a strong impact on the economy [Tu Wei-Ming, 2004].
4. Conclusion
The concept of an economic human as a theoretical foundation of the mainstream economy’s paradigm needs a deep-reaching modification in connection with the increasing complexity of economic manage-ment and changes in the roles of the determinants of economic growth
with social capital and management gaining on importance as the drivers of economic performance.
The mainstream economy used to assume that the economic human does business in the following environment:
– full and free access to information, – orderly set of preferences,
– economic accounts based on maximizing the pleasure and minimizing inconveniences,
– individual choice based on own interests.
I reiterated many times in the paper that the economic human is a “hypothetic” or “fictitious” being but if we want to construe predictive economic models we need to bring the abstraction of the economic human concept down to a more realistic level. This process of contain-ing the level of abstraction consists of nothcontain-ing more than includcontain-ing the cultural context to economic management. Culture is a part of the social capital with its strong influence on the global economy.
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