Economy of Culture

Description: Another idea of mine regarding the economy, it builds up on previous ideas such as „An Economy for the Future“ and „Arbeiter sind keine Werkzeuge!“ (= Workers are not tools!).

There are as many cultures on our planet as there are nations – if not more. However, despite the clear differences between cultures (i.e. cultural standards/patterns), economic systems like neoliberalism and socialism tend to dictate how a nation and its people should act. Some economic participants may implement policies to adapt the system to the dominant culture of the country they act within, but the main problem remains that goals such as privatization or collectivization remain mostly untouched, since they are essential to these systems to exist in the first place. Naturally, next to the economic difficulties, cultural complicacy arises as well.

For instance, slow growth and a lower level of productivity may seem undesirable to an economist of first world nations, but for the people an increased level of productivity, and therefore more working hours, could severly interfere with their way of life. Moreover, material welfare like in western nations may be seen as unnecessary to other nations (i.e. what goes beyond the basic material needs), but spiritual welfare as well as a balanced way of life is what is important to them.

Hence I propose that instead of following an abstract economic concept, the economy of a nation should be moulded by the culture and circumstances of life (e.g. society).

The understanding of cultural patterns, as well as values and norms, are therefore very important. In the following paragraphs I’ll introduce you to two researchers and their research into the different cultures of humanity.

What are cultural patterns and What is their Purpose?

• with variations they are valid for a majority of the members of a culture
• they describe and explain how a cultural group perceives and evaluates things, how they think and why they act in specific ways
• they regulate behaviour (interactions with other people in certain situations)
• variations (individual and group specific) are tolerated within certain boundaries
• behaviours outside these boundaries are socially rejected and sanctioned
• people’s own cultural standards are not perceived consciously any more after their successful socialisation -> makes understanding between cultures more difficult
• own cultural standards become conscious if they are compared with other cultures‘ standards

Edward T. Hall, an American anthropologist and cross-cultural researcher, distinguishes cultures in four dimensions (time, context, space and information) and two categories for each.

Time

Monochronous Cultures

M-Time means that people do one thing after another. Cultures in this category care about punctuality, making plans and keeping to plans. To them, their job/work is very important and thus also have more short-term relationships.

Their work time is clearly separable from personal time.

Polychronous Cultures

P-Times means that people do things simultaneously. Cultures in this category value human interaction over time and material things, thus leading to a decreased concern for finishing a project (for instance) at once – they still get it done, but in their own time.
Therefore, it can be deduced that time schedules are not so important and plans are flexible. On the other hand, people are very important and they spent more time on maintaining and building up relations with family/friends/business partners (more life-long relationships).

Their work time is not clearly separable from personal time.

Context

Low Context

Cultures within this dimension explicitly communicate a majority of the information in the verbal message. It means that more time is needed, but there’s also less chance of misunderstanding, especially when visitors are present.

Example: an apology must be clearly articulated.

High Context

Cultures within this dimension have many contextual elements that help people to understand the rules. Consequently, a lot is taken for granted. For people who do not understand the ‚unwritten rules‘ of the culture, this can be very confusing. However, it also means that a relationship is established prior to that (e.g. company and family).

Feelings, thoughts and information are not explicitly expressed, but also through a variety of contexts, such as voice tone, body language, facial expressions, eye contact, speech patterns, use of silence, past interactions, status, common friends, etc.

Example: an apology can be communicated through a wide range of nonverbal gestures such as a smile, a sigh, a shrug or a frown.

Space

Edward T. Hall also was concerned about space and our relationships within it. He called the study of space Proxemics. In many situations we are concerned with space; from personal body space to space in office, and parking space to the space at home.

High Territoriality

• people have distinctive places which they call „mine“ and don’t want them to be „disturbed“
• closed doors
• private offices and partitions
• minimal interruptions and disruption
• permission needed to enter private space
• no touching without agreement

People high territoriality tend also to be low context.

Low Territoriality

• large rooms, few if any partitions
• managers mix with employees
• open doors
• no problems with interruptions and disruption
• private and „public“ space not so clearly distinct
• touching is more common, e.g. greeting rituals

People with low territoriality tend also to be high context.

You can find an excellent summary of the three aspects here.

Note: Most cultures very likely have characteristics of all four dimensions, but some aspects may be more prevalent than others.

However, there’s also a 6-dimension model of national culture.

Geert Hofstede’s Cultural Dimensions Theory

According to Hofstede, there are six dimensions of a culture:

In order to make it short, I will explain each facet in one sentence. The information originates from Mindtools, as well as the list which is used.

Power Distance Index (PDI) – 1

PDI is the extent to which inequalities of power and wealth are commonly accepted.

Individuality Index (Individualism vs Collectivism – IDV) – 2

IDV is the extent to which individual interests prevail over the interests of a group.

Masculinity Index (Masculinity vs Femininity – MAS) – 3

MAS refers to the distribution of roles between men and women.

Uncertainty Avoidance Index (UAI) – 4

UAI is the extent to which people feel threatened by uncertain or unknown situations.

Long Term Orientation vs Short Term Orientation (Pragmatic vs Normative – PRA) – 5

The PRA indicates the long-term and short-term orientation of a country; countries with a long-term orientation tend to be pragmatic, modest and more thrifty whereas countries with short-term orientation tend to place ore emphasis on principles, consistency and truth, and are typically religious and nationalistic.

Indulgence vs Restraint (IVR) – 6

The IVR shows the amount of gratification which is allowed in a country. However, as it is pointed out by the website: „Hofstede’s sixth dimension, discovered and described together with Michael Minkov, is also relatively new, and is therefore accompanied by less data.„

Conclusion

From both Hofstede and Hall we can conclude that the cultural background greatly influences the individuals within a society – from how they behave during social interactions to a business approach. A lot of things have to be taken into consideration, otherwise misunderstandings happens or conflicts emerge.

While the characteristics mentioned apply especially for human-to-human interactions, in Hofstede’s case it already shows that these traits are most likely also reflected within the economy (see: IDV = Individualism vs Collectivism; PDI = Power Index -> wealth inequality/strong hierarchies, etc). This can also be seen when countries are compared to each other: Norway vs USA, for instance.

However, here it is also important to note that existing power structures do not necessarily reflect how the larger part of society thinks. This has less to do with the culture of a nation – especially with the studies mentioned above – and will therefore be addressed at another time.

Common Fundament

The existence of cultural differences does not result in a radical different economy from country to country, since worker rights movements – as an example – emerged all over the world in industralized societies.

In other words: we do not have to re-invent the entire economic system.

Take Europe, for instance: while all countries have a welfare system, there are some differences when it comes to universal healthcare. Some allow the market to play a bigger part, while other countries are heavily centralized in that aspect.
Once the pressure of endless economic growth and profit maximization are gone, we can expect that there’ll also be more differences in other parts of the economy.

To make it short: we are going to see a welfare state in each nation. In some nations the extent of collectivization may vary, as well as wealth inequality (i.e. very high taxation to evenly distribute health or moderate taxation that allows some individuals to be a bit wealthier than the general populace, not to the extent of the inequality we witness today).

Transition to the Economy of Culture

The transition to the Economy of Culture won’t happen overnight, since a lot has to be taken into account. During the early phase a lot of input from the populace is needed to determine the path is taken. In fact, the whole process relies on a continuous exchange with not just the people, but also different economic experts (that includes unorthodox ones too) and may even extent to scientists (e.g. climate of a region). Regional differences within a country could also occur, but will largely remain within the framework set by the national government.

Lastly, each country needs to respect the cultural differences – including the privat entities -. Additionally to the domestic policies, international treaties should be made as well to ensure that tax evasion and other loopholes are closed. It also requires to enforce the rules of the treaties which may end up in the formation of a special transnational committee which purpose is it to monitor very wealthy individuals and corporations during that time of transition. Once cemented, but that is going to take at least two decades, the tasks of the committee may change or it is dissolved when it deemed necessary.