Culture in Historical Political Economy

I decided to use my first post to talk about culture. Culture is one of those things that social scientists have long known affects all types of actions, interactions, and outcomes. Yet, until very recently we shied away from analyzing culture. There is good reason for this. In the first half of the 20th century, studies seeking to understand why some parts of the world are rich and others are poor drew way too heavily on simplistic Eurocentric tropes. Societies that did not succeed were lazy or conservative. They were too religious or dependent on old rituals. These tropes were most often intellectual cover for racist ideologies—good riddance to them.

But did the pendulum swing too far in the opposite direction? Surely culture must have some explanatory power. After all, cultural explanations are common in other disciplines. It is practically the norm in history, and cultural anthropology has made huge strides in enlightening our understanding of how culture shaped human development. And it is not as if anyone pretends that cultural differences are non-existent. It was just that, for most of the latter half of the 20th century, social scientists viewed culture as either irrelevant to economic and political outcomes or as endogenous to the deeper processes that drive these outcomes.

In the last couple of decades, however, economists and political scientists have reinvigorated their interest in culture. And they have done so in a way that is largely removed from those old racist tropes (though not fully removed … although I am not going to call out any studies in particular, a few recent ones reek of racist garbage). I think much of this has to do with advances in cultural anthropology, which informed much of the “early” work by social scientists. Cultural anthropologists view culture as the lens through which one sees the world—this lens is determined partially at the family level and partially at the societal level. The way people see the world is affected by their parents, their peers, and other adults (relatives, teachers). Surely this lens affects the way that people act and interact in economic and political situations. But how? And why?

Douglass North argued for one set of important answers to these questions. North was famous for his study of economic and political institutions. In his early work on institutions, he viewed them as any good neo-classicist would: the “market” decides which institutions are good ones, and they weed out bad institutions. The problem, which North noted in later works, is that bad institutions tend to stick around for a long time. One of the reasons for this is that the way people view the world (“culture”) is affected by institutions. Institutions are in turn affected by society’s mental constructs.

This means, as North recognized, that we need a definition of institutions that not only incorporates the formal and informal rules of the game, but also the mental constructs that support (and are in turn shaped by) these rules. Avner Greif proposed such a definition. In his conception, institutions are equilibria. What this means for our purposes is that institutions encapsulate everything that form the broader rules of the game, including our mental constructs. It is impossible to talk about institutions without considering the way people living in that society perceive them, and vice versa. They are all part of one system—one equilibrium—that shapes the society’s political and economic path.

This means that culture is much more than how a society “chooses” from multiple equilibria. This may be a useful aspect of culture in our day-to-day decisions (i.e., I know to meet you at Union Station rather than the Empire State Building because that is the norm that has emerged between us), but at the institutional level it is not a useful way to think about culture. Societies do not simply choose different institutional equilibria when multiple equilibria are possible because they have different cultures. Institutions and culture are inseparable. If two societies have different cultures, they have different potential institutions available to them.

If this seems confusing, an example may help clarify what I am talking about. Think about what it takes for democratic institutions to work well. Beyond there being formal institutions (e.g., election overseers, voting apparatuses), there must be certain norms that are built into the worldview of society. People must view a democratically elected leader as legitimate. They must view actions taken to undermine elections as illegitimate. Unconstitutional actions must be punishable, even if taken by the leader. And so on. If these norms do not exist—or if they are weak enough for a power-hungry leader to exploit—democratic institutions will not last long. Indeed, if those norms do not exist it is unlikely that democracy is one of the “equilibria” that society can choose from in the first place.

So what does this mean for historical political economy? How does culture impinge on political economy over time? For me, the most important consequence of taking culture seriously is that it provides a better understanding of why bad institutions and outcomes persist for so long. Bad institutions tend to last long if those institutions are consistent with the society’s culture. Various cultural elements can assist in this process. Religion is an obvious one. Religious precepts are hardly always bad for growth, but when they are, they can be a source of stagnation. Secular cultural ideologies can equally be sources of persistence.

So why does this matter? Increasingly, research in economics and political science has focused on the role of culture as a means of persistence of bad outcomes (or, occasionally, good outcomes). Events that happened long in the past cast a shadow over the future. Sometimes that is because those past events shaped institutions, which persisted long after the reason they emerged in the first place was relevant. Other times, those events shaped the culture of a society, which persisted over time. More often than not, those past events shaped both the society’s culture and institutions.

When this happens, persistence is likely. When culture and political institutions evolve in such a way that they complement each other, they are tough to change. Why would political institutions change when they are consistent with the way people view the world? Why would the way people view the world change when the political institutions that support those views remain the same?

This is why studies of culture have become of first-order importance for those interested in long-run economic and political development. Economists and political scientists are increasingly coming around to this idea. So much fascinating work has been done in the last decade, and in my eyes it has revolutionized numerous lines of thought in historical political economy. In my next few posts, I will be digging deeper into some of the specific insights from this literature. I hope to see you there.