“What explains the differential success of societies?”
Dr. David C. Rose’s answer would be: culture. He is trying to figure out why and how societies change over time, and why the change isn’t always the same. Unlike most economists who tend to blame institutions for economic problems, Dr. Rose believes that culture is the true root cause of all problems. He will argue, in his upcoming book, that culture is the key to maximizing general prosperity and freedom and therefore best explains the differential success of societies.
In his lecture on March 23, Dr. Rose explained that while blaming institutions might be easy, ultimately, even institutions are dependent on society, and society is a product of its cultural values. Most people shy away from blaming culture; they would rather not think that their own culture is creating problems. Dr. Rose has no such qualms. He explained that institutions require trust and cooperation. These qualities, and the degree to which they are present, are reflected in society and are bred through cultural values. Thus, even those who argue that institutions are to blame for economic problems, must concede that in the end, it is truly culture that matters most.
Cooperation and trust are only two of many cultural values that make general prosperity possible. The Tragedy of the Commons is where public goods are misused due to free riding. Dr. Rose argued that this principle also applies to culture because there are cultural-commons. When a significant number of people lie and cheat, trust in that social system is undermined. The example Dr. Rose provided was about people cheating on their taxes. When enough people don’t pay their taxes, many others are affected as a result of tighter restrictions and higher costs. A high trust society, one with good cultural values, wouldn’t have this problem. People would feel guilty about cheating on their taxes, and thus wouldn’t do it. The high level of trust in society would remain, nobody would be negatively affected, and society would flourish. High trust societies lead to widespread flourishing.
In early societies, even though, technically, economic success was present, Dr. Rose explained that problems still occurred because only a small percentage of society benefitted. There was a cultural problem that hindered greater progress: there was a lack of trust between workers and leaders. Trust is necessary for economy in order to create free market systems, and free market democracies are the ones that flourish. A society that culturally values freedom is bound to succeed. Some societies have inadequate cultures and do not flourish because they don’t have free-market economies. Why? According to Dr. Rose, it because these societies don’t value freedom enough to create the high level of trust necessary for a free market. Such societies require a change or shift in their cultural values.
Dr. Rose explained that culture affects whether or not individual rationality will undermine the common good, such as with cheating on taxes. Additionally, he argued that culture influences political economy. Economics is filled with institutions, and institutions are built on cultural values. Thus, Dr. Rose ultimately boiled everything down to one factor: culture.