Dispatch #43: How does culture affect political institutions and economic development?

In this dispatch we will look at the recent paper by Acemoglu and Robinson on culture and its impact on the politics and institutions

In the book titled ‘Culture Matters- How Values Shape Human Progress’, Samuel Huntington argued that the differences in culture lead to economic and political divergences in different countries and societies.

In the early 1990s, I happened to come across economic data on Ghana and South Korea in the early  1960s, and I was astonished to see how similar their economies were then. These two countries had roughly comparable levels of per capita GNP; similar divisions of their economy among primary products,manufacturing, and services; and overwhelmingly primary product exports, with South Korea producing a few manufactured goods. Also, they were receiving comparable levels of economic aid. Thirty years later, South Korea had become an industrial giant with the fourteenth largest economy in the world, multinational corporations, major exports of automobiles, electronic equipment, and other sophisticated manufactures, and a per capita income approximating that of Greece. Moreover, it was on its way to the consolidation of democratic institutions. No such changes had occurred in Ghana, whose per capita GNP was now about one-fifteenth that of South Korea’s. How could this extraordinary difference in development be explained? Undoubtedly, many factors played a role, but it seemed to me that culture had to be a large part of the explanation. South Koreans valued thrift, investment, hard work, education, organization, and discipline. Ghanaians had different values. In short, cultures count.

-Samuel Huntington

By invoking culture and economic development, Huntington and other authors in the book brought back culture into the forefront of the debate on political institutions, economic development and how culture affects both of them.

This prognosis by Huntington and many others like him is based on the definition of culture which American sociologist Talcott Parsons gave. According to Parson a culture is a set of values, attitudes, beliefs and preferences among the people in a society. More importantly, the culture, according to Parson, is logically coherent, stable, consistent and almost unchangeable. 

In a recent working paper, Daron Acemoglu and James Robinson, depart from this conceptualization of culture and have come up with a framework that explains how a culture impacts political institutions and economic outcomes. They do that by arguing that culture is not stable and it keeps on changing into various forms which they call as ‘cultural configurations’. 

Their definition of culture is this, “historically transmitted patterns of beliefs, relationships, rituals,attitudes and obligations that furnish meaning to human interactions and provide a framework for interpreting the world, coordinating expectations and enabling or constraining behaviors”. These beliefs, rituals and attitudes determine certain behaviour amongst the people in a group and also enable sanctions if these beliefs are not followed.

Here it is important to reiterate that unlike Parsons, the authors Acemoglu and Robinson (AR) believe that the culture is not static and it keeps on changing. And because of this dynamism in the culture, the political institutions also change in that society. 

Before we delve deeper, let’s take a step back and understand few basic concepts.

AR begin by defining culture as something that provides ‘meaning’ or a coherent framework to understand various situations in a society (example respect to elders or an authority). A culture also encourages a certain set of actions while putting sanctions on another set of actions (example prevention of violence or theft). 

A culture, according to AR, consists of interconnected attributes. Attributes may include “type of social hierarchy (patriarchy, gerontocracy, meritocracy), the identity of ‘in-groups’, the meaning, definition and importance of virtue, the structure of social responsibilities, the role of honor and violence in conflict resolution, respect for ancient customs and traditions, the extent of segregation and mixing between different types of people, family structure, certain rituals, religious precepts, regulation of sexual behavior, the role of higher ideals, etc.” 

For example we can have a culture that gives primacy to the social hierarchy based on age attribute and hence give certain responsibilities to younger generations. Now if this attribute combines with another attribute of the nuclear family then the same set of individuals will have restrictions on their sexual behavior. If you add another set of attributes like caste and notions of purity, you will have a very restrictive culture.

This combination of several attributes result in cultural configurations. 

In the figure below there are five cultural attributes. The combination of different sets of attributes result in two cultural combinations shown in blue and red.

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It’s the cultural configurations that provide meaning to a culture. For example a culture based on attributes of social hierarchy based on the notions of purity and status in society based on the occupation generates a caste based society as in the case of India and the political institutions are also designed that reinforces this hierarchy and make the access to public goods difficult for the individuals from lower castes. 

Let’s focus on the nature of the cultural configurations. AR argue that there are two kinds of cultures- fluid and hardwired depending on how their attributes combine.

A culture is fluid if it allows ‘a richer set of configurations’. A hardwired culture is one that allows ‘fewer cultural configurations’. Hence, in a fluid culture the attributes can combine in several ways at different moments of time. 

In the above diagram if a culture allows configurations of both red and blue then it is regarded as a fluid culture. But if it allows either only blue configuration or only red configuration, then it is regarded as a hardware configuration. 

In short, the more the configurations, the more the culture is fluid; lesser the configurations, the culture is hardwired. 

One may ask a question as to how and when these cultural configurations happen. What factors influence different cultural attributes to combine together to form cultural configurations? AR argue that there are three factors that influence the creation of cultural configurations. These are:

  1. History (Past cultural configurations)

  2. Institutions (Especially those that ‘shape and regulate economic and political power’)

  3. Politics (‘Ability of certain groups of individuals to form coalitions, come up with new ideas and exercise power’)

Let’s see how culture, institutions and politics interact with each other.

In the two figures below we have a block titled ‘Culture Set’. A culture set is a collection of cultural attributes. And as we have discussed earlier, the combinations of cultural attributes lead to cultural configurations. In addition, we also have two blocks- institutions (rules of the game like laws and constitution etc.) and politics (distribution of political power). 

In a hardwired culture, there is only one cultural configuration. This cultural configuration may lead to institutions that are extractive and restrictive. These institutions further impact (limit) the economic and social outcomes of individuals. Take a culture that gives primacy to notions of purity, hierarchy and subjugation of people doing menial jobs. This cultural configuration results in legitimising extractive institutions like caste. Belonging to a lower caste impedes the economic outcomes since those individuals would never get opportunities. This cultural configuration (caste) may lead to a very different kind of politics, say politics of affirmative action, which could then lead to a whole range of different institutions and economic and social outcomes. 

In a fluid culture, institutions lead to the evolution of different cultural configurations and politics can also lead to the evolution of different cultural configurations and institutions. The authors give the example of 17th century England. Before the Second Civil War the King’s ‘divine right to rule’ was considered as the dominant political philosophy, thus perpetuating the monarchy. After the Civil War, movements like the ‘Levellers’ and the readings by Hobbes and Locke started to undermine the rule by the monarch and established a political system where the people delegated the power to the representatives to govern and make laws. If the people are dissatisfied with their representatives they might pull them down by the sheer power of adult franchise.  The cultural shift happened in England because of the fluid culture that enabled interaction between politics, institutions and culture.

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Why are some cultures more fluid than others?

The two factors that determine the degree of fluidity of a culture are:

  1. Nature of cultural attributes (Abstract and Specific)

  2. Collection of feasible connections between attributes (Entangled and Free-standing)

Let’s talk about the nature of cultural attributes. There are two kinds of cultural attributes- abstract and specific. An abstract attribute is one that can have multiple meanings in different contexts. A specific attribute is one that is specific in nature and does not have different meanings in different contexts. Hence an abstract attribute allows for multiple connections while a specific attribute does not allow multiple connections.

On the basis of how these attributes combine we have entangled attributes and free-standing attributes. An attribute is entangled if its function or meaning is tightly linked to others and the scope of linking to other attributes is limited. An attribute is free-standing if its meaning and function is similar to others, thus increasing the possibility of combining with other attributes. 

Since, now we know the factors that determine the fluidity of a culture, we can put these factors in a 2x2 matrix that would look like this:

A fluid culture is one whose attributes are abstract and free-standing, while a hard-wired culture is one whose attributes are specific and entangled. 

The Indian caste system is a hard-wired culture since its attributes like rigid hierarchies and notions of purity are specific and entangled. 

The caste system is highly specific—everyone is born into the jati and varna of their parents, and this determines not just their station but their station in life. Already in the Vishnu Smriti, different varnas have distinct occupations and within the varnas, jatis have more specific occupations. The cultural attributes are not just specific, rather than abstract, they are also deeply entangled in the Hindu religion with the whole system being enforced by religious authority. 

The economic consequences of hardwiring peoples’ castes and occupations are clear and were powerfully identified by Ambedkar: the division of labor brought about by the caste system is not a division based on choice. Individual sentiment, individual preference, has no place in it. It is based on the dogma of predestination. As a consequence this system was bound to be highly inefficient, and not just economically.

-Acemoglu and Robinson

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