there is a limit to changes that can be made through ideological exhortation alone. In a society without enough jobs, preaching hard work will not be very effective in changing people’s work habits. In a society with little industry, telling people that disparaging the engineering profession is wrong will not make many young people choose to pursue it as a career. In societies where workers are treated badly, appealing for co-operation will fall upon deaf, if not cynical, ears. Changes in attitudes need to be supported by real changes – in economic activities, institutions and policies.
Take the fabled Japanese culture of company loyalty.Many observers believe it is the manifestation of an ingrained cultural trait rooted in the Japanese variety of Confucianism emphasizing loyalty. Now, if true, such an attitude should have been more pronounced as we go back further in time. Yet, a century ago, Beatrice Webb remarked that the Japanese have a ‘quite intolerable personal independence’. [31] Indeed, Japanese workers used to be a pretty militant bunch until fairly recently. Between 1955 and 1964, Japan lost more days per worker in strikes than Britain or France, countries which were not exactly famous for co-operative industrial relations at the time.[32] Co-operation and loyalty came about only because Japanese workers were given institutions such as lifetime employment and company welfare schemes. Ideological campaigns (and government bashing of militant communist trade unions) did play a role, but they would not have been enough on their own.
Similarly, despite its current reputation for peaceful industrial relations, Sweden used to have a terrible labour problem. In the 1920s, it lost more man-hours per worker due to strikes than any other country. But after the ‘corporatist’ compromise of the 1930s (the 1938 Saltjobaden Agreement), it all changed. In return for workers restraining their wage demands and strike activities, the country’s capitalists delivered a generous welfare state combined with good retraining programmes. Ideological exhortation alone would not have been convincing.
When Korea started its industrialization drive in the 1960s, the government tried to persuade people to abandon the traditional Confucian disdain for industrial professions. The country needed more engineers and scientists. But with few decent engineering jobs, not many bright young people wanted to become engineers. So the government increased funding and the number of places in university for engineering and science departments, while doing the reverse (in relative terms) in humanities departments. In the 1960s there were only 0.6 engineering and science graduates for every humanities graduate, but the ratio became one-to-one by the early 1980s.[33] Of course, the policy worked ultimately because the economy was industrializing fast and, as a result, there were more and more well-paid jobs for engineers and scientists. It was thanks to the combination of ideological exhortation, educational policy and industrialization – and not just promotion of ‘progressive values and attitudes’ – that Korea has come to boast one of the best-trained armies of engineers in the world.
The above examples show that ideological persuasion is important but not, by itself, enough in changing culture. It has to be accompanied by changes in policies and institutions that can sustain the desired forms of behaviour over an extended period of time so that that they turn into ‘cultural’ traits.
Culture influences a country’s economic performance.At a given point in time, a particular culture may produce people with particular behavioural traits that are more conducive to achieving certain social goals, including economic development, than other cultures. At this abstract level, the proposition seems uncontroversial.
But when we try to apply this general principle to actual cases, it proves elusive. It is very difficult to define what the culture of a nation is. Things are complicated further by the fact that very different cultural traditions may co-exist in a single country, even in allegedly ‘homogeneous’ ones like Korea. All cultures have multiple characteristics, some positive and others negative for economic development. Given all this, it is not possible, nor useful, to ‘explain’ a country’s economic success or failure in terms of its culture, as some Bad Samaritans have tried to do.
More importantly, even though having people with certain behavioural traits may be better for economic development, a country does not need a ‘cultural revolution’ before it can develop. Though culture and economic development influence each other, the causality is far stronger from the latter to the former; economic development to a large extent creates a culture that it needs. Changes in economic structure change the way people live and interact with one another, which, in turn, changes the way they understand the world and behave. As I have shown with the cases of Japan, Germany and Korea, many of the behavioural traits that are supposed to ‘explain’ economic development (e.g., hard work, time-keeping, frugality) are actually its consequences, rather than its causes.
Saying that culture changes largely as a result of economic development is not to say that culture cannot be changed by ideological persuasion. Actually, this is what some optimistic culturalists believe. ‘Underdevelopment is a state of mind’, they declare. For them, therefore, the obvious solution to underdevelopment is to change the way people think through ideological exhortation. I don’t deny that such an exercise may be helpful, or even important in certain cases, for changing culture. But a ‘cultural revolution’ will not take root unless there are complementary changes in the underlying economic structures and institutions.
So, in order to promote behavioural traits that are helpful for economic development, we need a combination of ideological exhortation, policy measures to promote economic development and the institutional changes that foster the desired cultural changes. It is not an easy job to get this mix right, but once you do, culture can be changed much more quickly than is normally assumed. Very often what seemed like an eternal national character can change within a couple of decades, if there are sufficient supporting changes in the underlying economic structure and institutions. The rather rapid disappearance of the Japanese ‘national heritage’ of laziness since the 1920s, the quick development of co-operative industrial relations in Sweden since the 1930s, and the end of ‘Korean time’ in the 1990s are some prominent examples.
The fact that culture can be deliberately changed – through economic policies, institution building and ideological campaigns – gives us hope.No country is condemned to underdevelopment because of its culture. But at the same time we must not forget that culture cannot be reinvented at will – the failure to create the ‘new man’ under communism is a good proof of that. The cultural ‘reformer’ still has to work with existing cultural attitudes and symbols.
We need to understand the role of culture in economic development in its true complexity and importance. Culture is complex and difficult to define. It does affect economic development, but economic development affects it more than the other way around. Culture is not immutable. It can be changed through a mutually reinforcing interaction with economic development; ideological persuasion; and complementary policies and institutions that encourage certain forms of behaviour, which over time turn into cultural traits. Only then can we free our imaginations both from the unwarranted pessimism of those who believe culture is destiny and from the naive optimism of those who believe they can persuade people to think differently and bring about economic development that way.
EPILOGUE
Sao Paulo, October 2037
Luiz Soares is a worried man. His family engineering firm – Soares Tecnologia
The first years of Soares Tecnologia were difficult. The high interest rate policy, which lasted between 1994 and 2009, severely constrained its ability to borrow and expand. But, by 2013, it had grown into a solid middle-sized firm producing watch parts and other precision equipment, thanks to Jose Antonio’s skills and determination.
In 2015, Luiz’s father, Paulo, came back with a Ph.D. in nano-physics from Cambridge and persuaded Jose Antonio to set up a nano-technology division, which he headed. That proved a lucky escape. The Tallinn Round of the WTO concluded in 2017 abolished all industrial tariffs except for a handful of ‘reserved’ sectors for each country. As a result, most manufacturing industries, other than low-technology, low-wage ones, got wiped out in most developing countries, including Brazil. The Brazilian nano-technology industry survived the so-called Tallinn
Paulo’s foresight paid off. Soon after he took over the firm in 2023, after Jose Antonio’s yacht sank in a freak hurricane in the Caribbean (a result of global warming, they said), Soares Tecnologia launched a molecular
