THE MA£OPOLSKA SCHOOL OF ECONOMICS IN TARNÓW RESEARCH PAPERS COLLECTION, ISSUE 2 (16)/2010

MA£GORZATA RAMOCKA*

Culture as an economic growth factor

K e y w o r d s: economic growth, culture, factors of the growth, social trust

S u m m a r y: The article considers a culture as an important factor of economic growth. A cul-

ture is understood as the environment for social and economic performance. It’s presenting three
theories which perceive a culture as an influential component for economic life. The starting
point is the Francis Fukuyama’s point of view about the meaning of social trust. Then in that con-
text it’s zooming on Mariano Grondona and Jacenty Siewierski theories.

The economic growth of countries is obviously uneven. Despite the convergence

theory, similar environmental conditionings, economic regimes etc.—the economic
performances might be very different, what can be noticed in the examples of Greece,
Portugal, Hungary and many others. Perhaps a reason for this situation is culture,
which—by creating different milieus for the same growth factors—is evoking dis-
tinct action.
The main purpose of this article is to show the need of considering culture as an
important growth factor as well as to present the ways of research and analyse eco-
nomic growth in the context of a culture.

1. The basic factors in economic growth

Economic growth is usually taken to refer to an increase in a nation’s capacity to
produce goods and services. Among the basic factors underlying this phenomena, the
most obvious is productivity, which directly affects the level of GDP. However, pro-
ductivity itself depends upon several factors of production:
Depending on the economic school and historical period, these factors of produc-
tion may differ. The physiocratism was considering a meaning of capital, land, labour
∗
Małgorzata Ramocka MA—Department of Management, Małopolska School of Economics in
Tarnów.
118 Ma³gorzata Ramocka

and entrepreneurship. According to the classic school represented by Adam Smith or

David Ricardo, the main factors were: land, labour and capital. However, Karl Marx
(sometimes also perceived as a representative of the classic economy) mainly appre-
ciated the importance of the labour, labour’s instruments and its subject. The contem-
porary attitude is now to treat a capital as a kind of amalgam of fixed, working and
financial capital and sometimes also, in more simple terms, as ‘human capital’.1
Land, labour, capital and human condition are formed by a whole range of ele-
ments, sometimes referred to as ‘beyond economic factors’. However, this name does
not seem very fitting, if they are able to interact with economic occurrences—like
for example political and institutional situation of a country, mechanisms in place to
encourage investors and entrepreneurs; as well as social situation, and, by extension,
level of social trust, education, demographics, tendency to consume and tendency to
save, level of motivation, attitude to work, wealth, as well as issues of organisational
structure, environmental considerations and of course technology—the main factor
underpinning economic growth according to an endogenous theory of growth, con-
vergence phenomena and probably many others. Sometimes, one of the factors iden-
tified is culture itself.

2. The beginnings—why is culture important?

The relationship between culture and economic growth or economic development,
more broadly speaking, seems to resemble the relation between the roots of the tree and
one of its largest branches. That is at least the case when we assume a theory of cul-
tural pattern,2 for example. According to this theory, culture consists of ways of think-
ing, feeling and reacting that are obtained and forwarded mainly via symbols. The main
core of culture to be considered are then traditional ideas, and moral values, in particu-
lar. The systems existing within a culture are taken to be not merely the results of ac-
tions, but instead constitute the main reasons for such actions. A key part of any culture
lies in its norms and behavioural standards; another key component are the ideologies
it uses to rationalise and justify certain forms of behaviours. Each culture has its own
general roles of selection and establishing order. This means that all patterns of behav-
iour can be easily generalised in terms of all levels of culture (Jenks, 1999, pp. 52–53).
There is only one thing lacking in this broad definition of culture—the thesis of its in-
ternal dynamic, which allows culture to be understood as a constant process, including
the evolving meaning and content of the symbols present in the culture.
As Adam Smith once said—economic life can only be considered in the context of
customs and values. The same opinion can be seen to be expressed in a famous the-
1
Human capital can be understood as a notion of capital that also includes the ideas of social and/or
intellectual capital.
2
Cultural pattern theory is one of many theories of culture, some of which understand culture instead
as a social structure or communication, etc.
Culture as an economic growth factor 119

ory of Max Weber, who set out to prove the Protestant work ethics to be a key factor
in capitalist development. That point of view—which sees culture as an inheritance
of ethical habits is also close to the thesis of Francis Fukuyama (Fukuyama, 1997,
p. 49). So perhaps, it is after all worthwhile to consider culture more closely in its
own right as a factor in economic growth and development.
Francis Fukuyama—the American economist, political scientist and philosopher
believes that the influence of culture appears most deeply in the level of trust as a so-
cial virtue. All societies are built on trust. However, the members of those societies
may trust each other and their institutions to a greater or lesser degree. How much—
of course depends on the culture and this can be seen, for example, in the spontane-
ous ways in which a society organises itself. Society’s ability to unite people depends
on the extent to which they share common values and norms. In other words—people
who are closer to each other in terms of ethical values form groups more naturally
and more easily, and consequently these groups are also more likely to generate in-
come. As Fukuyama says, a high level of social trust is beneficial not just in terms of
the development of expanded organisational structures, but also in terms of the trans-
formation of major hierarchies into a network of smaller entities, something that is
made possible by the emergence of new technologies. Societies with an abundance
of social capital are more liable to adapt new forms of organisation, which fit bet-
ter with the circumstances of new economic and technical order. A higher degree of
social trust also has an effect on the quality and efficiency of work. Flexibility and
a tendency to entrust lower levels of organisation with responsibility characterises
work in this kind of cultures. These phenomena in turn have a positive effect on the
motivation and morale of employees. In contrast, a world with a low degree of trust
is characterised by domination of bureaucracy and a complicated, complex hierarchy.
So, according to Fukuyama’s theory, the foundation for a healthy economy consists
of social capital and social trust, which themselves stem from a society’s culture.
Even though trust is a founding element of all cultures, some of them, more than oth-
ers, tend not only to encourage honesty, charity or mercy but also to trust institutions
and other members of society. At the opposite extreme, the attitude is that only peo-
ple worth trusting are those from the closest environment, for example, own family.
Fukuyama then analysed a number of chosen economies in terms of this difference,
showing that the successes of economies based on trust within the family circle—like
China, France, Italy or Southern Korea, were only possible thanks to state interven-
tion and the support provided by governments to global corporations. At the other
end of the scale, there are countries like Japan or Germany, where the level of social
trust is very high, and the formation of major corporations was not related to the idea
of family belonging but was an effect of a spontaneous unification of members of the
society. In summary, the ability to cooperate depends on established habits, traditions
and norms, and it is these factors that have a key role to play in forming the structure
of a market. It is then quite possible that a successful market-driven economy is de-
termined by the factor of social capital (Fukuyama, 1997, p. 398).
120 Ma³gorzata Ramocka

3. Culture as a founding element in the economic classification

of countries

The classification of countries according to their level of economic dynamism and

level of social trust is only one of the methods for finding links between culture and
economy. One of the most interesting models according to which economies are pro-
grammed by cultural factors for successful development or failure was presented by
Mariano Grondona. Recognition of a culture as productivity-oriented or the reverse is
here based on a set of mental features that lists twenty ways of characterising a type
of culture. This set of features is shown in Table 1 below.

Ta b l e 1
The cultural standardisation of economic development by M. Grondona

No. Cultural factor Pro-Development Culture Anti-Development Culture

1. Religion Pharisee religion—priority of wealthy, Plebeians religion—priority of poor
successful people—for example Prot- or impecunious people—for example
estantism Roman Catholicism
2. Belief in the Indi- Belief and trust in the individual Lack of trust leading to developed
vidual system of control and supervision
3. Moral Imperative Widespread agreement on rights and Two different universes—one of sol-
roles, which are not too demanding, emn ideas and the highest of stand-
making them easier to implement as ards and a second one—every day
a result ethics—full of hypocrisy and duplic-
ity
4. Wealth Wealth is in the future—what will Wealth is what is here and now
once exist
5. Competition To achieve wealth and excellence, Competition is a form of aggression.
competition is a necessity It should be avoided
6. Distributive jus- Takes the business of future genera- Only for the contemporary, living
tice tions into consideration. Less dis- generation of society. Focus on cur-
posed to consumption. Frugality as rent consumption, lack of tradition of
a virtue frugality
7. Work value Positive value of work Lack of respect for work as a value
in itself. The places at the top of the
social ladder are held by intellectuals,
artists, politicians, army and religious
authority figures
8. Heresies Intellectual pluralism Suppression of intellectual innova-
tions, devotion to orthodox doctrines
9. Education System lets the individual find the Education is a transfer of dogma,
truth without pressure of one doctrine breeding another generation of loyal
believers in the established doctrine
Culture as an economic growth factor 121

10. Meaning of util- Lack of trust in theories which it is Idealistic attitude, inspired visions
ity impossible to verify, focusing on busi-
ness in the practical sense
11. Lesser virtues Lesser virtues are valuable—like solid Lack of importance of the lesser vir-
work, order, kindness and punctuality tues. They impose an unnecessary de-
gree of rigor. At the same time, they
are meaningless in comparison to tra-
ditional virtues, such as love, justice,
courage, generosity etc.
12. Time dimension Focus on near future Focus on past

13. Rationality The greatest virtue Fantasy and breadth are more impor-
tant—pyramids, great revolutions,
huge undertakings achieved in coun-
tries without roads, hotels and basic
infrastructure
14. Power and au- Rule of law, steadiness Rule of an individual or a group. In-
thority stead of following the rules, people
focus on predicting the caprices of
authorities
15. World view The world is open, it is a stage upon The world is an entity without meas-
which every actor has its role ure, a stage upon which only the most
powerful forces are able to act—God,
devil, international conspiracies, im-
perialism, capitalism, Zionism, etc.
16. Life view People create their own life Life is given to people, they have to
accept it as it is
17. Salvation Salvation in another world depends Salvation will be given to people who
on the efforts to change this world resisted the temptations of this world
18. Utopia Utopia is something remote. The Utopia is something close at hand,
present-day world makes creative ef- the individual is outreach of it
forts towards achieving it in the dis-
tant future
19. Nature of Opti- Making an effort to change reality Belief in God and good fortune are
mism does make a difference. People can the most helpful, favourable attitudes
affect reality
20. Democracy Liberal, constitutional democracy—in A people’s republic can be estab-
the style of Locke or Montesquieu lished based on absolutist tradition.
Rather in style of Rousseau

S o u r c e: author’s own study based on: Grondona, 2003, pp. 105–112.

According to the author, this list of elements characterising pro- and anti-develop-
ment cultures is merely a basis and may be more extended or abridged, depending on
the kind of issues to be highlighted. The system of standardisation has of course to be
considered as a simplification, because it is impossible to capture the unchangeable
and untouchable position of any culture on such a scale. The values taken into con-
sideration are constantly shifting and changing, probably more dynamically now than
122 Ma³gorzata Ramocka

in previous decades. The biggest challenge is to capture the values of the moment,
when a change in values is about to come, with an effect on a society’s way of acting,
leading to economic growth at a specific historical moment.

4. Other systems of standardisation

A standardisation of cultures that blends Grondona’s attitude and, more indirectly,
the issue of social trust has been proposed by Jacenty Siewierski. According to his
view, faster economic development is typical for modern societies, where the pat-
tern of acting is based on rationality and the main position in the value hierarchy is
an aspiration to positive changes and improvements. Here, the form of social kinship
is impersonal, something that is important in terms of Fukuyama’s theory and might
be related to the higher degree of social trust. Social relationships are conditioned by
steady law, while the influence of public opinion and situations of conflict are insti-
tutionalised. In turn, economic growth tends to be ‘dampened down’ in more tradi-
tional cultures. The characteristic features of such cultures boil down to respecting
tradition as the only pattern of acting where the highest place in the value hierarchy
is assigned to steadiness and an aversion to change, and where the most important
relations are built at family level and religion or customs are more important than
civil law (Siewierski, 2006, p. 68). Apart from the factors identified by Grondona,
pro-development cultures are characterised by egoism of the individual, shown for
example in the perception of one’s own life as an asset, that can be freely shaped and
created. In view of those values, exponents of traditional cultures prefer a more altru-
istic vision of human nature and they seem to be more ready to agree to accept their
fate. Ultimately, they also have different attitude to the questions of actual economy,
too. Pro-development cultures consider wealth to be the main source of satisfaction
of needs and it is something that is in turn recognised as a result of individual work.
Private property is a natural right and the functioning of society in terms of market
forces and competition is the only way to achieve economic success. In contrast, anti-
development cultures perceive wealth rather as a symbol of power, given by the grace
of some authority or achieved as result of fraud or crime. Private property is a matter
of appropriation but can be also sanctioned by some higher order, for example a re-
ligious authority.
Those attitudes identified here are of course not the only ones that have an influ-
ence on growth. In 2003, Robert J. Barro and Rachel M. McCleary published a thesis
that sought to prove the relations existing between certain forms of religious behav-
iour and economic growth data. The most important indicators used in these studies
were church attendance, as well as the belief in heaven and hell. Based on the data
gathered, the authors were, amongst other things, able to prove a positive correlation
between the belief in heaven and hell and economic growth (Barro, McCleary, 2003,
p. 36). The issue of the culture also appears as an important problem in the context of
Culture as an economic growth factor 123

a New Institutional Economy. Oliver E. Williamson created a scheme presenting in-

teractions between four levels of economic reality. The first, most general level corre-
sponds to the culture and informal institution, that is the mainspring of all social and
economic action. The second level corresponds to formal institutions, including the
law and socio-political institutions. The next level is that of management and the last,
but constantly changing level is that of the allocation of resources (Williamson, 2000,
p. 597). All these levels have an influence on each other, proving the theory of an ab-
solutely endogenous reality. Interactions between economic growth factors resemble
that of a great, pulsing system, within which all elements at some point interact, and
where any change in the system has a knock-on effect at all other levels.

Bibliography
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Kultura jako czynnik wzrostu gospodarczego

S t r e s z c z e n i e: Artykuł dotyczy wpływu kultury jako istotnego czynnika wzrostu gospodar-

czego. Kultura rozumiana jest tu jako środowisko życia społecznego, w tym gospodarczego.
Punktem wyjścia jest ukazanie kultury jako siły warunkującej oddziaływanie czynników pro-
dukcji, bezpośrednio odpowiedzialnych za poziom wzrostu gospodarczego. Wśród elementów
„pozaekonomicznych” znajduje się między innymi problem zaufania społecznego, szeroko omó-
wiony przez Francisa Fukuyamę. Artykuł przybliża także narzędzia służące analizie kultury pod
kontem jej produktywności autorstwa Mariana Grondony i Jacentego Siewierskiego.

S ł o w a k l u c z o w e: wzrost gospodarczy, kultura, czynniki wzrostu gospodarczego, zaufanie

społeczne