News Release

October 30, 2001

Economics largely ignores question of culture
New Cato Institute book makes case for multidisciplinary approach to economics

WASHINGTON-To many, economics is the study of a sterile world populated only by numbers and charts. Behind the models, calculations and data, however, lie human beings with beliefs, habits and histories.

The new Cato Institute book, Culture and Enterprise, makes the case for a new way of studying economics that takes into account the important role of culture in determining a nation's economic future. Cultural factors, while not quantifiable like interest or savings rates, nonetheless exert an enormous influence on whether or not a nation achieves prosperity.

Authors Don Lavoie and Emily Chamlee-Wright, both professors of economics, argue that economics and the field of cultural studies could both be improved by learning from each other. They say economics is improved by an understanding of the cultures that underpin all financial institutions and activities, while cultural studies gain insights from a better understanding of the everyday economic activity that makes up the bulk of life.

There is a deep well of distrust between academics in the two fields because of their radically different approaches. But Lavoie and Chamlee-Wright show that the methodology of cultural studies can be applied to great effect in the field of economics. They apply a concept normally limited to different physical endowments to the world of culture: comparative advantage. They point out that some cultures are conducive to independent entrepreneurship, others to highly developed trust relationships, and yet others to habits of thrift. Rather than presenting different cultures as simply competing for allegiance or resources, "comparative cultural advantage" opens the possibility of gains from trade, a fundamental concept in economic discourse.

The role the media plays in shaping attitudes towards business in the United States is discussed. On fictional television shows, for instance, business people commit 40 percent of murders. While such distortions of reality can be seen as harmless entertainment, the authors argue that this distorted picture shapes public attitudes towards business, with direct consequences for public policy.

The authors also tackle the morality of the market. While many argue that markets are inherently immoral, and some that they are simply amoral, Lavoie and Chamlee-Wright make he case that profitable business enterprise is fully compatible with concern for ethical behavior.

Culture and Enterprise: The Development, Representation and Morality of Business