Is economics just the study of a sterile world populated only by numbers and charts? Those who think so forget that behind the models, calculations and data are human beings with beliefs, habits and histories.
In this new Cato Institute book (co‐published by Routledge) two economists argue for an economics that takes into account the important role of culture in a nation’s economic development. Cultural factors, while not quantifiable like interest or savings rates, nonetheless exert an enormous influence on whether or how a nation achieves prosperity. Culture matters.
Authors Don Lavoie and Emily Chamlee‐Wright argue that economics and the field of cultural studies could both be improved by learning from each other. Economic insights are improved by an understanding of the cultures that underpin all economic institutions and activities, while cultural studies gains insights from a better understanding of the everyday economic activity that makes up the bulk of life for the vast majority people.
Lavoie and Chamlee‐Wright show that the methodology of cultural studies can be applied to great effect in economics. A concept normally limited to different physical endowments or abilities — comparative advantage — is applied to culture. Economists have shown how comparative advantage is the key to understanding the greater productivity of exchange and the division of labor. The authors of Culture and Enterprise point out that comparative cultural advantage offers similar opportunities for mutually advantageous exchange: some cultures are more conducive to independent entrepreneurship, others to highly developed trust relationships, and yet others to habits of thrift, entailing gains from specialization and exchange. 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 book includes a discussion of the role the media plays in shaping attitudes towards business in the United States. In the world of television, for instance, 40 percent of murders are committed by business people. While such grotesque distortions of reality can be seen as harmless entertainment, the authors argue that this distorted picture shapes public attitudes towards economic enterprise, with direct consequences for public policy.
The book concludes with a discussion of 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 the case that profitable business enterprise is fully compatible with concern for ethical behavior.