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Pp-economic constraint on multi-iculti2

SEPIO, U. Paris 1 - Mardi 19 octobre 2010, 16h, salle 17 - MSE, 106-112 bd de l'Hôpital, Paris 13e Revised, but still very preliminary, incomplete references
Objections and suggestions still most welcome! The economic constraint on multiculturalism: why Europe
should protect its Western institutional rules and values
(while avoiding racism and fascism)
Department of Institutional Economics, Prague University of Economics Abstract: In Europe, multiculturalism used to be welcome in the name of western
values of freedom and tolerance to diversity. But a growing controversy is now putting it in doubt. Some arguments against it are based on the values of patriotism and national identity. These, however, although able to attract strong emotions, are analytically weak, possible to reject as culturally relativist. Some non-relativist arguments build on the logical inconsistencies involved – such as tolerance of intolerance, or freedom for religions to oppress individuals vs. freedom of individuals. But the controversy is still far from settled. This paper brings in another non-relativist argument that takes into account the effects of cultures on economic performance. It starts with the well-known findings of institutional and developmental economics showing that cultures significantly differ in their effects on economies, and that the West grew rich largely thanks to certain ingredients of its cultures. It then examines in what ways these ingredients are now threatened by ingredients of other, economically less successful cultures, and by internal decay. To conclude, it briefly discusses properties of policies by which these key ingredients, without which the West would become poor again, might possibly be protected. But how to design and implement such policies is recognized to be a difficult question that is left open.
Acknowledgments: I thank the students of the course “Institutions, Evolution, and
Economic Policy” at the Prague University of Economics and the participants of the SNEEs 12th yearly conference in Mölle, Sweden, for helpful comments, and the Grant Agency of the Czech Republic for the support under grant 402/09/1991 for my research project on “Evolutionary Political Economy,” of which the last and so far the least advanced part is the topic of this paper. The usual caveat applies with emphasis. 1 Introduction
In Europe, multiculturalism used to be welcome without qualifications in the name of western values of freedom and tolerance to diversity. But a growing controversy is now putting it in doubt. Some of the arguments against it are based on the values of patriotism and national identity. These, however, although able to attracting strong emotions, are analytically weak, possible to reject as culturally relativist. Non-relativist, analytically stronger arguments refer to the logical inconsistencies involved – such as tolerance of intolerance, or freedom for religions to oppress individuals vs. freedom of individuals. But the controversy is still far from settled. This paper brings in another non-relativist argument based on the effects of cultures on the performance of economies. Compared to culturally relative values, economic performance is indeed a more tangible basis of arguments. To be sure, there may be disagreements on how the performance should exactly be measured. But most people appear to have little difficulty in distinguishing rich economies, where individual efforts are relatively well rewarded, from poor ones, where hardly anyone can escape misery. This distinction also clearly appears in the direction in which people try to vote with their feet. The argument draws on several well-known findings of institutional and developmental economics – in particular those by North and Thomas (1973), Rosenberg and Birdzell (1986), and Harrison and Huntington (2000) – which it combines with some of the author’s own views (Pelikan, 2010). Its basic claim is that cultures significantly differ in their effect on the performance of economies, and that the West grew rich largely thanks to certain specific ingredients – or, in Dawkins’s (1976) terminology “memes” – of its cultures. The paper examines the threats to these memes from memes of other, economically less successful cultures, and from own internal decay, and then raises the question of what policies may be devised to protect these key memes, without which the West would become poor again. Two broad strategies are found to be essential: imposing certain qualified constraints on multiculturalism, and making the western populations more clearly aware of how crucial for their continuing welfare these memes are. But how to design and implement such policies is recognized to be a difficult question that is left largely open. 2 How cultures influence the performance of economies
Consider the following features of an economy: (1) resource endowment, including human talents (potential rationality) (2) terms of trade with nature and other economies (3) formal institutional rules (codified law) (4) informal institutional rules (socio-cultural norms) (5) values (individual and social preferences) (6) actual bounded rationality (talents developed or inhibited by education) (7) ornaments: music, dances, food, dresses, art . Consider their classification into two intersecting sets: (I) factors of economic performance, containing features (1) – (6); and (II) memes, as ingredients of a culture, containing features (4) – (7). All the important links between cultures and economic performance stem from their intersection, that is, features (4) – (6), or, in other words, economically relevant memes. Their effects can be summarized as follows: (4a) on the transactions among actual economic agents (4b) on competition and selection, and thereby the qualities of the agents, and their adjustment to their roles (e.g., resistance or tolerance to “competence-difficulty gaps”) (5a) on individual objective functions (preferences, tastes) (5b) on standards of moral, honesty, truthfulness, trustworthiness (6a) on individual economic behaviors, the efficiency of using available resources (6b) on socio-political behaviors, relationships with others and with institutional rules But the remaining subsets remain important: not all factors of economic performance are cultural, nor all memes matter for economic performance. Undeniably, as usually considered, the performance of an economy also depends on its resource endowments and available terms of trade that have little to do with culture. Even formal institutional rules – meaning codified laws – are not directly cultural: they can be dictated or imported. For them however, cultures matter in two respects: (i) it depends on informal institutional rules to what extent they will be voluntarily respected, and how strong formal enforcement they will consequently require; and (ii) it depends on individual economic behaviors to what extent the potential of formal rules – for instance, extended economic freedoms – will actually be exploited. Note that in standard analysis, where all individuals are assumed perfectly rational, always exploiting to a maximum whatever opportunities are offered to them, respect (ii) is overlooked. This makes this analysis unable properly to explain the well-known fact that the same institutional rules may lead to substantially different results in different economies. The present use of the term “meme” calls for a clarification. Its main advantage is its shortness. It is also becoming increasingly popular among social scientists (e.g., Blackmore, 1999, Blute, 2010). But care must be taken not to see in it an analogy to the concept of “gene” – contrary to what Dawkins (1976) had in mind. To recall, he defined “meme” as any unit of cultural ideas, symbols or practices that are being transmitted, and thus “replicate,” from one mind to another. Memes and genes thus only share the abilities to replicate (to which Dawkins limits his attention), but may substantially differ in how they instruct the organizing and operating of their bearers. While all genes instruct, through the synthesis of proteins, the forming and working of organisms, only some memes can be said to instruct the forming and working of economies and societies. Memes thus logically correspond to any segments of DNA, all of which replicate, but only some instruct, and only some of these are genes. It is thus only the economically relevant memes, belonging to the above categories (4), (5) and (6), that can be said to instruct the development and working of economies. Here, however, this comparisons with biology need not be pursued any longer. It suffices to note that a culture is understood as a set of memes, partitioned into two subsets: economically relevant, or “instructing,” and economically irrelevant, or “ornamental” (Pelikan, 2010). The former memes are those that influence the above-listed factors of economic performance – that is, informal institutional rules and individual economic behaviors. They may be exemplified by respect for property rights, sense of fairness, value of knowledge, business ethics, truth-telling, trust, propensities for corruption, and ways of dealing with conflicts. Examples of the latter memes are national costumes, food, music, Admittedly, the boundary between the two subsets may not be entirely clear, and may have to be shifted in light of new discoveries. For instance, some memes that at first appear purely ornamental may turn out to have significant effect on economic performance – such as food diets that may turn out to affect health and longevity, or religious rituals that may turn out to disrupt production. Where precisely to draw the boundary is therefore to some extent an open question. Its main lines, however, appear clear enough to make it useful in search of the limits of admissible multiculturalism. 3 Economic differences among cultures
That there is a great variety of cultures that have been invented in, and spread across, different human societies is rather obvious. Less obvious is how to classify them into well- defined types and sub-types. This is indeed a difficult question which only competent anthropologists, ethnographers and sociologists might properly answer. Fortunately, however, no comprehensive typology of cultures is here necessary. As the present interest is limited to their economically relevant memes, it is possible to classify several otherwise quite disparate cultures into one category, provided they do not significantly differ in these memes. It is also such a category that the term “western cultures” here denotes. The adjective “western” is therefore symbolic, rather than geographic: the category may thus include some cultures from the east and exclude some from the west. The category is also strongly idealized. All of its economically relevant memes are defined to have a “good” form – meaning one that allows them to help a given economy as much as possible to perform well in given environments. Probably no real-world culture may qualify to be its full member. It is rather that different cultures may acquire different degrees of membership. This makes it also possible to accommodate the frequent objections that the empirical dividing line between economically favorable and economically unfavorable cultures does not cut between geographical west and geographical east: some Far East cultures now clearly appear economically more favorable, and thus members to a higher degree of what is defined here as “western cultures,” than some South-European cultures. The question then is, why to call this category “western”? Good reasons appear possible to find in history. As can be understood from North and Thomas (1973) and Rosenberg and Birdzell (1986), most of the good memes have their origins in Western Europe, and some of those needed for realization of technological innovations and the development of industries more narrowly in its northern parts. To identify and list all the good memes is of course impossible – not only because of the lack of space in this paper, but because not all of them are fully and reliably known. Modern institutional economics has undoubtedly answered many questions about them, but even more questions still remain to be answered. Here it is possible only to offer a very rough, incomplete, and possibly not even entirely correct sample, which appears possible usefully to order with the help of the four above-listed categories of economically relevant The main common property of good (4a)-memes appears to be that they minimize transaction costs. They can be exemplified by highly respected property rights, strong informal pressures for truth-telling and the fulfillment of explicit and implicit contracts, and social norms for solving conflicts in calm by peaceful negotiations. It is about this category that modern institutional economics has learnt most. The good (4b)-memes are all those that help the economy to select the right persons for the right positions, and thus organize efficient, flexible, and to productive innovations open markets, firms and industries. Examples are social norms for fair competition together with strong informal incentives for taking part in it, including public appreciation of the winners and maintained dignity for the losers. Human rights with extensive individual freedoms also appear to be of prime importance in this context. The economic impact of (a2)- memes is much less explored than the one of (a1)-memes. To learn more about it, institutional economics and the economics of industrial change would have to cooperate with each other more closely than they have done so far. What the good (b1)-memes should do may be described only very approximately, with many open questions. It appears safe to say that they should make individuals seek some of their happiness in enriching themselves while also enriching, and not impoverishing, others. But this also requires tolerance to others’ enrichment. The problem is that the wealth of one person often appears to have negative external effects on the happiness of other persons – because of feelings that may be called “social justice,” “relative status,” or just “envy.” As is now being discovered in the new field of behavioral economics, such feelings are widely spread across all cultures. But industrial dynamics and economic development cannot work without relatively large differences in wealth and income. One task of the good (b1)-memes must therefore be to maximize the tolerance to such differences, especially if these are due to differences in merits rather than chance. Note that the well-known Ultimatum games only indicate people’s tolerance to the latter, but not to the former. Among the good (b2)-memes, perhaps the most important ones are those that lead individuals to rational reasoning based on facts, rather than superstition or blind faith, to corresponding education for themselves and their children, and to search for scientific knowledge, in both the natural and the social sciences, as well as – and here is a key historical advantage of the West – for practical applications of this knowledge. As admitted, all this may be only a very incomplete and very inaccurate description of the memes thanks to which the western world “has risen” in the words of North and Thomas (1973), and “grew rich” in the words of Rosenberg and Birdzell (1986). But whatever their correct and precise description might be, they must be recognized to exist, be valuable, and 5 The two main dangers
To think of any defenses, it is important first to realize the dangers. Those that threaten the good memes of the western culture can be divided into (1) exogenous, coming from economically inferior memes of other cultures, and (2) endogenous, coming from own Much of type (1) danger is connected with the immigration of labor from poor countries. While economists usually limit attention to the positive effects of its quantity, it sometimes also brings with it some economically relevant memes which are among the prime causes of the poor countries’ poverty. Examples are low respect for property rights, great differences in loyalty and trust between insiders and outsiders of families, reason-blackening hatred of other religions and cultures, rules of honor that foster lasting inter-family conflicts and/or intra-family oppression, soft constraints on corruption, and hard constraints on education opportunities for women, which both waste their talents and lower the quality of The tendencies to internal decay appear to have two main sources. First, probably in all cultures, the inter-generation copying of memes is typically far from perfect. As has often been observed, young generations are not always very willing to adopt the memes from their parents without more or less extensive modifications (“mutations”) – although, as has also been observed, they typically end up by departing from their parents’ memes less than they The second source is more specific to the western culture. The very prosperity to which this culture has lead appears to have on many young westerners negative effects. Many of them appear to take the prosperity for granted, which tends to decrease their motivation to educate themselves and engage in productive activities, and to turn instead to unproductive leisure, in the worst case combined with drug addiction. These tendencies may be strengthened by the increasing dependence of economic prosperity on complex technologies, with increasing demands on education and talents, that more and more of today’s young westerners appear to find difficult to meet and/or not be worth their interest. As some of these uninterested and/or uneducated young people are children of immigrants, the two dangers may cumulate, increasing the strength of each other. 6 What policies may help?
First, it must be soberly admitted that the search for feasible policies that could effectively defend the economically advantageous memes of western cultures might be vain: such policies may no longer exist. Perhaps, human societies are doomed by evolutionary forces working above their heads to repeat periods of enlightenment and relative prosperity with periods of dark ages and widespread misery. But it would be foolish to give up the defense too early. So, even without any illusions about the chances of success, the search is still worth conducting, and is in fact the only hopeful strategy actually to adopt. The policies sought should fulfill two main tasks: (1) to impose certain qualified constraints on multiculturalism, and (2) to make the western populations in general, and the Europeans in particular, more clearly aware of how crucial for continuation of their relative welfare certain memes of their cultures are. The first task is a delicate one. The main difficulty is, how to design and enforce any constraint on multiculturalism while steering clear of all forms of fascism and racism, which would violate many of the very values that the constraints are intended to protect. It is indeed an unfortunate paradox that many of the actual defenders of western civilization are not very civilized themselves, while most of the more civilized part of the western political spectrum, because of false political correctness, entirely avoids the problem. In search of the constraints, the key is the above-introduced boundary between economically relevant and ornamental memes. The constraint may, and indeed must, be limited to the former. To welcome ornamental multiculturalism is indeed one of the conditions for avoiding fascism and racism, and for minimizing any feelings of hostility that such constraints may arise. Another necessary condition is to adopt a strictly individualistic approach to immigrants, not to discriminate against the many of them who are keen to learn and adopt the economically relevant memes of the host country. The policies for realizing the constraints would probably have to focus more on education than interdictions – although the two may have to be combined by interdicting education programs that impair, rather than develop, critical rational thinking, and by obliging all immigrants who wish to stay to let their children get the full western education, including biology and sports for girls. But the exact form of such policies is far from clear. It is important to emphasize that the constraints are religion-neutral. While they may have to soften the religious commandments that blatantly violate economic efficiency, such as the interdiction of loans with market determined interest, even this is largely religion-neutral: such an interdiction exists in most of today’s main religions, differences only are in the ways developed to get around it. Although some religions may appear to be more conducive to literacy, initiative, work moral and rational economic calculus than others, there is no deterministic link. For example, to make a little allusion to Max Weber, one definitely need not be Protestant to be a highly productive member of a western economy. Education also appears to be the main ingredient of the defense against internal decay. A major part of the problem is that far from all Europeans understand the fundamental dependence of their relative prosperity on the western institutional rules and values. But to a large extent, this is also the fault of modern economic research. Only a small part of it may be seen to search for a good understanding of this dependence, and only few of the results obtained so far are sufficiently clear to help the education of European voters and politicians. To search for more of such helpful results is thus one of the socially most useful tasks which economists should put high on their agenda. References (very incomplete!):
Blackmore, S. (1999), The Meme Machine, Oxford University Press: Oxford. Blute, M. (2010), Darwinian Sociocultural Evolution, Cambridge University Press: Cambridge. Dawkins, R. (1976), The Selfish Gene, Paladin: London. Harrison, L.E and S.P. Huntington (2000), Culture Matters: How Values Shape Human North, D.C. (1990), Institutions, Institutional Change and Economic Performance, Cambridge North, D.C. and R.P. Thomas (1973), The Rise of the Western World, Cambridge University Pelikan, P. (2010 online and forthcoming), “Evolutionary developmental economics: how to generalize Darwinism suitably to help comprehend economic change,” Journal of Rosenberg, N. and L.E. Birdzell (1986), How the West Grew Rich, Basic Books: New York.


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