how do differences of culture — however defined — interact with traditional economic mechanisms involving prices, incomes, and simple comparative statics? Are those competing explanations, namely cultural vs. economic? Ought they to dovetail nicely in some kind of broader explanation? Or might the cultural factors in some manner be “reduced” to questions of more traditional economics? Some combination of the above? Something else altogether? And, from among these and other options, what principles of differentiation rule how “culture” and “economics” will be related in a particular problem?
That to me is the most important unsolved problem in economics and indeed in social science more broadly.
1. I do not think that problems get “solved” in economics the way that they do in physics. We come up with interpretive frameworks, the way that historians do. Some of our frameworks, like supply and demand in microeconomics, seem pretty robust. Others are flimsier and faddish.
2. My current definition of culture is: socially communicated thought patterns and behavioral tendencies.
3. Economic behavior fits within this definition of culture. There is plenty of social communication involved in determining how people conduct themselves in markets.
4. There is tension here, in that a lot of our interpretive frameworks start with very individualistic assumptions. People are presumed to make their own choices, given the opportunities and constraints that they face.
5. The individualistic models get you somewhere when the other cultural factors are held constant. Fix the country and look at narrow slices of time and specific industries, and you have a good chance using ordinary economics. But a lot of interesting questions (why did different countries achieve what McCloskey calls The Great Enrichment at different times? why is southern Italy poorer than northern Italy? why did mortgage securitization balloon and then collapse? why is labor force participation declining?) are affected by cultural factors that differ across time and/or location. That’s when standard economics alone falls short.
Or how much culture and economics is geographic, along the lines of Diamond. Historians do solve some problems thanks to archaeology. Yes, individuals are reticent to give up their favored frameworks, just look at those who predicted hyperinflation from recent Fed policies. Science often advances one funeral at a time, yet it advances. (We better hope we don’t discover immortality or we may end up stagnating.)
“2. My current definition of culture is: socially communicated thought patterns and behavioral tendencies.”
Can we agree that “socially communicated thought patterns and behavioral tendencies” are expressions (in a social context) of individual motivations?
If so, perhaps we can agree that where there is sufficient commonality (in kind and degree) of individual motivations, in particular circumstances, a culture will form.
This may not be too different from observations of the Petri Dish where the medium (agar, e.g.) compares to the social and physical circumstances.
That would tend to support:
“. Economic behavior fits within this definition of culture. There is plenty of social communication involved in determining how people conduct themselves in markets.”
“why did different countries achieve what McCloskey calls The Great Enrichment at different times?. . . ”
perhaps the work of Emmanuel Todd offers us some clues, if we investigate how individual motivations are formed and develop in differing social structures; and, follow Alan Macfarlane’s work in tracing the appearances and roles of individuality (“Individualism”), capped with some Oakeshott on the rises and recessions of individuality as the nations of Europe formed.
“why is southern Italy poorer than northern Italy?. . .” Try Edward Banfield.
But, it is all fascinating.
AND –
Individual choices will be highly colored by what the individuals are exposed to, and the messages about it from in-groups and out-groups. This is especially true in markets thick with choices, which are difficult to ennumerate let alone understand.
So, overwhelmed by an open ended choice like “what car to buy?” a person who sees “all of my friends have Ford or Chevy pickup trucks, go look at those” has not lost their individual freedom, but had it constrained by information limits.
Seems to me a great deal of “market forces” lit and arguments miss those constraints…. (And great deal of marketing is devoted to creating those pre-decisions…)
AND –
” 4. There is tension here, in that a lot of our interpretive frameworks start with very individualistic assumptions. People are presumed to make their own choices, given the opportunities and constraints that they face.”
Choices are made amongst the alternatives available or that can be “shaped.”
That applies to the selection of particular “markets” by particular participants. We go to the markets we have with the participants
that exist and also so chose.
We have just observed a wide public reaction to dissatisfaction with the way available choices are to be determined by “establishments;” one of the failures of those who “would be” (but are not) “Elites” to control the determinations of available choices.
There will always be limitations on the choices available. It is important to understand how, by whom or by what forces limitations are determined.
Read your excellent “confessions” book and even paid for it, it was quite good, direct, to the point. But now you’re sounding like a defensive social scientist: “There is tension here, in that a lot of our interpretive frameworks start with very individualistic assumptions. People are presumed to make their own choices, given the opportunities and constraints that they face.” – bring back the old Arnold Kling. 😉
“I do not think that problems get “solved” in economics the way that they do in physics. We come up with interpretive frameworks “.
Perhaps we can argue that problems in economics do get “solved” from the perspective of the different conceptual frameworks? For example, the problem of what determines income distribution has not been solved the way a problem in physics gets solved, Nevertheless, neither a libertarian nor a Marxist would consider it an unresolved problem: the libertarians are confident they have solved it and so are the Marxists. However the problem has been “solved” in one way in the libertarian conceptual framework and in another way in the Marxian framework. And both are convinced their favored solution is not just one among various possible solutions but THE solution!
Incidentally, even McCloskey, who introduced economists to rhetorical analysis and insists that knowledge, even in physics, is always tentative, small-k knowledge, writes as if she has discovered THE solution … big-K knowledge … to the origins of Industrial revolution. She may agree with you that “We come up with interpretive frameworks ” but she does not say ” I provide one interpretative framework for the origins of the industrial revolution” ; she is confident she has found the one and only valid solution