The Economic Decoding of the Phenomenon of Culture Based on the Antientropic

Formation and Ranking of Human Ends: Definition, Formation and mpact

Paul Fudulu
A!stract: The phenomenon of culture is about a layer of representative emerged
preferences and rules, in the sense of being unintended or non-designed, that are causal
in shaping the characteristic behavior of human collectivities. Consequently, the crux of
the economic understanding of culture and its consequences is the unintended or non-
designed formation of preferences and rules, which falls under the guidance of the same
fundamental causal principle that governs the comprehensive identification and ranking
of human ends: t is the ob!ective antientropic formation of human ends that underlies
the formation and evolution of cultures. "gainst all odds, both the formation of human
ends and the formation of cultures are economic phenomena.
"# ntroduction
This study is not the kind of work that draws upon previous efforts of economic
science to understand and adopt a phenomenon which is hard to understand by its very
nature, like culture. On the contrary, it is about how Western-inspired orthodox economic
science, which failed on other fundamental topics, cannot model a phenomenon like
culture. This paper will show that the economic understandin of culture must be based
on a transcultural perspective that the prevailin economic science has never taken, and
on fundamental concepts and theories about phenomena that orthodox economists have
avoided because of their assumed unknowable nature or because of roundless hope that
knowlede about those phenomena is the burden of some other social sciences.
!onse"uently, part # of this study, The $tatus %uo& 'o (conomic )ecodin of
*undamental +nthropoloical Terms and (rrant ,nderstandin of *undamental *eatures
of !ulture, emphasi-es the lack of even minimal effort to decode, in economically
meaninful ways, terms used in definin culture, as well as economists. failure and
reasons for correctly identifyin the nature of culture. /art 0, The $tatus %uo&
*undamental *eatures of !ulture 1nored, deals with features of cultures which
economists have inored even thouh they are vital to a correct understandin of culture.
/art 2, The !ause of !onfusion in ,nderstandin !ulture& *undamental *ailures of
Orthodox (conomic Theory, takes up the problem of concepts and phenomena that
economic theory has abandoned or misconceived, and without which the economic
definition and understandin of culture are ruled out. /art 3, The 4asis for the (conomic
,nderstandin of !ulture& The +ntientropic *ormation of (nds, /references, and 5ules,
introduces in a very brief way the true nature of ends, preferences, rules, and institutions,
and the causal principles of their formation. +ll of these theoretical elements are
conceived from the eneral power perspective, which 1 have been developin for more
than twenty years6and the results of which the prevailin orthodox economists have
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constantly re8ected, with one exception.
7
1t is based on these new definitions and
principles that in /art 9, +n (conomic )efinition of !ulture, 1 introduce an
economically meaninful definition of culture and comparatively assess its ability to
capture the features of culture as they have been revealed by anthropoloists. /art :, +n
(conomic Theory of !ulture *ormation and 1ts 1mpact on (conomic /erformance,
rounds the primordial role of culture in determinin the economic performance of
human collectivities and conceives an economic theory of culture formation that draws
on the antientropic formation of ends, preferences, and rules. The final /art ;,
!onclusions, reveals conse"uences that, to an orthodox economist, cannot but be
surprisin.
$# The %tatus &uo: 'o Economic Decoding of Fundamental Anthropological Terms
and Errant (nderstanding of Fundamental Features of Culture
4efore sayin anythin about the definition and nature of culture, 1 have to make
clear what 1 do not mean by culture in this paper. 1 leave aside all the meanins of culture
which, althouh important for some research interests, are not in any way directly related
to the differences in behavior of human collectivities, especially in terms of their
economic performance. 1 especially exclude culture as a social sector that produces
ob8ects of art and culture as nonbioloical transmissions of information between
enerations. 1n other words, here 1 use the anthropoloical meanin of culture.
1f 1 had to assess economists. knowlede about culture 1 would sharply distance
myself from a relatively recent assessment which runs& 1n spite of the attention that has
been paid to culture in social sciences over the centuries, we are still no closer to an
unambiuous, widely accepted definition of the term. !onceptuali-ations of culture vary
across disciplines, between schools and simply between authors <4euelsdi8k and
=aseland, #>77?. This assessment errs by treatin anthropoloists and economists alike,
between whom there are reat differences in terms of the ability to understand, define,
and identify the features of human cultures. @eavin aside exceptions in the ranks of
anthropoloists <1 do not know anyone notable in the ranks of economists?, most
anthropoloists have a "uite accurate understandin of culture, while economists have
wholly meaninless definitions, poor or flatly wron understandins of some important
features and are inorant of other fundamental features <as revealed by anthropoloists?,
which have very important conse"uences for the eneral understandin of the
phenomenon and its expected economic impact. The root cause of all of those
economists. failures is a theoretical perspective which does not o into enouh depth and
width and, correspondinly, lacks even the conceptual apparatus to depict and understand
the subtle and comprehensive phenomenon which culture is.
The first symptom of this situation is the absence of even the least effort to
decode anthropoloical definitions, which have no meanin to economists. 1f properly
decoded in economic concepts, Aluckhohn.s definition of culture as patterned ways of
thinkin, feelin and reactin, ac"uired and transmitted mainly in symbols <7B37&;9?,
Ceert-.s definition of it as an historically transmitted pattern of meanins encoded in
symbols <cited in Don, #>>B&9?, and Eofstede.s visible manifestations of culture
7
On the 5ationality of 1mmiseratin !oercion <with 5oer ). !onleton? in #ournal of $conomic
%ehavior and &rgani'ation, Duly 7BB9, 700-709, ,niversity of $outhern !alifornia, @os +neles, ,$+.
- # -
consistin of values <as desired rather as desirable?, symbols, heroes, and rituals or his
statement that !ulture is to a human collectivity what personality is to an individual
<Eofstede, #>>7&7>? are not different conceptuali-ations but different descriptions
<usin mostly synonymous words? of the same social phenomenon.
$ince patterned ways of feelin and reactin cannot but be about values
<preferences? and rules, patterned meanins cannot but be about values, and values and
rules are fundamentally perfectly similar rankins of human ends, althouh measured on
two coordinates which differ in nature <satisfaction or benefits and, respectively, costs or
sacrifices?, all of the above-"uoted anthropoloists have the same understandin of
culture as much as the definition is contained in those components. 4ut the other
components of the definitions support the same idea. The symbol component in
Aluckhohn.s and Ceert-.s definitions is perfectly matched by values as desired <as
opposed to values as desirable? in Eofstede.s definition. $ymbols make the ob8ects,
actions, or ends they suest rather discreet and so discourae debates or open, direct,
explicit exhibitions of values. +s such they are techni"ues to keep away from values as
bein desirable, which for some <moral, ideoloical, political? reasons move the
description away from facts.
(conomists. understandin of those definitions of culture as descriptions of the
same social phenomenon is precluded by the absence of any economic definition, or the
existence of only tautoloical definitions, of preferences and rules, plus the inability to
account for emered or non-desined rules and institutions, which are the most
fundamental and important of all. To my knowlede there is not one sinle instance or
example in the whole orthodox economic literature, Eayek included, of how a rule can
emere and uide behavior without human intentional desin and third party
enforcement. +dd to this economists. inability to conceive sound theories of ends and
preferences <values? formation, and then why wonder that all they were able to do was to
move from meaninless anthropoloical definitions to unworkable economic definitions
of cultureF
#

=ovin now to more detailed descriptions of culture, 1 will describe economists.
lack of understandin in two ways. The first is to show that fundamental ideas about
culture, which were issued by anthropoloists, have been taken wron by economists or
have simply been defied without any reason6except maybe the desire to accommodate
the conception of culture to their own economic theories. With reard to the idea that
culture differentiates one collectivity from another, althouh most anthropoloists would
aree with it, there is nothin in their work that would warrant economists. understandin
that culture has the purpose of differentiatin collectivities <Throsby, #>>7? or buildin
up collective identities <4euelsdi8k and =aseland, #>77&70?.
#
What could an economist make of the followin two definitions& <7? Gwe define culture as those
customary beliefs and values that ethnic, reliious, and social roups transmit fairly unchaned from
eneration to eneration <Cuisi, $apien-a, Hinales, #>>9&#0?, and <#? Gwe loosely define culture as
those behavioral and ideational structures that are deemed essential to the constructed identity of a
community <4euelsdi8k and =aseland, #>77&70?F Eow could terms like customary beliefs or
ideational structures be used in economists. choice models, which should predict behavior in various
human activities or social sectorsF Eow could those definitions support economic models that can account
for the hue and very real differences in economic performance across epochs and countriesF
- 0 -
*or instance, Iandenberhe <#>>0? accepts that culture as the totality of human
products conditions the existence of humans,
0
and that culture in this comprehensive
sense exists only in plural. !onse"uently, culture differentiation is intimately connected
to human existence and as such to the causal principle of the ob8ective phenomenon of
life enerally. (conomists, as much as they consider themselves scholars and,
conse"uently, keep away from any mystical stance, must consider life an ob8ective
phenomenon of the universe and as such connected to its more comprehensive causal
principles. Jet economists are completely silent on this topic because, consciously or not,
they have replaced ob8ective causality with human ideals, as Ieblen noted as early as
7;B;. 1t is here where we have to start our "uest for a sound understandin of culture, and
it is also here where a theory of values <preferences? formation, which conditions a sound
understandin of culture, has to start. +nticipatin in brief one of the basic ideas of this
paper, economists should start their intellectual endeavor by acknowledin the
antientropic nature of life <as defined by the reat physicist $chrodiner? and, in this
particular case, acceptin that differentiation of human cultures and human values
enerally are means to maximi-in humans. antientropic control. +s a conclusion on this
issue, for human collectivities, differentiation of cultures is a means and not a purpose in
and of itself.
4ut economists went furthest in the wron direction reardin what is perhaps the
most fundamental feature of culture, which is stronly connected with other very
important features revealed by anthropoloists. With 'orth <#>>3?, Don <#>>B?, and
others, culture is located in the realm of means
2
or instruments to reduce poverty and
increase efficiency in terms of <absolute? wealth. The loic is that of transaction costs&
With common cultural values predictability and mutual trust increase and, conse"uently,
transaction costs decrease and economic rowth is enhanced. This economic idea about
culture errs on two rounds. *irst, culture is about human values and values ultimately
rank human ends. 1f economists like 'orth and Don are riht, either culture is not about
values or it is about values but all human ends can be s"uee-ed down to only the
meaend of <absolute? wealth. 1n other words, culture can value or rank anythin except
wealth, which must be an invariable transcultural human meaend.
3
This idea is not
backed by social reality and would be denied by many solid scholars.
4ecause most economists accept anthropoloists. idea that culture ranks human
ends or is about values, economists. escape should be in the realm of human ends.
,nfortunately, lon ao economists abandoned the issue of human ends, includin their
taxonomy. !onse"uently, their knowlede in this reard should be based on other social
scholars. authority such as anthropoloists, socioloists, and philosophers. To their
disappointment6and this is the second round on which the idea of culture as a means to
0
Without humans there is no culture, but without culture there are no humans either <Iandenberhe,
#>>0&29#?.
2
$ome anthropoloists such as $windler <7B;9? have taken this stance. 4ut $windler, who sees culture as a
tool kit from which people construct strateies of action, is flat wron with reard to her fundamental
hypotheses. *irst, her example about the ethos of /rotestantism that outlived /rotestantism is based on an
errant conception of reliion. 5eliion uses Eeavenly beins and facts but is essentially a special
description of (arthly social systems and as such of human ends. +fter a reliion perishes, human ends stay
and are expressed some other way. $econd, there cannot be end-neutral tool kits or strateies because
these very tool kits are derived from the nature of ends.
3
1t is ironic that economic theory, which emered as a science due to cultural evolution consistin of an
increasin weiht for the meob8ective absolute wealth, ended up in neatin any cultural evolution.
- 2 -
poverty reduction is flawed 6 althouh none of those roups developed a precise
taxonomy, they would all aree that besides absolute wealth there are other human ends
<and they mean e"ual substitutes? such as approval and status or, in short, relative power.
The implication is dramatic and orthodox economists seem to have sensed that. 1f culture
values or ranks human ends, and human ends are more comprehensive than absolute
wealth, then absolute wealth is also ranked. +nthropoloists sinled out this
comprehensive feature of culture,
9
and it is no coincidence that this is one of the features
of culture economists have inored without exception. !ulture values all human ends or
interests. 'othin is left unranked includin <absolute? wealth.
The dramatic character of the precedin idea stems from the fact that different-in-
nature human meaends entail different maximi-in principles or different behaviors and
as such different economic principles or theories. !onse"uently, different cultures entail
different economic rationalities. 4y the same tken one sinle type of economic
rationality or one economic theory e"uals inorein the hue differentiation of cultures
whose populations. behavior has to be explained and predicted. +nthropoloist
Eerskovits <7B9>? was riht on taret when, durin his dispute with Aniht, he chared
orthodox economists with what would be a kind of Western ethnocentrism& We are
tempted to consider as rational the behavior that represents only the typical reactions to
be expected of those who order their lives in terms of the economic systems of (urope
and +merica <7B9>&#2?.
Aniht.s response consisted of an idea that had already become a basic orthodox
economic idea& (conomic principles are valid for all human ends and as such The most
eneral principles are not different in different cultural situations6exactly as the
principles of mathematics are not different <in Eerskovits, 7B9>&37>?. 1n order to
disprove this idea, this time 1 leave aside the purely theoretical arument about the fact
that that the orthodox idea defies the causal relations between ends and means, which are
not at all theoretical but concrete and specific. This time 1 present two forceful examples.
*irst is 4ecker.s <7BB9? fundamental hypothesis of market e"uilibrium as a fundamental
component of his economic approach, which he claims to have eneral validity. The
institution of a market is characteri-ed by relative power e"uality. Within a sound
theoretical perspective on institutions, which are defined as patterned opportunity costs of
the meaends absolute wealth and relative power <*udulu, #>>0?, the institution of a
market makes only the meaend absolute wealth available since the opportunity cost of
relative power is infinite <relative power e"uality makes it impossible to exercise any
relative power?. !onse"uently, 4ecker.s economic approach draws upon the behavior
derived from only one human meaend. 1t is for this reason that, when his approach is
used to explain social activities that are heavily marked by cultural variation, implicitly
variation in the nature of human <mea?ends, its explanatory power is neliible <see
1annaccone.s and his followers. application of the 4eckerian economic approach to the
study of reliion?.
The second example is based on my personal research on the economic decodin
of reliious domas <*udulu, #>7>?. 'ot surprisinly, Weber is a point of reference, but
my model of the economic understandin of reliion is "uite different. One of my
9
(liot leaves no doubt about the reality of this all-inclusive feature of cultures& The cultures of various
collectivities determine their whole way of life, from birth to the rave, from mornin to niht and even in
sleep <cited in Iandenberhe, #>>0&29#?. +nd Eofstede <#>>7&7;? talks about culture.s all-encompassin
influence on our mental prorammin.
- 3 -
conclusions is that those followin the 4eckerian economic approach <especially
1annaccone? are fundamentally not so different from Weber, whom they do not "uite
understand and about whom they are very critical. 1n a way Weber.s comparative
analysis of /rotestantism <in his The (rotestant $thic and the )pirit of Capitalism?,
especially in relation to !atholicism, has strikin similarity to Aniht.s stance, which had
become and has stayed a characteristic component of orthodox economics, includin the
4eckerian economic approach. Aniht considered economic behavior as a normative
ideal <in Eerskovits, 7B9>&37>?. Within his theoretical framework various culture
settins can only account for various departures of actual behaviors from the ideal
behavior. The implication is that cultures are not different human rationalities derived
from various human meaends, as with Eerskovits, but that cultures are responsible for
the various real derees of rationality. +nd because what Aniht considers ideal behavior
is in fact *estern behavior derived from the Western ideal meaend of absolute wealth,
the ideal rationality is the Western type.
With Weber the /rotestant reliion was conducive to hiher economic
performance by /rotestant populations because of its hih deree of intrinsic rationalism.
The other reliions, except maybe Dudaism, possessed lower levels of rationalism and as
such were not as favorable to the adoption of a capitalist system or the formation of a
sound economic rationality. +lthouh the reat world reliions analy-ed by Weber are
ood proxies for the cultures of the respective populations, 1 would part company with
=aseland who sees Weber as the father of the culture and economy debate <in de Don,
#>>B&77?. 1n a very strict sense Weber does not see reliions as cultural expressions
because various reliions do not embody various human meaends. The criterion of his
analysis was the ideal reliious rationalism of /rotestantism and all doma components
of /rotestantism are consistently shaped by the Western ideal meaend of absolute
wealth. This is the 8unction between Aniht.s and Weber.s perspectives. +nd it is
because of this strikin similarity between the two conceptions that provin wron one
entails revealin the errant character of the other.
=y research on the economic decodin of reliious domas assumes that, in a
way similar to cultures, reliions express specific rankins of the human meaends.
+ccordinly, for each reliion each doma component should contain a type of
rationality derived from its specific mix of meaends. The result was stunnin& Without
exception, for each reliion each doma component proved to contain a type of
rationality described by specific values and rules, which perfectly fits its specific mix of
meaends. *or instance, both the !atholic believer.s behavior and the !hinese 8ude.s
practice to 8ude not based on rules but case by case <which Weber disapproves and
presents as cases of low rationalism?, are perfectly rational when absolute wealth ceases
to be the only assumed meaend, and relative power, the other comprehensive human
meaend, has no neliible weihts. 1n other words, when the variation in human ends is
taken into account, the various real human behaviors, reliious or not, prove to have no
difference in terms of the level of rationality. !onse"uently, there is no ideal economic
behavior because there is no ideal mix of human ends except in relation to a specific
culture, which cannot but be one of the very many. Or, if one en8oys playin with words,
there are as many ideal economic behaviors as there are cultures in this world.
)# The %tatus &uo: Fundamental Features of Culture gnored
- 9 -
With respect to the second way of showin economists. lack of understandin of
the phenomenon of culture, 1 present important features of cultures which are almost
unanimously accepted by anthropoloists but are wholly inored and even implicitly
denied by economists.
The first feature of this kind is that described by Eofstede <#>>7&9? by separatin
values as the desired from values as the desirable. The purpose is to et as close as
possible to describin the real behavior of collectivities. +voidin desirable values e"uals
avoidin ideoloy that distorts understandin of real behavior.
:
The idea that culture is
about values as the desired corresponds to what in economic theory should be emered
preferences and rules, that is, patterns of behavior that appear not by intentional desin
but out of thousands of ordinary choices that individuals make in their day-to-day life
when contemplatin a myriad of alternative actions and ob8ects. Those rankins <in terms
of benefits or sacrifices? derived from ordinary choices become values and rules because
time and aain in invariable choice situations the same behavioral solutions are chosen.
1ndividual behaviors seem invariably valued or ruled because similar choice situations
produce invariable decisions. Orthodox economists lack the conceptual apparatus to
understand the emerence of values and rules and, conse"uently, avoid those real facts.
4ecause all they can tackle are created or debated values, rules, and institutions6and
they have no theory of values <preferences? and rules formation6they cannot imaine
culture as a non-desined fact.
Two relatively recent books on culture written by economists <de Don, #>>B and
4euelsdi8k and =aseland, #>77? contain this errant idea of culture as humanly desined
or intentional
;
fact. To Don <#>>B&;? this idea seems so natural that he even cites
)i=aio without noticin that in that particular "uotation )i=aio was referrin to
hih culture or culture as the social sector associated with ob8ects of art created by an
elite <which has features opposite to culture as representative values for a collectivity?.
=ost economists who study and write about culture seem unprepared to separate a
human-made fact from a human-desined one. Eayek insisted on drawin attention to
social phenomena like rules which are a result of human activity but not a result of
human intentional desin. Jet without sound fundamental hypotheses and a specific
theory to show how exactly rules emere, the impact of his ideas seems to fade away.
There are two conse"uences of confoundin human-made facts with human-
desined ones. The first consists of omission, which economists seem to do too often
when they read anthropoloical definitions of culture. They neither notice nor account for
the almost constant presence in the definitions of culture of the term symbols. $ymbols
are a techni"ue to transmit, in a kind of secretive way, values and rules that describe
behavior as it is and not as it should be. One lesson of human life seems to be that open,
explicit transmissions of values and rules that conflict somehow with what moral,
ideoloical, and political authority hold should be avoided.
:
Eofstede writes <#>>7&9? The desired relates more to pramatic issuesK the desirable, to ideoloy and
"uotes @evitin as statin that confoundin the two kinds of value is a positivistic fallacy.
;
de Don <#>>B&;? concludes that *inally, all definitions of culture refer to a humanly desined
phenomenon which is transmitted from eneration to eneration. +lthouh 4euelsdi8k and =aseland find
one of the features of culture is that it is a human-made phenomenon <#>77&77?, on the next pae they err in
statin that The concept of institutions, like culture, relates to ideational and behavioral structures that are
created by humans and influence their decision-makin.
- : -
The second conse"uence is the fact that economists do not properly understand
expressions like historically transmitted or traditional ideas <Aluckhohn, 7B37&;9,
and Ceert-, 7BB0&;B?, which are also fre"uently present in anthropoloical definitions.
1nstead of emphasi-in the fact that those traditions are transmitted by symbols, practices,
and word of mouth, or by means that circumvent the open, public, explicit expression of
values and rules, economists concentrate on the fact that cultures are very stable or
invariable and as such, they say, inflexible, inade"uate, or even irrational. This is the
economists. other serious error in understandin culture.
$tability of cultural values and rules throuh enerations can entitle someone to
e"uate it with inflexibility or inade"uacy, unless it is caused by the stability of its causes
or determinants. Jet to my knowlede economists like Cuiso, $apien-a, and Hinales do
not have a theory of culture formation or a eneral theory of preferences and values
formation. The theory of culture formation 1 sketch later in this paper exactly reveals this
reat stability of its causal factors. +lthouh there is a continuous chane in world
cultures, which is very slow but steady.
B
+ somewhat different approach to the way
culture is handed down throuh enerations is inspired by the same impressive stability
and comes, for instance, from economists such as 4euelsdi8k and =aseland <#>77&;-B?.
!ulture, they say, is a iven to the next enerations and as such it is not "uestioned by the
individual members of a collectivity. 1t is not rationally chosen, althouh it is a
component of rational choices.
+ll of these features and approaches to culture are derived from a lack of
understandin of the process of culture formation. They are the product of minds that
contain an imae of culture that can only be a humanly desined fact. The reality is that
culture has never been the result of an intentional rational choice and it will never be,
because that is aainst its very nature. Eowever, culture is an unintentional result of
billions of ordinary or particular rational choices made by individuals pertainin to a
collectivity. 1n such a sense culture is not a iven but is always in the makin
7>
6
althouh it is a makin that, in short historical periods, produces no spectacular
chanes, and for us humans livin relatively short lives, it seems like there is no chane
at all.
Out of all those features of culture orthodox economists have inored because
they do not make sense to the science of economics, the last is the capacity of culture
to produce in social scholars what 1 called culture blindness <*udulu, #>>:?. !ultural
values and rules are so comprehensive and so basic that they fill in our entire hori-on& 1n
order to see somethin different somethin else has to be erased from that hori-on, which
is very difficult to do. The conse"uence is that culture prorams what we see and what
we do not see. 4ased on our own culture, that part which we do not see in other cultures
is assumed to be the same and as such it is not "uestioned. !ulture facilitates the
confoundin of social realities. 1n terms relevant to economists, Western culture, within
which economic science was born, facilitated confoundin its representative type of
B
+lmost all of the seven reat world reliions 1 covered in my book on the economic decodin of reliious
domas have undertaken chanes in domas that are compatible with a lower preference for the
meaob8ective relative power and a hiher preference for the meaob8ective absolute wealth, which seems
to support the idea of the unidirectional movement of all world cultures.
7>
While the perspective 1 use in this study accounts for this always in the makin interpretation of
culture, it is no surprise that 4euelsdi8k and =aseland find it only enters occasionally into economics
<#>77&7>?.
- ; -
personality
77
with the many other representative types to all other cultures. The Western
personality type was assumed to be eneral, with the conse"uence that the differences in
behavior were looked at in the realm of ability to identify means and not in the realm of
human ends. The scientific results have been disappointin& The effort to build up a
eneral economic science without takin into account the nature of human ends that vary
reatly across cultures has entailed low descriptive and predictive capacity and even
pushed scholars to falsification.
This daner of culture blindness was, to my knowlede, especially emphasi-ed by
Eofstede <#>>7? and Iandenberhe <#>>0?. Eofstede <#>>7&#? talks about the possibility
that our mental constructs or models contain not only a description of reality but reflect
our mental prorammin, within which culture is an important component. +t the same
time, Iandenberhe <#>>0&290? warns of our culturally and historically determined deep
symbolic forms that pre-structure our vision of the world and ourselves. 4oth
approaches to the phenomenon of culture blindness include suestions about its cure.
Eofstede suests poolin and interatin a variety of sub8ective points of view of
different observers <#>>7&#?, while Iandenberhe <#>>0&290? hopes that awareness and
acceptance of multiple cultures induce a reflexive process of cultural self-relativisation
and self-ob8ectification. )ue to their confusion in understandin culture, economists
seem to be the most vulnerable to culture blindness. (ven to Eofstede this is a sure
thin.
7#
*# The Cause of Confusion in (nderstanding Culture: Fundamental Failures of
+rthodo, Economic Theor-
The inability of the orthodox economic approach to capture and model most of
the fundamental features of the phenomenon of culture has deeply rooted causes which
stem from an inability to rasp and model fundamental economic phenomena and
processes. The reality is that Western economics cannot model cultural diversity and its
accompanyin features because it is fundamentally based on the implicit assumption of a
universal cultural uniformity, which is based on one culture out of very many. +nd this
implicitly assumed cultural uniformity of humanity precludes not only understandin
culture but even understandin basic economic phenomena without which understandin
culture is and will remain impossible.
*irst, a proper economic understandin of culture is precluded by the inexistence
of a proper definition of ends, a proper taxonomy of ends, and a sound theory of ends
formation. $econd, because culture is about emered values and rules, it is impossible to
frame a theory of culture formation and evolution without correct theories of values or
preferences and rules formation. Third, because cultures are simultaneously described by
77
Eofstede <#>>7&7>? introduces the idea that culture is to a collectivity what personality is to an individual.
+s a conse"uence, culture is the representative type of personality for a human collectivity
7#
1n a comment on the concept of culture blindness, which 1 had introduced in the manuscript of my paper
on the nature of rules and institutions <published later, *udulu, #>>:?, Eofstede wrote& The term Lculture
blindness. applies to most economists, and 1 don.t see many sins of chane is this respectG. (conomics is
an <+nlo-?+merican discipline and it starts from +nlo-+merican cultural assumptions. This was 8ust
reconfirmed by the latest 'obel /ri-e which extended an endless list of culture-blind +merican winners
<maybe except Doseph $tilit-? <Ceert Eostede, October 7#, #>>3?.
- B -
values and rules, it is impossible to comprehensively describe and compare real cultures
without a theory that rounds the conversion of rules into values and vice versa.
The need for a sound and ade"uate definition and taxonomy of ends is vital to an
economic understandin of culture for two reasons. *irst, values and rules are ultimately
about rankin human ends. $econd, since economic science focuses especially on choices
and their optimi-in bundles, the ends to choose amon must not only be assumed
enerally but also specifically. ,nfortunately, in terms of human ends economic science
has remained at a very primitive stae. von =ises <7B2B&B#-B0? and 5obbins <7B0#&7#?
could not produce more than tautoloical definitions of ends that led nowhere, and
Aniht sealed the impossibility of solvin the problem in statin that ends are the most
obstinate unknown of all unknowns <#>>B&7#?.
1n terms of values or preferences the state of economic theory is not any better
positioned because the nature and formation of values are intimately connected to the
formation of human ends. 1n fact, both are conditioned on a correct identification of the
causal principle of the ob8ective phenomenon of life, which to economists at least has
retained an implicit mystical nature. *or example, in his book Culture and $conomics
<#>>B?, de Don ives values nothin more than a definition framed by anthropoloist
Aluckhohn, which besides its tautoloical character cannot be used in any economic
research.
70
1t was within this perspective that incorrect conclusions were drawn& Aniht
opposed reason to feelins and 'orth went even further and stated that cultural heritae
consistin of myths, taboos, reliions, and domas defies scientific explanation and,
conse"uently, hinders economic rowth. 4ecker.s effort to circumvent the eneral
problem of preferences formation by assumin stable and invariable fundamental
preferences postponed a sound and lastin solution even loner, after Aniht.s roundless
idea that formation of values is not economists. problem had discouraed any renewed
effort.
The orthodox perspective on rules further explains economists. flawed
perspective on culture. (conomists. wishful thinkin about a kind of culture that is
humanly desined, debatable, and modifiable at will, or a culture that is wholly shaped
consistently with the ob8ective of economic rowth, is mostly derived from a conception
of rules <implicitly, institutions? that can only be humanly desined and enforced by a
third party. There is no place and no loic within this orthodox perspective for emered
rules, and this situation precludes any possibility to correctly understand culture. 4ut the
orthodox perspective on rules not only erases the reality of the most fundamental type of
rules and institutions. 1f thorouhly followed to its ultimate conclusion, it would imply
erasin the notions of rules and institutions altoether. *or if rules and institutions are
ultimately about rankin alternative ends, a theory of rules and institutions that ultimately
assumes only one external-component human meaob8ective or meaend like wealth
72
makes no sense, and is even loically impossible. +s a conse"uence, the orthodox
tautoloical definition of rules and institutions is the only kind of definition possible
althouh it is essentially not a definition at all. +nd if there is no proper reason for rules
70
de Don takes over Aluckhohn.s definition as cited by Eofstede <#>>7&3?& + value is a Lbroad tendency
to prefer certain states of affairs over others..
72
)efinitions of institutions by 'orth& 1nstitutions are a set of rules, compliance procedures, and moral and
ethical behavioral norms desined to constrain the behavior of individuals in the interest of maximi-in
wealth or utility of principals <7B;7&#>7? and The behavioral postulate of wealth is the cornerstone of
economic theory. 1t is also the cornerstone of this theory of institutions <'orth, 7B;2&0#?.
- 7> -
and institutions, there must be no proper reason for culture. The phenomenon of culture
seems to be meddlin in the economic world and prevailin economic theory.
.# The Basis for Economic (nderstanding of Culture: The Antientropic Formation
of Ends, Preferences, and Rules
+s 1 have already made clear, the basic cause of economists. confusion in
decodin and understandin the economic impact of the phenomenon of culture is the
lack of understandin of fundamental phenomena and terms such as ends, preferences,
and rules. This lack of understandin is not derived from the nature of those phenomenaK
rather, it is a conse"uence of a flawed eneral perspective taken by Western orthodox
economics. The loical conclusion of such a dianostic is the need for a different, proper
eneral perspective. 1n this section of the study 1 outline the eneral power perspective 1
have been developin for more than two decades and present its implications in terms of
definin and understandin fundamental correlations relative to ends, preferences, and
rules. Then in the next and the last parts of the paper 1 use this new theoretical framework
to develop a meaninful economic definition of culture and a theory of culture formation.
The startin point of the loical architecture of this different eneral perspective is
the idea of the antientropic nature of life enerally as suested by physicist $chrodiner
<7B22? and already adopted by other solid scholars such as Ceorescu-5oeen <7B:9?.
The reasons for doin so are simple& $chrodiner.s definition connects life in all its forms
to the reat causal principles of the universe and in this way it wipes out any trace of
implicit mysticism, the paradoxical and anostic nature of which seems to liner in the
current orthodox economics. +t the same time it is economically meaninful6unlike any
other scientific description of life. @ivin beins, humans included, live by absorbin
matter from their external reality, includin other livin beins of the same or other
species,
73
matter so structured or orani-ed as to enerate their capacity to temporarily
stop the ever-entropic deradation. 1nstead of defyin universal entropic deradation, in
the end the antientropic direction of livin matter speeds it up and thus is perfectly
consist with it. 1n other words, life could be said to have an intrinsic maximi-in nature&
1t makes the entropic deradation of the universe happen faster than it would have
without livin matter. This is done throuh pumpin back into the external world hih
entropy or matter with a lower potential to move or do thins. Thus the livin world is
tied to the eneral laws of the universe or is determined as is any other province of the
universe and, conse"uently, the social sciences should consist of laws and reularities
compatible with all other sciences.
1n order to maximi-e the antientropic absorption humans must allocate their
available eneral power resources, takin into account the efficiency and effectiveness
offered by various external world components in terms of low entropy absorption.
Euman ends are primarily and fundamentally those components of our nonhuman and
human external reality out of which we suck low entropy or the fuel of life. The
antientropic nature of life imposes an overhaul of the role played by human ends in
human lives. They are not thins we live for but thins we live on. We do not live to
attain ends but attain ends in order to live. $uckin the fuel of life is done based on
73
The bioloical or socio-bioloical principle of the individual as the unit of selection and account leaves
no doubt about that, and historical evidence wholly confirms this idea.
- 77 -
components of our external world, and throuh anchorin human ends on that reality the
prevailin confusion in classifyin, selectin, and rankin ends is eliminated. 4ased on
this fundamental perspective, a theory of human ends formation must cover not only
conscientiously selected and ranked ends but also ends that manifest their existence and
rankins throuh mental forms like passions and emered preferences and rules.
The taxonomy revealed based on this perspective on human ends, and suested
here in (xhibit 7, sinles out the existence of a substitute to the sinle orthodox meaend
of absolute wealth& the meaend of relative power. Takin into account this meaend
which is missin from the orthodox perspective, it is possible to create meaninful
definitions for preferences, rules, and ultimately culture. The evolutionary separation of
the two comprehensive sets of ordinary ends was imposed by their different nature and
different conse"uences in terms of overall neentropy absorption or, in other words, in
terms of social proress. While the meaend of absolute wealth consists of pro-
cooperative ordinary ends, the set of ends 1 call relative power consists of antaonistic
ordinary ends. 1t is the chanin weihts of the two meaends that has marked social and
cultural evolution, and it is for this reason that the taxonomy thus developed is
fundamental in definin and understandin the process of culture formation. (xhibits #
and 0 show how this taxonomy of ends helps wipe out confusion in classifyin passions
79
and in understandin the oriin of derived and sublimated ends that confuses so many
social scholars.
79
+s an example, in his book The (assions and the nterests, Eirschman <7BB:? uses the consecrated
division of passions but never accounts for it, and later on this is the source of confusion in accountin for
their evolvin weihts.
- 7# -
E,hi!it "& The taxonomy of human ends based on the antientropic nature of life.
E,hi!it $& /assions and their relation to meaends.
E,hi!it )& *rom primary meaends to derived and sublimated ordinary ends.
To maximi-e the antientropic absorption humans must allocate their available
resources, takin into account the efficiency and effectiveness in terms of low entropy
absorption occasioned by the various components of their nonhuman and human external
- 70 -
reality, upon which all human ends are anchored. The principle of maximi-in the
efficiency or effectiveness of antientropic absorption must uide both selectin and
rankin human ends. Two kinds of instruments stand out in rankin human ends& <7?
values or preferences and <#? rules and institutions. 4oth are of two kinds& consciously or
intentionally made and enforced, and non-consciously or unintentionally produced or
emered. The nature and formation of values and rules are essential to understandin the
nature and formation of culture.

/# An Economic Definition of Culture
Civen the whole conceptual apparatus 1 have introduced above, the economic
definition of culture 1 suest is the followin& The culture of a collectivity is its
representative emerged preference or rule expressed in terms of the two all-inclusive
megaends, absolute wealth and relative power. *iures 7 and # contain eometrical
descriptions of Creek, 5oman, and !hristian (uropean cultures as a preference and as a
rule. 4efore checkin to what deree this economic definition of culture confirms the
main features of culture as revealed by anthropoloists, a couple points need clarification
and a couple important conclusions must be drawn.
Figure "& Creek, 5oman, and !hristian cultures expressed in terms of preferences for the
meaends absolute wealth <w? and relative power <r?.
- 72 -
Figure $: Creek, 5oman, and !hristian cultures expressed as patterned opportunity costs
<rules? for the meaends absolute wealth <w? and relative power <r?.
*irst, the concept of culture should support understandin the characteristic
behavior of various human collectivities, and this characteristic behavior is shaped by a
specific mix of ends. +lthouh we talk about behaviors of collectivities, the mental
prorams containin the various rankin of human ends that shape behavior exist only in
human minds. +s a conse"uence we cannot but account for behaviors of collectivities
throuh or based on individuals. behaviors. This is an exiency for this kind of research,
but it is simultaneously a reat support for usin an economist.s conceptual framework to
understand this specific phenomenon.
Eofstede stated that !ulture is to a human collectivity what personality is to an
individual <#>>7&7>?, but 1 would o even further. !ulture is the representative type of
human personality for a collectivity. Thus the emered preference and rule in the
definition suested above describe the mental proram of the representative personality
of a specific collectivity. The representative type of personality is a statistical concept and
does not assume any overlappin with any number of the members of a collectivity. 1t is
a constructed type of personality to which most of the members of a collectivity
convere. 1n this way culture exists throuh and as a property derived from various
individual personalities and the behavior characteristic to a collectivity, which culture
should predict, and is a result of individuals. behaviors.
$econd, althouh most of the anthropoloical definitions 1 am aware of and those
presented in this paper do not use the concept of rules, the definition of culture 1
suested contains that concept. This is because that the perspective 1 use in this paper
reveals that rules and values are interchaneable. The same rankin of ends can be
expressed both in terms of preferences and rules. 1n other words, rules can be converted
into preferences and preferences into rules. They are inversely related& (ach preference
rankin has a correspondent opportunity cost rankin and they are perfectly e"uivalent.
7:
1n fact, culture is a unique and representative +to a collectivity, ranking of human
megaends, which can be expressed both in terms of preferences and opportunity costs.
7:
1n at least one instance Eofstede supports this idea. 1n describin the Onion )iaram that suests
manifestations of culture at different level of depth <#>>7&77? he implicitly uses norms and values
interchaneably. =oreover, 1 do not know any behavioral aspect of a collectivity or social system which is
described only by values.
- 73 -
Takin into account this reality, one could also use the terms cultural preference or
cultural value <described in *iure ;? and cultural rule or cultural opportunity costs
<described in *iure B?.
The first conclusion to be drawn based on this definition of culture refers to what
we can expect from studyin and comparin various cultures. $ince cultures ultimately
rank human ends, their purpose must be traced back to the role of selectin and rankin
ends in human life. Euman ends are primarily the inert or livin thins we live on. The
mix of ends we select and the rankin we conceive for them are solutions for life and are
totally dependent on the various characteristics of individuals. human and nonhuman
external reality. These solutions are specific because they respond to specific situations
and as such they must be compared with reat caution. Their comparison for the purpose
of usin them as substitutes is ruled out, as there is no sense comparin specific solutions
as solutions.
The second conclusion has paramount sinificance for the relation between
culture and the ob8ective of economic performance and must be surprisin to the
orthodox economist. 1n the most profound sense, the economic performance of various
human collectivities is caused by the representative individuals. effectiveness in terms of
the meaob8ective of absolute wealth. The rankin, the level of produced absolute wealth
they choose, and the shares of total resources they allocated to its production are
components of a larer solution. @eavin aside human errors, representative individuals.
various economic performances or economic performances sustained by various cultures
are derived from rational choices, and they should be neither lamented nor applauded.
,sin consecrated terms, as a rule, the wealth and poverty of nations are wholly
rationally chosen and cannot but be different for different countries.
!ulture has been the specific field research of anthropoloists and all economists
should do is decode that knowlede in economically meaninful terms and adopt it. $ince
anthropoloists characteri-e collectivities, includin nations, their results should reatly
support economists. efforts in understandin differences in economic rowth across
countries. +nd because in terms of culture we economists cannot now brin in much new
liht <except with reard to the mechanism of culture formation? but only decode or
translate, an economic perspective should be 8uded by its ability to capture or describe
the fundamental features of culture as revealed by anthropoloists. (xhibit 2 compares
these abilities in terms of the orthodox perspective and the antientropic perspective.
Eowever cautious one miht be, the poor descriptive capacity of the orthodox perspective
seems clear.
E,hi!it *# The !omparative +bility of !apturin the *eatures of !ulture
Features of Culture as
Re0ealed !-
Anthropologists
Captured or 'ot !- the
Antientropic Perspecti0e
Captured or 'ot !- the
+rthodo, Economic
Perspecti0e
The essential core of
culture consists of
values
!aptured explicitly by the
definition of culture
$poradically captured
- 79 -
(mbodied and
transmitted in symbols
or consistin of values
as desired
!aptured throuh emered
rules and preferences
1nored
!omprehensiveness !aptured by the all-inclusive
meaends absolute wealth
and relative power
)efied or inored
!ulture characteri-es a
collectivity
!aptured explicitly !aptured in a flawed way& +s
an end in and of itself
!ulture is to a human
collectivity what
personality is to an
individual
!aptured throuh idea of
culture as the representative
type of human personality
1nored
!ulture produces culture
blindness
!aptured and dealt with by a
variable representative type
of human personality
1nored and even unaware of
!ulture was
fundamentally and
initially formed by
climate or eoraphy
!aptured by a theory of
culture formation <see the
followin part of the paper?
1nored
1# An Economic Theor- of Culture Formation and ts mpact on Economic
Performance
$ince the weiht of importance attached to the meaend of absolute wealth is
determined by culture, it predetermines the economic performance of a iven collectivity.
4ecause values or preferences are formed inversely related to opportunity costs, after the
specific cultural value and cultural rule are formed, the e"uilibrium level of absolute
wealth produced by the representative individual and, conse"uently, the level of
economic performance of a collectivity is predetermined <see *iure 0?. What is left to be
accounted for is the process throuh which the specific opportunity cost of absolute
wealth is determined. $uch an idea has been only rarely and vauely expressed in
economic literature and with a weak theoretical underpinnin. Weber.s idea about the
causal relation between the spirit of capitalismMwhich in a different description is called
the preference for absolute wealthMand formation of capital is one of the rare
articulations of the idea of the predetermination of economic performance by culture.
7;
7;
+nd, what is most important in this connection, it is not enerally in such cases a stream of new money
invested in the industry which brouht about this revolutionMin several cases known to me the whole
revolutionary process was set in motion with a few thousands of capital borrowed from relationsMbut the
new spirit of modern capitalism, had set to work. The "uestion of the motive sources in the expansion of
modern capitalism is not in the first instance a "uestion of the oriin of the capital sums which were
available for capitalistic uses, but, above all, of the development of the spirit of capitalism. Where it
- 7: -
The level of available resources is itself historically determined by culture and a theory of
economic rowth, meanin the causal factor relative to economic rowth cannot but be
tautoloical.
Figure )& !ultural predetermination of economic performance.
The main ob8ective of this final part of the paper is to sketch an economic theory
of culture formation. +lthouh the loic is economic and uses correlations revealed only
by the particular perspective of this paper, 1 start from results derived from
anthropoloists. field research, especially Eofstede.s work <#>>7?. They are presented in
(xhibit 3 and seem to be areed upon unanimously. The most remarkable discovery of
Eofstede.s study of culture <7B;2, #>>7? is that different collectivities or countries are
characteri-ed by different ine"ualities in terms of what in my model is their individual
relative power,
7B
which are positively correlated with preferences for these ine"ualities
and neatively with economic performance <C)/ per capita?. $o, the hiher the
ine"ualities in terms of relative power amon individuals makin up a collectivity, the
hiher their preferences for ine"uality in terms of relative power and the lower the
economic performance of that collectivity.
E,hi!it .& !orrelations amon climate, level of relative power and economic
performance.
Climate 2e0el of relati0e po3er
2e0el of economic
performance
!old @ow Eih
Warm
Eih @ow
appears and is able to work itself out, it produces its own capital and monetary supplies as the means to its
ends, but the reverse is not true <Weber, 7B;3&9;?.
7B
5ouhly, his term power distance overlaps with my term level of relative power, while his term
power distance overlaps with my term preference for relative power.
- 7; -
)rawin on the relevant literature, Eofstede <7;;2? presented an explanation
<which he himself calls educated speculation? of those correlations that defies
economic loic. The explanation runs like this&
1n colder climates, because of the hardship of nature, survival re"uires that man
becomes a hiher performer and, as such, he needs more technoloy. This is not the case
in warmer climates where man can perform less <althouh he could perform as well as in
colder climates? and the need for technoloy is lesser. *urther on, hiher technoloy calls
for better educated and also better paid lower and middle strata. *or this reason, wealth
will be more e"ually distributed and power will also be more e"ually distributed
<Eofstede, 7B;2& B3, B;?.
There are two reasons such an explanation is hihly "uestionable to an economist&
<7? 1f an individual is modeled as a maximi-er, there is no reason someone
livin in a more enerous climate does not need comparatively more technoloy. On the
contrary, instead of bein content, he should take advantae of a better climate and
produce more. Then the relationship between climate and wealth should be, ceteris
paribus, with a positive sin <which is not true?& /eople should be wealthier as we move
from cold to warm climates.
<#? +ssume that all individuals, irrespective of the climate they live in, have
some common standard in terms of absolute wealth and, conse"uently, those livin in
colder climates have to be better performers because of the hardship of nature. 4ut a
better performance in terms of absolute wealth is not achieved by a more e"ual
distribution of absolute wealth or income. On the contrary, what has to be enforced is the
principle of distribution accordin to the marinal productivity of different individuals.
Then there will be more e"ual distribution of absolute wealth and relative power only if
differences in abilities are narrower. 1n other words, increasin the level of absolute
wealth or income does not entail chanin the individual relative power structure that
already exists in colder climates and, conse"uently, the differences in individual relative
power ine"ualities between colder and warmer climates cannot be accounted for in this
way.
'ow let me focus on findin an explanation of the inverse relationship between
the hardship of nature and ine"ualities in terms of relative power based on one of the
fundamental correlations revealed by the different perspective of this paper& 1n order to
account for the differences in preferences for relative power we should try to find out
how the opportunity cost of individual relative power is chaned by the climate. =ore
precisely, the "uestion to be answered is& 1n what way does a colder climate lower
individual relative powers and then make their opportunity costs hiher, which further on
entails relatively lower preferences for relative powerF
+ssume a collectivity of n individuals whose available <maximum? absolute
wealth levels vary e"ually by a between w for the stronest one or individual s and w-
a+n--, for the weakest one or individual e. +ssume further that this collectivity has to
se"uentially
#>
confront two different climates& a warm <enerous? one in the beinnin,
#>
This se"uence6a warm climate in the beinnin and then a colder one6seems to fit the history of
humanity which, initially from an +frican oriin, dispersed to colder climates <@andes, 7BB;&9?.
- 7B -
which allows all to survive, and then a colder one, say two times more severe, which
causes half of them <the weaker ones? to pass away and a correspondin decrease in the
variation in individual abilities.
#7
The available relative power of each survivin
individual, for convenience we will say the stronest s, which can be exercised in the two
situations, is calculated by the formula
##
&
#
? <
7
7
7
7
na
w w r
n
i
aw
s
av
n
i
s
av
= =

,
where
av
r
stands for the available relative power,
av
w stands for available absolute
wealth
#0
.
The available relative powers of the individual s in the two different climates, the
warm one and the cold one, are
#
na
r sw
av
=
and, respectively,
; #
# #
na
a n
r sc
w
= =
<in
passin to a two times colder climate, the number of individuals or the eneral power
scale lenth is halved and the variation in absolute wealth or the relative power of each
individual is halved as well?. !onse"uently, after the chane in climate the newly
emered population becomes more e"ual and also more resourceful. de Toc"ueville
<7B23?, for whom there is no doubt that +merica exceled in de facto e"uality,
#2
also noted
the relatively larer capacity, reater averae mobility, and the reater level of activity of
its population.
+n even more important conse"uence of passin from a warm climate to a two
times colder one is the increase in the opportunity cost in individual s.s relative power
from na
w
na
w #
#
=
to
na
w
na
w
2
;
#
=
. 1n terms of *iure 2, the eneral power possibility curve
<gp? not only shifts inward <from gp
-
to gp
.
? but its slope increases from tN to tg/0. tg1.
#7
This levellin of the abilities that is caused by a severe climate is hihlihted by ,mbeck <7B;7?, when
he explained the reduction of the variance in the abilities of old miners durin the old rush in !alifornia&
1n fact, 8ust the riors of the voyae to !alifornia, whether by boat or by foot, killed many potential miners
before they reached the old fields, eliminatin all but the stronest. When combined with a relatively
simple minin technoloy, hard work and disease had the effect of reducin the variance in the abilities of
the individuals to mine old <3#?.
##
This formula is consistent with *ranch and 5aven, 7B:;.
#0
The sum of absolute wealth and relative power makes up what 1 call eneral power <p?.
#2
+merica, then, exhibits in her social state an extraordinary phenomenon. 'ever are there seen on a
reater e"uality in point of fortune and intellect, or, in other words, more e"ual in strenth, than in any
other country of the world, or in any ae of which history has preserved the remembrance <de Toc"ueville,
7B23& 220?.
- #> -

Figure *& The alteration of cultural opportunity costs by climate.
This is enouh to put into motion a process that explains the whole difference in
terms of de facto ine"ualities, cultural values, and economic performance of various
collectivities or countries& Those collectivities livin in cold climates will form hiher
opportunity costs for relative power and, accordin to one fundamental idea of the
perspective of this paper, lower preferences for relative power and hiher preferences for
absolute wealth, and the result will be the choice of hiher e"uilibrium absolute wealth
levels, which further on allows more accumulated absolute wealth and faster economic
rowth. 1n *iure 2, the combined effect of the hiher slope of the eneral power
possibility curve gp
.
and the lower slope of the new cultural indifference curve 2 results
in a hiher e"uilibrium absolute wealth < l h
w w >
?. Of course, this theory of culture
formation accounts only for the formation of cultures in an initial stae of social
evolution, or inorin the pressure which collectivities havin different cultures can
exercise upon each other.
4# Conclusions
The economic understandin of the phenomenon of culture is crucial to solvin
fundamental problems like the une"ual economic rowth of collectivities and countries
because it is about their characteristic behavior. !ulture has been studied by
anthropoloists <especially based on field research? and all economists have to do is to
decode, adopt, and place that knowlede at the core of their models. ,nfortunately,
current orthodox economic theory is not able to capture the nature and features of culture.
This study did not even find attempts to decode the fundamental anthropoloical terms
- #7 -
used in the definitions in meaninful economic terms. =oreover, this study found that out
of seven features of culture identified by anthropoloists economists inored five, one
was sporadically captured, and one was only captured in a flawed way.
The root cause of this inability is derived from the failure to understand
fundamental phenomena like the nature and formation of ends, preferences or values,
rules and institutions, especially the emered or non-desined ones6all of which are
fundamental in understandin culture. The economic study of those phenomena has been
either abandoned <in the case of ends? or performed from a Western culture perspective
that cannot capture cultural variations. !onse"uently, what was needed was a different
transcultural perspective that would make it possible to understand the nature of and
correlations specific to fundamental phenomena like ends, preferences, rules and
institutions6an area where culture itself is located. This study uses the transcultural
perspective of eneral power that draws on the antientropic nature of life. *rom an
economic perspective, this is the most meaninful definition of life and connects social
and economic principles to the reat universal causal principles. 1t ends the anostic
stance and temptation to fre"uently find excuses for theoretical failures in the assumed
paradoxical "uality of human nature.
1n brief, within the transcultural perspective 1 use in this study, human ends are
primarily components of individuals. external reality out which they suck low entropy,
neentropy or the fuel of life. +ll ordinary derived and sublimated ends have to be traced
back to these external components. 1t is in this way that the confusion in classifyin ends
is over, and a lon-missin sound taxonomy of ends is conceived. 1dentifyin and
rankin human ends is uided by the principle of maximi-in antientropic control. (nds
are not thins we live for but thins we live on. The main techni"ues for expressin the
maximi-in rankin of human ends consist of preferences <values? and rules
<institutions?. 4ecause culture consists of a special kind of preferences and rules, its
formation is uided by the same principle of maximi-in the antientropic control. The
power of my theory of rules and preferences formation consists mainly in its ability to
account for the emered rules and preferences6and it is this very kind of rules and
preferences of which culture consists. +ainst all odds, the formation of culture as much
as the formation of values and rules are economic problems. This study sketches a theory
of culture formation that takes into account specific correlations as revealed by
anthropoloists and accounts for the variation in economic performance across climates.
The conclusions of this paper reardin the effect of culture on economic
performance and economic theory must be very surprisin to those economists takin an
orthodox stance. +ccordin to my perspective, culture is the emered rule or preference
that is representative of a collectivity and is expressed in terms of the two all-inclusive
meaends absolute wealth and relative power. $ince the in-depth meanin of economic
performance is the effectiveness in terms of absolute wealth, various cultures e"ual
various weihts attached to economic performance. Thus culture predetermines the
economic performance of a collectivity. The optimum level of economic performance is
derived from a larer maximi-in problem. The conse"uence is that a ood economic
performance is 8uded by variable standards. *urther, none of economic performances of
various countries should be applauded or lamented because all are rationally determined.
5eardin economic theory, conclusions are e"ually surprisin. 4ecause cultures
differently rank the two different-in-nature meaends, the maximi-in principles and,
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conse"uently, the economic or maximi-in behaviors are particular to particular cultures.
+s a conse"uence, there is no such thin as a enerally valid economic theory that can
explain human behavior without takin into account culture variation. +nd the reason for
this is that maximi-in principles are determined by the nature of the human meaends to
be maximi-ed. + different culture means a different mix of human meaends havin
different natures, and this implies variable maximi-in principles. Aniht, then, was flat
wron when he assumed that economics is not dependent on culture <as is the case with
mathematical principles?. 1n fact, if we take into account that he declined the descriptive
capacity of economic science, the two stances are not so incompatible.
+ last eneral conclusion& !ulture is a local solution to a eneral maximi-in
problem. !ultural solutions are not interchaneable and comparisons of cultures must be
made with reat caution. 1n no way can a culture be ranked or valued usin criteria
derived from other cultures. 'or should cultures be compared with the aim of chanin
them& They are the best solutions for the members of those collectivities. 1f in need of
chane, they will chane. +nd, in fact, they do continuously chane. The culture of a
collectivity is continuously shaped by billions of daily ordinary choices by its members.
!ulture is an emered phenomenon which continuously adapts itself.
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