The argument that economic development is captive to culture is well-known, made famous by Max Weber in The Protestant Ethic and the Spirit of Capitalism (1904) and in modern times by Lawrence E. Harrison in Underdevelopment Is a State of Mind: The Latin American Case (1985) and also by Lawrence E. Harrison and Samuel P. Huntington in Culture Matters: How Values Shape Human Progress (2001).
These arguments have been debated and often ridiculed by other economists, who argue that people merely respond to incentives, and that institutions create incentives. Can people choose some of their cultural institutions? Native language, for example, is instinctively absorbed at such an early age that there is nothing conscious or chosen about it.
Oscar Arias, the two-time former President of Costa Rica and winner of the Nobel Peace Prize in 1987, now enters the fray in the Jan/Feb issue of Foreign Affairs 90 (1)(2011) with an article, “Culture Matters: The Real Obstacles to Latin American Development.”
The fault, dear citizens, is ourselves according to Arias. Using the first person, he addresses the key issues that he feels hold back Latin development: (a) a conservative mindset that protects the status quo of power and wealth; (b) a fundamental lack of trust in others; and (c) a fragile commitment to democracy.
For those who may not know, Arias’ Costa Rica has achieved an admirable record of democracy for reasons that may have more to do with culture than enlightenment musings (see Harrison’s first book above). Arias argues:
No development project can prosper in a place where suspicion reigns, the success of others is viewed with misgiving, and creativity and drive are met with wariness. (p. 4)
Latins are primarily wary of their own governments that represent entrenched interests. People flagrantly abuse the laws, with no repercussions. Arias cites The World Values Survey, which finds that only 16 percent of those people surveyed in Latin America say that “most people can be trusted” – and this number is just three percent in Brazil. The impact on entrepreneurship is predictable but tragic. Consequently, Arias notes:
Latin Americans doubt the true intentions of all those who cross their paths, from politicians to friends.
For economic development to succeed, Latin Americans must be able to trust their states to act reasonably and predictably. They must be able to anticipate the legal consequences of their actions. And they must be able to trust that others, too, will act in accordance with the rules of the game. (p. 5)