barriomulas.com - Japan, Culture, and Economic Performance

The Economist recently ran an article on Japanese business culture. Business habits of foreign cultures fascinates me, because it represents such a blunt example of how a culture can effect economic activity. These traits, either for the better or for the worst, can have effects on economic development. The article notes:

Informal cues are as important as the legalistic ones... Managers meet to exchange meishi - their all-important business cards (usually presented with two hands) - and bow respectfully. It helps establish confidence...

In the West, that culture is increasingly one of implicit mistrust. Deals require armies of lawyers and thick paper trails to give parties confidence, in spite of the time and money that such work entails. In Japan, by contrast, companies - some dating back centuries - regularly deal with longstanding partners; reputational concerns, rather than strictly legal ones, are paramount.

I think that it is a grave error for anybody who has anything to do with management or marketing in any firm to ignore the fact that culture plays a crucial role in economic development.

Different cultural traits - such as those mentioned above - cause have different events in one economic system and entirely different events in another. Some cultures may have traits that are beneficial to capitalistic economic development while others may carry traits that are beneficial to a socialistic ones (gasp).

Some social scientists suggest a cultural overhaul. Even Mao carried out his Cultural Revolution. But the matter is not one cultural fallacies but of incompatibilities with a given economic system. It's much easier, I argue, to reform an economy than it is to reform a culture. Anthropologists could probably do a more efficient job at drafting economic policy than Chicago Boys with their cookie-cutter perception of global economics.