Linking Culture and Economy: 3 Values That Affect Wealth

Why do Protestant nations generally have more wealth? Why did the American South develop more slowly than the North?

It’s no secret that some countries and regions have more wealth than others, but it’s not always obvious why that is. Proponents of cultural theories of inequality argue that three cultural values contribute to whether a nation is rich or poor. These are work ethic, openness to new ideas, and public trust.

Read more to learn about the intriguing connection between culture and economy.

Culture and Economy

Some authors argue that differences between cultures are responsible for international inequality. Culture, they explain, determines the values a nation promotes in its people. When these values are aligned with good economic practices, a nation is more likely to be rich. When they resist good economic practices, a nation is more likely to be poor.

Let’s take a look at the link between culture and economy by examining three cultural values.

Value #1: Work Ethic

Max Weber (The Protestant Ethic and the Spirit of Capitalism) argues the religion Protestantism is conducive to economic success because it encourages hard work, frugality, and smart investment. He notes that, at the time his book was written in the early 20th century, majority Protestant nations like the United Kingdom, Germany, the Netherlands, and the United States tended to be the most successful. On the other hand, economist Thomas Sowell’s Basic Economics argues many nations in tropical climates are poor in part because their cultures lack discipline or urgency—because the climate ensures crops year-round, they never had to plan ahead and store food for winter.

Value #2: Openness to New Ideas

Sowell (Basic Economics) suggests openness to new ideas and cultural exchange is crucial for economic success. Cultures that encourage these values will more readily adopt new technologies, improving efficiency to create more wealth. On the other hand, cultures that are resistant to new ideas or shut themselves off from the world will stagnate and fall behind economically.

For example, plantation owners in the antebellum South resisted industrialization, fearing the new technologies would unseat their place in the social and economic order. This meant the South had far less developed infrastructure than the North for many years and lagged economically because of it.

Value #3: Public Trust

Economist William Easterly’s The White Man’s Burden argues that in a capitalist global economy like the one we have today, public trust is a cultural value crucial for success. Easterly argues that without public trust, people won’t enter into economic exchanges because they’ll fear getting ripped off or cheated. Without these economic exchanges, an economy will stagnate.

Easterly uses the fall of the Soviet Union as an example of why public trust is so important. During this period, free market capitalism was suddenly imposed on the new Russian state with little time for them to adjust. Because there was no opportunity for Russia to develop public trust, politicians and business leaders instead turned to corrupt backroom dealings and allowed the economy as a whole to suffer for their own personal benefit.

Linking Culture and Economy: 3 Values That Affect Wealth

Elizabeth Whitworth

Elizabeth has a lifelong love of books. She devours nonfiction, especially in the areas of history, theology, science, and philosophy. A switch to audio books has kindled her enjoyment of well-narrated fiction, particularly Victorian and early 20th-century works. She appreciates idea-driven books—and a classic murder mystery now and then. Elizabeth has a blog and is writing a creative nonfiction book about the beginning and the end of suffering.

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