Why Culture Matters Most
by David C. Rose.
Oxford University Press, 2019.
Hardcover, 197 pages, $35.
Reviewed by J. Daniel Hammond
David Rose’s Why Culture Matters Most tackles a question that economists have been loath to take on—the connection between morals and prosperity. Following what they perceive to be scientific method, economists attempt to confine their analysis to matters of quantifiable material fact, steering clear of normative issues. As Milton Friedman put it, economics is a positive science that deals with “what is,” not “what ought to be.”
This self-imposed constraint on making moral pronouncements has, however, kept economists from doing more than making moral claims. It has kept them from considering how the moral standards by which people live impinge on economic performance. Even if, as is commonly believed, morals are subjective, there are facts of moral standards. In this sense there are moral facts, whether the standards be true or false, noble or ignoble. Certainly, the moral standards by which people order their lives might have economic effects, and thereby be fitting for inclusion in positive economics.
David Rose argues that moral standards do have economic effects, and has taken a step to fill this gap in economic knowledge. Rose argues that moral standards have the most important effects, more important than resources, technology, or human ingenuity. If Rose’s book is about economic effects of morals, why is the title, “Why Culture Matters Most” rather than “Why Morals Matter Most”? This is because culture is the locus of moral standards. The thesis of Why Culture Matters Most is that culture matters most because morals matter most.
This is not a large book, and it need not be. The author is an economist, not a historian. He develops the argument analytically with lots of analysis and relatively few facts, rather than the reverse. The book is in nine chapters divided into two parts. Part I defines culture, lays out the analytical framework, and develops the thesis of how morals affect economics through culture. Part II develops several parts of the thesis in more detail and considers implications for what might be done to overcome cultural, i.e., moral, barriers that prevent societies from developing and sustaining “free market democracy.” The book is well-written in clear and lively prose with a minimum of technical jargon. Though the argument is rendered in economic analysis, readers do not need a background in economics, mathematics, or statistics. In combination with economic analysis, Rose makes use of evolutionary theory and history for his anthropology. These are actually as important to the argument as is economic theory.
In short, the thesis is that “free market democracy” requires a culture of trust. Rose argues that free markets and democracy are complementary. Trust is a necessary condition for both. Free markets require trust because the webs of people with whom we trade are mostly strangers. Democracy requires trust because we know few of our fellow citizens, and few of the people responsible for political institutions. The question from which Rose’s thesis arises is why some societies are more successful than others, where success means enjoying abundance on two fronts—materials goods and freedom.
The key requirement for abundance of material goods is, as we learn from Adam Smith, extensive cooperation through markets to exploit the gains from division of labor, specialization, and trade. In and across prosperous societies people engage in trade with one another, but for the most part remain strangers. No society could attain prosperity with trade restricted to family and friends. The scope of markets would be too small. Rose considers democracy the key requirement for abundance of freedom, with democracy serving as a check on the power of government. He combines these two economic and political dimensions of societal success in the term “free market democracy.” He argues that it is free market democracy, not the intelligence of a people, the level of technology, or access to natural resources, that allows societies to flourish.
Rose identifies the necessary condition for both free markets and democracy as the virtue of trust. Without widespread trust a society can neither sustain the extensive cooperation required for specialization in production and exchange, nor can they sustain institutions that support democratic politics. “Since many of the institutions that support free market economies and democratic government are trust dependent, the key to having a thriving free market democracy is having a high-trust society” (p. 2). Of course, high trust throughout a society requires that members of the society are trustworthy. They must be dependable to abstain from taking advantage of others, even when chances of detection are slim. The virtue of trustworthiness must be embedded in the culture, which Rose refers to as a society’s “collective brain.” Trustworthiness then can be transmitted from one generation to another through imitation and teaching, i.e., through culture. Societies that flourish are those that have trust-producing and trust-conserving cultures.
The economic analysis with which Rose builds his argument has several components. First there is the concept of “public good.” A public good is a theoretical entity defined as a good that is both “non-rival” and “non-appropriable.” Non-rival means that if the good is produced for one person, it can be made available to others at no additional cost. The marginal cost of adding users is zero. Non-appropriable means that if the good is produced for one person, it is not feasible to keep others from using it. It would be prohibitively costly to deny them the good.
Public good is an ideal concept, like a line. Do we ever see on a page “the shortest distance between two points”? No. We see marks that have width and thickness. A distance cannot be seen. Likewise, a public good is an ideal concept that is not fully manifested in any actual product or service. These may, however, have more or less public good qualities, just as a mark on a page may be more or less visually representative of a line. National defense in the form of military preparedness is the classic example of a near public good. The “good” in military preparedness is reduced probability of attack from another nation. This security is not diminished for current residents of the United States if our population grows. That is, security from military preparedness is non-rival. Also, by its nature this security cannot be denied to any portion of the population. If someone is in the U.S. they receive the security whether they have contributed to its cost or not. Therefore the security is non-appropriable.
The problem public goods present for voluntary exchange through markets is that people have an incentive to try to avoid bearing a share of their cost, i.e., to “free-ride” on others. If only a few members of the community free-ride there will be no discernable effect on others. People who pay for the good and free-riders will both enjoy the benefits from the public good. But the temptation to free-ride is there for everyone. If everyone or enough people try to free-ride, they all lose the good. Rose argues that culture has a substantial public good dimension. Everyone in a society benefits from the healthy parts of the society’s culture, whether they contribute to sustaining the culture or not. The “cultural commons” is non-rival and non-appropriable. Therefore, the deck is stacked against societies building healthy cultures, and if they manage to do so, against their keeping it.
The second component of Rose’s economic analysis is rational choice theory. This is built on the assumption that people make decisions on the basis of their scarce resources and knowledge with the objective of maximizing personal gain. This does not necessarily mean narrow selfishness, that people do not care for family and neighbors. But it does mean that since a person has to bear the cost for most things provided for himself and others, if he can get something for free, he will. To the extent that the culture within which parents raise their children is a public good, parents will scrimp on efforts to sustain healthy culture, saving effort and money to provide their children with non-public goods such as education, medical care, entertainment. With trustworthiness being a cultural virtue, Rose’s claim is that parents scrimp on efforts to build up and sustain a healthy culture of trust.
The third piece of Rose’s economic analysis crosses over from economics into his evolutionary anthropology. He assumes that moral sentiments are based on consequentialist utilitarian values. People consider their actions immoral to the degree they have knowledge that their actions inflict pain and suffering on others. No perceived pain and suffering means no moral problem with an action. So, for instance, a person might have qualms about stealing $100 from a poor neighbor, but no qualms from underpaying taxes by $100. As in soccer, no harm no foul. With this basis for conscience, life presents many so-called “golden opportunities.” These are chances to help oneself by cheating, stealing, or lying with concrete personal gain but little or no perceptible harm to others. In Rose’s analysis, pairing this moral code with rational choice theory makes trustworthiness a sucker’s virtue. Rational agents jump on golden opportunities. Not to do so would be irrational. Therefore low trustworthiness and low trust become the equilibrium for behavior and for a society’s culture.
How did humans come to be this sort of rational agents? Rose bases his anthropology on a materialist theory of evolution. By random selection humans evolved from lower non-rational forms of life. Human reason, meaning computing power, is what separates us from other species.
As humans started to enjoy greater success relative to all other species, a number of evolutionary feedback processes began to unfold. The more humans dominated all other species, the truer it became that competition with other humans affected survival more than competition with other species. This likely contributed to an intraspecies cognitive arms race that explains why our intelligence is so far beyond all other existing species today (p. 6).
Our capacity to store and transmit knowledge is also a product of evolution:
As humans increased their stock of knowledge, they undertook more complex behaviors and therefore had more complex things to teach their children. This naturally selected for traits that made us better storytellers. As better storytellers, we were able to build more effectively on prior accumulated knowledge. This created even more content and therefore additional evolutionary return to reinforcing traits that supported storytelling.…
With the rise of language, each successive generation had a richer base of such ideas to work from. This increased the evolutionary return to having more memory capacity to store ideas and more processing power to understand increasingly abstract, complex, and subtle ideas. This process fed on itself to produce ever bigger brains (p. 31).
At some point in our development as a species in a “cognitive arms race” genetic evolution gave way to cultural evolution, with feedback from culture to genetics. Cultural adaptation could occur faster than genetic adaptation. Communities with cultures most fit for survival in their environments were winners in the evolutionary contest of cultures. Rose suggests as an example that Athenian culture made ancient Athenians more fit than Spartans.
Evolution of morals is an important piece of Rose’s sketch of anthropological history. Because human evolution occurred in small communities of around 150 members, the morals that developed were those appropriate for survival of small communities. In the small-group moral calculus, members of one’s community are “us” and everyone else is “other.” Strangers have no moral value. Taking a dish of food from a neighbor might carry more negative moral weight than would killing a stranger. Moreover, what Rose refers to as the “empathy problem” implies that people attribute moral probity to doing harm to a stranger in order to help a member of their community. That small-group morals are natural for humans is an additional impediment to developing widespread trust. When members of other groups, strangers, pose a threat to you and you to them, there is no basis for a bond of trust.
So how did some societies develop cultures of trust sufficient to grow to the size required for specialization and trade? As with other evolved traits, this was largely a matter of chance. People who have the good fortune of living in free market democracies, such as Americans and Western Europeans, should not take their good fortune for granted. Prosperity and freedom are good fortune, not markers of a progressive climb of moral and constitutional history. The entropic pull of small-group genetic moral sense is an ever-present threat to overcome culturally based large-group morals. The larger a society becomes, the greater will be the drag of small-group moral intuitions on the further spread of trust. And the greater is the risk of disintegration.
This is all rather gloomy, not in the least a way of suggesting “the end of history” as many expected after the fall of Soviet Communism. Free market democracies are fragile. Can anything be done to forestall disintegration of free market democracies and to help peoples who are trying to climb out of material and political poverty? Rose’s analysis leads to the conclusion that no help can be found in human reason. Reason applied to humans’ evolutionary heritage is the source of the problem. According to Rose, any solution, if there is one, will require circumventing reason.
His plea is for parents to inculcate in their children the virtue of trustworthiness as a duty, before the children reach the age of reason. Once they reach the age of reason it is likely too late. Putting his suggestion into economics terminology, Rose suggests that parents form their children to have the virtue of trustworthiness as a “taste” or basic preference. In rational choice theory homo economicus uses reason to satisfy desires that are based in preferences. A person’s preferences are “givens” that are served by, not formed by, reason. If generations of children grow up in a culture of trust they will acquire a preference for trustworthiness. Their reason will thereby guide them around “golden opportunities” to lie, cheat, and steal. Rose concludes:
Because thriving free market democracies are wellsprings of creativity and juggernauts of cooperation, they are our best hope for ensuring that each future generation leaves a better society for the next. Trust-producing culture is our best hope for sustaining the high-trust society that makes such societies possible, so leaving what our children learn to chance is foolish. If we don’t teach our children the kind of moral beliefs that put moral restraint first, making them trustworthy individuals who can sustain a high-trust society, then others, or their small-group genes, will teach them something else (p. 171).
I will suggest three reasons that Why Culture Matters Most is an important book. First, it is a rare case of an economist writing as an economist about moral problems. As such, it could be a first step toward restoring Adam Smith’s discipline to its rightful place in moral philosophy. The twentieth century was marked by success of science in service of material engineering—modern medicine, the space program, computers that fit in our pocket. However, much of the social engineering of the century was at best wasteful and ineffective, and more often destructive and dehumanizing. The list of harm done by the “best and brightest” is long—eugenics, population control, urban “renewal,” and liberalization of divorce law are but a few examples. Rose understands and impresses on his readers that free markets and democracy both have moral requisites. They cannot be achieved or preserved by “getting the incentives right” through the elements of economic policy—prices, taxes, transfers, and in-kind subsidies. Rose’s plea is not for policy reform. He calls for nothing more or less than a moral commitment by parents for the sake of their children and grandchildren.
Second, this book is important in laying bare the reigning anthropology of economics and other social sciences. The book’s anthropology is drawn from the materialistic theory of evolution with an overlay of the rationality of calculation. Though not without its scientific merits, this anthropology is limited for understanding human nature and behavior. Humans are presumed to be set apart from nature only by being differently evolved, as calculating animals. Imago Dei, the subject of science and literature through most of Western history, has given way to what could be labelled Imago Altum Caeruleum. This is man made in the image of Big Blue, the IBM computer that famously defeated chess grand master Gary Gasparov in a televised match from New York City in May 1997. Big Blue was a creature of the computer scientists at IBM.
In evolutionary anthropology, homo sapiens is not a creature. He is merely a link in a random series of mutations. By contrast, Christian anthropology understands homo sapiens to be more than a calculating animal. We are animals with immortal souls, made in the image and likeness of God. Christian anthropology accommodates what Rose and others observe—our capacity to lie, cheat, and steal, especially from those we consider to be “other.” We are fallen creatures. But we nonetheless have the light of the Divine within us, so virtues such as trustworthiness are not contrary to human nature and reason. There is no need to bypass reason to instill virtue. “But if a wicked man turns away from all his sins which he has committed and keeps all my statutes and does what is lawful and right, he shall surely live; he shall not die” (Ezekiel 18:21).
The third reason Why Culture Matters Most should be read and discussed is that our culture is clearly in decline. At the core of the decline is loss of trust. We are losing trust in commercial, political, educational, judicial, and religious institutions. Declining trust in institutions means declining trust in people. We have institutional problems, but they are not problems that can be fixed by institutional reform. Personal reform is necessary. We cannot expect restoration of trust by way of task forces, commissions, ombudsmen, and school curricula reform. David Rose is right. A culture of trust is built one trustworthy person at a time. Rose’s suggestion that rationality is a problem that has to be bypassed to raise children into trustworthy adults does not give human nature and rationality enough credit. Perhaps it is time for economists and other social scientists to revisit the Christian anthropology that so much effort has been made in the modern era to forget. Perhaps, after all, we are creatures made in the image of God.
Dan Hammond is Hultquist Family Professor of Economics, Emeritus, and Scholar in Residence at the Eudaimonia Institute of Wake Forest University. He is author of “Paul Samuelson’s Ideology and Scientific Economics,” in Robert A. Cord, ed., Paul Samuelson: Master of Modern Economics, Palgrave Macmillan, forthcoming, and “Malthus, Utopians, and Economists,” in Research in the History of Economic Thought and Methodology, vol. 33, 2015.