Does culture matter for economic success?
August 5th, 2012
10:23 PM ET

Does culture matter for economic success?

By Fareed Zakaria

“Culture makes all the difference,” said Mitt Romney at a fundraiser in Israel last week. He was comparing the country's economic vitality with Palestinian poverty.

Certainly, there is a pedigree for this idea. Romney cited David Landes, an economics historian. He could have cited Max Weber, the great German scholar who first made this claim 100 years ago in his book The Protestant Ethic and the Spirit of Capitalism.

The problem is that Weber singled out two cultures as being particularly prone to poverty and stagnation. They were China and Japan. But these have been the world's fastest-growing large economies over the past five decades.

Over the past two decades, the other powerhouse has been India, which was also described for years as having a culture totally incompatible with economic success, hence the phrase “the Hindu rate of growth,” to describe the country's once-moribund state.

Remember, China was stagnant for centuries and then suddenly and seemingly miraculously, in the 1980s, began to grow and industrialize three times faster than the West did. What changed wasn’t China's culture, which presumably was the same in the 1970s as it was in the 1980s. What changed, starting in 1979, were China's economic policies.

The same is true for Japan and India.

Had Romney spent more time reading Milton Friedman, he would have realized that historically, the key driver for economic growth has been the adoption of capitalism and its related institutions and policies across diverse cultures.

The link between economic policies and performance can be seen even in the country on which Romney was lavishing praise. Israel had many admirable traits in its early decades, but no one would have called it an economic miracle. Its economy was highly statist, even socialist.

Things changed in the 1990s with market-oriented reforms, initiated by then-Finance Minister Benyamin Netanyahu, and also sound monetary policies. As a result of these policies, Israel’s economy grew much faster than it had in the 1980s. The miracle Romney was praising had to do with new policies rather than deep culture.

Despite all this evidence, most people still believe that two cultures in particular, Islamic and African, inhibit economic development. But the two countries that will next achieve a gross domestic product of $1 trillion are both Muslim democracies – Turkey and Indonesia.

Out of the 10 fastest-growing economies in the world today, seven are in Africa. The world is changing, and holding on to fixed views of culture means you miss its changing dynamics.

But culture is important. It’s the shared historical experience of people that is reflected in institutions and practices.

But culture changes. German culture by 1955 was very different from what it was in 1935. Europe was once a hotbed of violent nationalism; today it is post-nationalism and almost pacifist.

The United States, meanwhile, was once an isolationist, agrarian republic with a deep suspicion of a standing army. Today, it has half of the world’s military power.

Daniel Patrick Moynihan, the former U.S. senator, once observed: “The central conservative truth is that it is culture, not politics, which determines the success of a society. The central liberal truth is that politics can change culture and save it from itself.”

That remains the wisest statement made about this complicated problem – and probably too wise to ever be uttered in an American political campaign.

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Topics: 2012 Election • Culture • Economy

soundoff (186 Responses)
  1. Nina

    The planet is falling precipitately apart AND coming reluctantly together at the very same moment.
    —Benjamin Barber, from Jihad vs. McWorld

    August 7, 2012 at 10:30 am | Reply
  2. Nina

    For Deniz
    Why think thus O men of piety
    I have returned to sobriety
    I am neither a Moslem nor a Hindu
    I am not Christian, Zoroastrian, nor Jew

    I am neither of the West nor the East
    Not of the ocean, nor an earthly beast
    I am neither a natural wonder
    Nor from the stars yonder

    Neither flesh of dust, nor wind inspire
    Nor water in veins, nor made of fire
    I am neither an earthly carpet, nor gems terrestrial
    Nor am I confined to Creation, nor the Throne Celestial

    Not of ancient promises, nor of future prophecy
    Not of hellish anguish, nor of paradisic ecstasy
    Neither the progeny of Adam, nor Eve
    Nor of the world of heavenly make-believe

    My place is the no-place
    My image is without face
    Neither of body nor the soul
    I am of the Divine Whole.
    —Rumi, 13th century Sufi poet, translated from the Persian by Shahriar Shahriari

    August 7, 2012 at 10:31 am | Reply
    • CalDude

      Very nice poem... but gibberish and drivel.

      August 7, 2012 at 11:17 am | Reply
      • Nina

        Can you state why?

        August 7, 2012 at 12:48 pm |
  3. Yitzak

    In the case of Israel vs Palestine, it's not about Culture...it's about BILLIONS of US Taxpayers Dollars going to Israel ever since they were created.

    Israel, Americas Welfare State!

    August 7, 2012 at 12:46 pm | Reply
    • Nina

      You are like a little dog who by taking a Jewish name is rubbing himself all over a big dog's pi$$ so that others will think you are big also.

      August 7, 2012 at 12:50 pm | Reply
      • Peter Beck

        The truth hurts, doesn't it Nina?

        August 9, 2012 at 9:04 am |
      • Patrick

        What truth dik wad?

        August 9, 2012 at 6:47 pm |
  4. BB

    Culture might be one of many factors to economic success, but certainly not the most important one.

    August 7, 2012 at 3:30 pm | Reply
    • BB

      Weber was a leading thinker of his era. However, it is obvious by now that he (as well as most Europeans at the time) had little understanding of Asian and non-western culture.

      August 7, 2012 at 3:34 pm | Reply
      • BB

        Over the past two decades, many scholars have discredited some of Weber's assertions.

        August 7, 2012 at 3:37 pm |
  5. Amit-Atlanta-USA

    Elise, Sushil & several others who believe Mr.Zakaria to be fair & balanced (or even learned!):

    Part-1

    Firstly, I must admit that I had not even read Mr. Zakaria's article before I put in my compilations (partial! ) to prove that Yes.......Culture does matter for our overall success.

    PLEASE REFER MY TRULY INFORMATIVE, FACTUAL, UNBIASED COMPILATIONS ABOVE posted August 6th 11:42 pm, 11:56 pm, and 12:02 am.

    And, the reason I did not care to read Mr. Zakaria's article, was firstly paucity of time, and then even more importantly my in-depth understanding of my former countryman from India Mr. Zakaria’s biased psyche. I don’t blame him though given that he is a Muslim first and the son of a devout Muslim scholar……….irrespective of his claims, and.…..that’s called Taqiyya!

    Having said that, Mr. Zakaria is NOT to be confused for other liberals you find all over the media who hold an excessively simplistic view of the world and fight for universal good (even for the undeserving who don’t believe in peace & harmony!).

    So, on the contrary my former countryman Mr. Fareed Zakaria is a Muslim, and like the MAJORITY of Muslims in the world he hates America, Israel and the entire free world, and believes that the entire non-Muslim world is ganged up against Islam. He fights for almost every Muslim cause in the world be it Palestine, Kashmir, Chechnya, Kosovo, Bosnia etc, and just as Muslims all over the world NEVER EVER FAILS to connect Muslim discontent (incl. American Muslims) with every other real & perceived inequality against Muslims anywhere in the world, e.g. Burka ban in France, Minaret ban in Switzerland, opposition to GZ VICTORY Mosque, enhanced interrogation of terrorists, security checks at a/ps etc. etc.

    He has FAMOUSLY SAID several times that AMERICA IS “THE” GREATEST DANGER TO THE WORLD and “NOT” AL-QAEDA” (Ref: Reflections on 9/11 and its Aftermath” CNN-GPS Sept 9th, 2011):

    ......to be contd.

    August 7, 2012 at 7:30 pm | Reply
  6. Amit-Atlanta-USA

    Part 2:

    Here are some fine examples of Mr.Zakaria’s biased writings:

    1)Where he squarely blames the west, Russia and his native India for Muslim hatred, holding these nations “squarely responsible” for NOT merely Muslim discontentment but also “Muslim Terror”, and CONCLUDING that the danger is from us and NOT from them!

    a) “Why do they hate us”-Newsweek Aug 22nd 2007 –
    b) “Reflections on 9-11 & Aftermath” Sept 11th 2011
    c) “Why America Overreacted to 9-11” – Newsweek Sep 4th-2010
    d) “How Russia created its own Islamic Terrorism Problem” Time Jan 27th 2011
    e) “Don't Overreact to Terrorism – Newsweek Jan 09th 2010
    f) “India Occupying Kashmir” – Rediff June 25th 2001. In a ceremony while receiving India’s third highest civilian award from the Indian Ambassador to the US Mr. Zakaria condemned India for its role in Kashmir terming it “Martial Rule” and castigated India for its perceived illtreatment of Muslims.
    f) “India Please Stand up” CNN GPS Mar 26th 2012

    2) Where he tries to showcase Muslim radicalism as a direct result of their backwardness & poverty & NOT their radical religious IDEOLOGY (disregarding far more poverty ridden places such as Haiti, Nepal, much of Sub-Saharan Africa), URGING already HARD HIT Americans & Europeans to CONTRIBUTE more, w/o ever mentioning the oil rich Sheikdoms or their own rich people (for e.g. ONLY 1% of Pakistanis pay income taxes-many of whom are far more affluent than average Americans or Europeans who toil more than 3 months a year JUST to pay their taxes!).

    a) “What People Will Die For – Newsweek Jan 5th 2008
    b) “Put Pakistan (Govt. & Miltary) on Notice” but keep pumping money! – CNN GPS May 13th 2011
    c) Plus all of the articles under (1) above.

    3) Where he deliberately DOWNPLAYS the threat of radical Islam in the west.

    a) “Jihad against the Jihadis- How Moderates WON against extremists” – Newsweek Feb 12th 2010
    b) “Learning to Live with Radical Islam” – Newsweek Feb 28th 2009
    c) “Congressional Hearings on threats from radical Islam” ABCNews.com Feb 11th 2011
    d) “When Terror Loses its Grip-Time May 20th 2011

    August 7, 2012 at 7:38 pm | Reply
  7. Amit-Atlanta-USA

    Part 3

    4) Where he PRETENDS to be concerned about America while CONSTANTLY highlighting the fact that America’s best days are over, and talks about the emergence of other powers. While that may be somewhat true, you can see a definite bias in the coverage, almost WISHING TO SEE OUR DOWNFALL, just as most Muslims the world over want!

    a) “Are America’s Best Days Over” Time March 3rd 2011
    b) “Beyond Bush” June 11th 2007
    c) “The Future of American Power” Foreign Affairs May-June 2008

    August 7, 2012 at 7:45 pm | Reply
  8. Wilson Lee Flores (follow same name on Twitter)

    I believe culture is the X factor in socio-economic progress of nations & peoples, but it's not of course the only factor because other factors can influence, enhance or block the culture factor too..... Please read this my latest Philippine Star newspaper column, where I had tackled the idea of culture as the X factor to socio-economic development of nations & peoples.... http://www.philstar.com/Article.aspx?articleId=834985&publicationSubCategoryId=82 Pls tell me your feedbacks at WilsonLeeFlores on Twitter or http://www.facebook.com/#!/pages/Wilson-Lee-Flores/122467601116985

    August 8, 2012 at 7:07 am | Reply
  9. black ops ii forum

    Thank you for any other magnificent post. Where else may anyone get that type of information in such a perfect method of writing? I've a presentation next week, and I am at the look for such info.

    August 8, 2012 at 7:46 pm | Reply
  10. Peter Beck

    Mr. Zakaria carefully avoids Romney's ignorance of facts on the ground and the reason the Palestinian economy is not comparable to Israel's. When will it be permissible for American journalists to use the word "occupation?"

    August 9, 2012 at 9:02 am | Reply
  11. XiaoJack

    Of course the culture will matter for economy success ~ Just like the Kechara Wealth Vase ~ It is from the Tibetan, and it could help us to get more wealth lucks. When everyone is rich and keep use money, it will lead to the success of economy ~

    August 9, 2012 at 9:21 am | Reply
  12. Betty Luck

    Once you've taken control of a peoples "means of production" by deception, then killed and weakened their society, you can say that your culture is a determinant of success. Jacob taught the current modern day devil how to deceive and kill their father to gain control over societies. Once this occurs, they then want peace. If USA citizens want to fight a war for the parasitic imposter jews of the imposter israel, then elect Romney. Israel cannot exist without the support of the USA. Romney has no self righteousness or moral compass just as the imposers have none. Let Netanyahoo fight his own battles.

    August 9, 2012 at 8:09 pm | Reply
  13. Joseph McCarthy/Quigley/LyndsieGraham/krm1007 ©™/Joe Collins/J. Foster Dulles/Marine5484

    I am a useless piece of camel dung. I post anti American, anti GB, anti semite, anti India, anti modern anything because I am a good moooooslem. I steal people's monikers because I am so ashamed of myself and post the most stupid comment. When people get angry with me, I claim insanity. I am the same guy.

    August 18, 2012 at 9:01 am | Reply
  14. Poetry

    Very great post. I just stumbled upon your blog and wished to mention that I've truly enjoyed surfing around your weblog posts. In any case I'll be subscribing for your rss feed and I'm hoping you write again soon!

    August 23, 2012 at 5:25 am | Reply
  15. imranahmedjafri

    I believe, what was valid about a 100 years ago may not always hold true in the current state of affairs. While cultures change and business and politics form an alliance or sometimes a nexus... if we stick to the basics governing human behaviour, we can be pretty safe. I mean assuming that consumerist form of democracy is the panacea for all the problems of economy is preposterous, and that seems to be the basic mistake many of the economies have made. It gives rise to the tendency of unbridled greed- a form of human behaviour which is difficult to control if the state itself is encouraging it through its philosophy. Many of the Asian economies which you have referred to, are better in controlling this and therefore were safe in the recent economic crisis. This is all ofcourse in relative terms....

    September 20, 2012 at 4:08 am | Reply
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