Are Economic Progress and Cultural Values Mutually Exclusive?

(Mises)—Economic progress is sometimes seen as inimical to the bonds of “family, faith, and flag” that many people value. Many place such a high priority on their way of life within their own neighborhoods or communities, that losing their traditional cultural values in exchange for economic progress may not be a price they would wish to pay. This is poignantly expressed by John Slaughter, in his article “How Does it Profit the South,” as “a tinge of sorrow” about the changing heart of his own state, Alabama.

Yet, the heart of Alabama is changing, and I cannot help but feel a tinge of sorrow as I witness the transformation unfolding before my eyes. The small farms that dotted the landscape have been gradually replaced by sprawling subdivisions, where rows of characterless houses emerge almost overnight. The charming service stations, where old men used to pass the time with stories of old, now yield to the yellow-black glow of Dollar General, emblematic of the creeping homogenization brought about by modernity.

Economic progress cannot be separated from cultural values in understanding the history of any society. This message was frequently emphasized by the great development economist Peter Bauer who studied economic progress in Africa extensively. Unlike many economists, Bauer noticed that economic progress called for tradeoffs with other values that African societies held dear. For example, he argued that if African societies placed no value on private property rights and wished instead to hold all property in common, that was their choice, and they should be free to make it. Economic progress in Africa was championed by Western governments and global institutions such as the World Bank, who attached no significance to African culture and had no concerns about destroying African village life.

Bauer’s friend, Anthony Daniels, met him in Africa and understood the importance of these principles to Bauer’s economic thought. As Daniel explains, Bauer was particularly against “the politicisation of life that foreign aid promoted.” Globalist economists created the impression that economic success lay in the gift of foreign governments, and that Africans therefore had to adopt Western culture and Western political priorities in order to benefit from foreign aid as a path to economic advancement. Bauer was against this, and emphasized the importance of cultural values in explaining people’s economic choices. The example Daniels gives is: “If one were to learn that the construction of skyscrapers in the Vatican would promote Italian economic growth, who, other than a barbarian, would advocate it?”

Bauer’s approach to economic development in Africa, as explained in his book Dissent on Development, emphasized that “economic development depends largely on determinants which cannot readily be analysed with the tools of economic theory.” This argument reflects, in part, a point made by Ludwig von Mises, in his book Liberalism, that market exchange is not the sum total of the human experience. The fact that economics is a value-free science does not mean that human values are unimportant. As Mises explained, the fact that market exchange cannot address people’s “inner, spiritual and metaphysical needs,” the human yearning for “happiness and contentment” is not a failing of economic science, but a failing of those who look to economic science or social policy to answer these “deeper and nobler” questions. They are looking in the wrong place. Not all questions are economic questions. Mises’s discussion of this point is worth quoting at some length, in order to convey accurately the point he is trying to make:

Liberalism has often been reproached for this purely external and materialistic attitude toward what is earthly and transitory. The life of man, it is said, does not consist in eating and drinking. There are higher and more important needs than food and drink, shelter and clothing. Even the greatest earthly riches cannot give man happiness; they leave his inner self, his soul, unsatisfied and empty. The most serious error of liberalism has been that it has had nothing to offer man’s deeper and nobler aspirations.

But the critics who speak in this vein show only that they have a very imperfect and materialistic conception of these higher and nobler needs. Social policy, with the means that are at its disposal, can make men rich or poor, but it can never succeed in making them happy or in satisfying their inmost yearnings. It is not from a disdain of spiritual goods that liberalism concerns itself exclusively with man’s material well-being, but from a conviction that what is highest and deepest in man cannot be touched by any outward regulation. It seeks to produce only outer well-being because it knows that inner, spiritual riches cannot come to man from without, but only from within his own heart. It does not aim at creating anything but the outward preconditions for the development of the inner life.

That was also Bauer’s view. He explicitly avoided formulating a “general theory of development” that could solve all of Africa’s economic problems, unlike the hubristic World Bank economists who insisted they had the cure for all Africa’s ills. Bauer understood that the fix for economic progress may well resolve economic problems, but economic problems are not the only problems society faces, nor are they always the most important problems.

Indeed, it could be argued that cultural problems, such as the breakdown of the family unit and the disdain for education, are much greater determinants of poverty than the failing economic institutions. This was a point often made by the great economist Walter E. Williams. In relation to the West, Bauer argued that the sense of moral and racial “guilt” that plagues many Westerners is itself the cause of many economic disasters in Africa. Therefore, Daniels is correct to observe that Bauer viewed economic development within its cultural context:

That Peter’s thought was not unidimensional, let me mention here that he did not think of economic development as necessarily an unequivocal good, that people the world over ought to aim at single-mindedly. This is because there is rarely gain without loss, and people may, with reason, care more about their losses than for their gains.

Daniels further explains that Bauer had a rounded view of the nature of man:

Though [Bauer] did believe in free trade and a liberal economy he was certainly not a believer in Homo economicus, far from it. The undifferentiated man who considers only his narrow economic interest, which he calculates with perfect rationality, did not exist for Peter. He did not think that in a world in which restraints on economic life were removed (if one were able even to envisage such a world) differences between individuals and groups would disappear or die out.

Therefore, it must be acknowledged that in pursuit of the peaceful cooperation necessary for market exchange, there are many social and cultural values still worthy of being acknowledged and defended. Murray Rothbard reflects this idea, in part, when he reminds libertarians of the importance that many people attach to their nation:

Contemporary libertarians often assume, mistakenly, that individuals are bound to each other only by the nexus of market exchange. They forget that everyone is necessarily born into a family, a language, and a culture. Every person is born into one or several overlapping communities, usually including an ethnic group, with specific values, cultures, religious beliefs, and traditions. He is generally born into a “country.” He is always born into a specific historical context of time and place, meaning neighborhood and land area.