The Economic Decoding of the Phenomenon of Culture Based on the Antientropic Formation and Ranking of Human Ends

preferences and rules, in the sense of being unintended or non-designed, that are causal in shaping the characteristic behavior of human collectivities. Consequently, the crux of the economic understanding of culture and its consequences is the unintended or non-designed formation of preferences and rules, which falls under the guidance of the same fundamental causal principle that governs the comprehensive identification and ranking of human ends: It is the objective antientropic formation of human ends that underlies the formation and evolution of cultures. Against all odds, both the formation of human ends and the formation of cultures are economic phenomena.

1. Introduction

This study is not the kind of work that draws upon previous efforts of economic “science” to understand and adopt a phenomenon which is hard to understand by its very nature, like culture. On the contrary, it is about how Western-inspired orthodox economic “science,” which failed on other fundamental topics, cannot model a phenomenon like culture. This paper will show that the economic understanding of culture must be based on a transcultural perspective that the prevailing economic “science” has never taken, and on fundamental concepts and theories about phenomena that orthodox economists have avoided because of their assumed unknowable nature or because of groundless hope that knowledge about those phenomena is the burden of some other social sciences.

Consequently, part 2 of this study, “The Status Quo: No Economic Decoding of Fundamental Anthropological Terms and Errant Understanding of Fundamental Features of Culture,” emphasizes the lack of even minimal effort to decode, in economically meaningful ways, terms used in defining culture, as well as economists’ failure and reasons for correctly identifying the nature of culture. Part 3, “The Status Quo: Fundamental Features of Culture Ignored,” deals with features of cultures which economists have ignored even though they are vital to a correct understanding of culture. Part 4, “The Cause of Confusion in Understanding Culture: Fundamental Failures of Orthodox Economic Theory,” takes up the problem of concepts and phenomena that economic theory has abandoned or misconceived, and without which the economic definition and understanding of culture are ruled out. Part 5, “The Basis for the Economic Understanding of Culture: The Antientropic Formation of Ends, Preferences, and Rules,” introduces in a very brief way the true nature of ends, preferences, rules, and institutions, and the causal principles of their formation. All of these theoretical elements are conceived from the general power perspective, which I have been developing for more than twenty years—and the results of which the prevailing orthodox economists have constantly rejected, with one exception. It is based on these new definitions and principles that in Part 6, “An Economic Definition of Culture,” I introduce an economically meaningful definition of culture and comparatively assess its ability to capture the features of culture as they have been revealed by anthropologists. Part 7, “An Economic Theory of Culture Formation and Its Impact on Economic Performance,” grounds the primordial role of culture in determining the economic performance of human collectivities and conceives an economic theory of culture formation that draws on the antientropic formation of ends, preferences, and rules. The final Part 8, “Conclusions,” reveals consequences that, to an orthodox economist, cannot but be surprising.

2. The Status Quo: No Economic Decoding of Fundamental Anthropological Terms and Errant Understanding of Fundamental Features of Culture

Before saying anything about the definition and nature of culture, I have to make clear what I do not mean by culture in this paper. I leave aside all the meanings of culture which, although important for some research interests, are not in any way directly related to the differences in behavior of human collectivities, especially in terms of their economic performance. I especially exclude culture as a social sector that produces objects of art and culture as nonbiological transmissions of information between generations. In other words, here I use the anthropological meaning of culture.

If I had to assess economists’ knowledge about culture I would sharply distance myself from a relatively recent assessment which runs: “In spite of the attention that has been paid to culture in social sciences over the centuries, we are still no closer to an unambiguous, widely accepted definition of the term. Conceptualizations of culture vary across disciplines, between schools and simply between authors” (Beugelsdijk and Maseland, 2011). This assessment errs by treating anthropologists and economists alike, between whom there are great differences in terms of the ability to understand, define, and identify the features of human cultures. Leaving aside exceptions in the ranks of anthropologists (I do not know anyone notable in the ranks of economists), most anthropologists have a quite accurate understanding of culture, while economists have wholly meaningless definitions, poor or flatly wrong understandings of some important features and are ignorant of other fundamental features (as revealed by anthropologists), which have very important consequences for the general understanding of the phenomenon and its expected economic impact. The root cause of all of those economists’ failures is a theoretical perspective which does not go into enough depth and width and, correspondingly, lacks even the conceptual apparatus to depict and understand the subtle and comprehensive phenomenon which culture is.

The first symptom of this situation is the absence of even the least effort to decode anthropological definitions, which have no meaning to economists. If properly decoded in economic concepts, Kluckhohn’s definition of culture as “patterned ways of thinking, feeling and reacting, acquired and transmitted mainly in symbols” (1951:86), Geertz’s definition of it as “an historically transmitted pattern of meanings encoded in symbols” (cited in Jong, 2009:6), and Hofstede’s visible manifestations of culture consisting of values (as desired rather as desirable), symbols, heroes, and rituals or his statement that “Culture is to a human collectivity what personality is to an individual” (Hofstede, 2001:10) are not different “conceptualizations” but different descriptions (using mostly synonymous words) of the same social phenomenon.