Modernization theorists from Marx to Bell have argued that economic development brings pervasive cultural changes thus leading to a cultural homogenization and convergence as the result of economic development. On the other hand, others, from Weber to Huntington, have claimed that “cultural values have an enduring and autonomous influence on society” (Inglehart and Baker 2000: 20). In recent years, research and theory on socioeconomic development have given rise to two contending schools of thought. DiMaggio (1994: 56) suggests how "one school emphasizes the convergence of values as a result of modernization – viewed as an overwhelming flux of economic and political forces that drives political change. As a result traditional values decline and are replaced by modern values. The other school of thought emphasizes the persistence of traditional values despite economic and political changes. This school assumes that values are relatively independent of economic conditions. Consequently, it predicts that the convergence around some set of modern values is unlikely and that traditional values will continue to exert an independent influence on the cultural changes caused by economic development."
While substantial progress has been made, according to Vernon Ruttan (1998), within a partial equilibrium framework to analyze the sources and influence of technical and institutional change, little attention has been devoted by economists to the role of cultural endowments. To the extent that cultural traits – or cultural endowments – are considered at all by economists, they tend to be subsumed under the concept of tastes. In the post World War period, the first generation of development economists gave a prominent role, at least at a rhetorical level, to the role of cultural endowment in constraining or facilitating economic growth. Economists, such as Hagen (1962) and Rogers (1969), accepted the body of scholarship in history, philosophy, anthropology, sociology, and political science that insisted that cultural endowments exerted major influence on behavior and hence on the response in traditional societies to the opportunities associated with the modernization of community life and the possibilities of national economic development. In the next section, I take into consideration the major contribution on this topic offered in the last few decades.
Bert Hoselitz, from the University of Chicago, with his Non-Economic Barriers to Economic Development, played a particularly important role in the 1950s in urging economists to give greater consideration to the role of particular factors in economic development. Among the non-economic factors identified by Hoselitz (1952: 10) were the emergence of cultural minorities or classes that serve as the spearhead for both technical and institutional change; a social and political system that encourages a high degree of social mobility; social and cultural environment that facilitates the development of institutions capable of generating the technical and institutional knowledge necessary to operate a modern society; and the weakening of commitment to traditional methods of production and institutions.
This last consideration was particularly important in Hoselitz’s (1952: 15) view in that traditional "value systems offer special resistance to change … their change is facilitated if the material economic environment in which they can flourish is destroyed or weakened. […] Economic development plans which combine industrialization with an extension of traditional or near traditional forms of agriculture are thus creating a dilemma which in the long run may present serious repercussions in the speed or facility with which ultimate objects can be reached."
Another significant attempt to incorporate cultural variables into the analysis of economic development was that of Everett Hagen in his On the Theory of Social Change: How Economic Growth Begins. Hagen (1962: 4) argued that advances in the field of anthropology, sociology, psychology, and economics had “reached the point where a synthesis could be achieved to form a unified theory of society and social change.” Hagen’s (1962: 80) analysis led him to place primary emphasis on personality formation arguing that the “interrelations between personality formation and social structure are such that social change could not occur without prior or concurrent personality change.” Traditional societies were characterized, Hagen (1962: 83-84) contends, by authoritarian and unquestionable personalities,
the image of the world … includes a perception of uncontrollable forces. […] Each individual finds his place in the authoritarian hierarchy of human relationships.
In his historical studies, Hagen gave particular attention to the emergence of personality characteristics conducive to innovation, and argued that a disproportional share of entrepreneurs are drawn from social groups that were excluded from traditional elite roles. His work has been seen as the culmination of an effort to enrich the theory of development by drawing on anthropology, sociology, and psychology, rather than as the foundation for further advances.
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