Academic journal article The McKinsey Quarterly

The Gross National Product and the Gods

Academic journal article The McKinsey Quarterly

The Gross National Product and the Gods

Article excerpt

The variety of forms that capitalism takes are deeply conditioned by the economic culture of the societies in which it operates

SCHOLARS MAY DISAGREE about why Jesus drove the money-changers from the Temple. But few would question the reality of the tension, implicit in that famous scene, between economics and culture, especially religious culture -- the beliefs, values, and orientations toward life through which people organize their existence, search for meaning, and define who they are.

Fewer still would argue that culture actually determines economic behavior in today's industrial societies. (Some anthropologists do, of course, hold such views regarding pre- or non-modern societies, but that is a different matter.) By contrast, numerous economists assert that, since we are "rational actors" in economic affairs, we must be comparably rational in the other areas of our lives. This naturally leads me to wonder why people who have been so remarkably unsuccessful in clarifying, let alone predicting, the workings of the marketplace should be trusted to shape our common interpretations of politics or social life.(1)

Attempts to explain the dynamics of Wall Street in theological terms have been unpersuasive at best; so, too, efforts to provide a strict economic explanation for events like the Iranian revolution. For all practical purposes, therefore, the gulf separating markets from sanctuaries and economic rationality from morals -- that is, the gulf between the gross national product and the gods -- remains as wide as it was in biblical times.

The idea of economic culture

Must this always be so? Is there no navigable middle course between "culturalism" (where beliefs and values are supposed to explain everything) and "economism" (where politicians, spouses, and Islamic revolutionaries are all assumed to act in accordance with the logic of investment bankers)? Common sense says there is: a perspective focused on what I call "economic culture" -- the social and cultural context of economic behavior.(2)

Such a view of things does not assume that culture determines economics or economics culture. It assumes only that human beings exist in society and that this context, with its baggage of cultural attitudes and habits, affects economic behavior and is in turn affected by it in ways that must be studied empirically, case-by-case on the ground. No matter how much the same capitalist rationality may animate managers from different cultural backgrounds, those differences are not -- and cannot be -- left conveniently in the cloakroom before discussions or negotiations start. Indeed, they often have as telling an effect on the outcome of such sessions -- albeit in a different way -- as do cash flow projections or estimates of market size.

A question of advantage

Variations in economic culture matter. In particular settings, they can provide the basis for what my colleagues and I have come to think of as comparative cultural advantage. For historical reasons, to cite one example, modern Japanese capitalism has been more successful than its American counterpart in building large organizations that command intense, sometimes passionate loyalty from their members. Arguably, this has provided Japanese companies a culture-based source of competitive advantage.

Now, this does not mean that the Japanese are always successful in this way or that Americans can never be. It means only that, comparatively, the cultural baggage that the Japanese bring with them into the economic arena is differentially helpful in this particular aspect of organization-building. This has, however, a further implication: what may be helpful at one time may be a handicap at another.

The cultural constellation of loyalty and conformism (what the Japanese call "groupism"), which helped create the manufacturing achievements that have been scaring the wits out of Americans and Europeans for so many years, may be much less helpful -- may indeed be a source of comparative disadvantage -- in a "post-industrial" era of high technology and information-driven services. …

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