Academic journal article Contemporary Economic Policy

Cultural Accounting: An Example from a Small Caribbean Island

Academic journal article Contemporary Economic Policy

Cultural Accounting: An Example from a Small Caribbean Island

Article excerpt

I. INTRODUCTION

The cultural accounting matrix approach (CAM) in the present study is a version of the extended input-output, or social accounting matrix approach, that analysts widely apply at the national and regional levels. Hicks (1942) introduced the term "social accounting." Subsequently, Stone and his co-workers (United Nations, 1953, 1968; Stone, 1973) extended this concept to develop the System of National Accounts (SNA) framework. The innovation of cross-tabulating the conventional double entry national accounting system into a single entry social accounting matrix created both improvements in accounting consistency and the opportunity to understand the role of particular economic flows. This technique thus extended Leontief's (1951) input-output system and offered a new tool for understanding the relationship between economic change and social distribution (Pyatt and Roe, 1977). Adapting SNA to the situation of less developed countries requires rethinking many international sectoral and social classifications in order to reflect local circumstances, available data, and policy needs (see Ward, 1977; Adelman et al., 1988).

The taxonomy of the CAM and the corresponding cultural division of labor introduced here originates from anthropologists in the tradition of Furnival (1948), Herskovits (1961), and Glazier (1985). These authors write of the interrelationships and the correlations between economic, political, and social relationships as a function of cultural identity. For these authors, culture is not a primary trait but is part of an adaptive behavior by a group and by those who interact with it. This adaptive behavior often serves as a social construct to maintain existing segmentation--for example, through kinship and ethnic affiliations (see Glazier, 1985). One can compare this assumption to that of economists who argue that economic segmentation is perpetuated because it is functional in reproducing a capitalist hegemony (Reich et al., 1973) or that the very exclusiveness of groups with access to specific incentives determines their likelihood to act in a group-interested manner (Olson, 1971).

In the context of this paper, the cultural division of labor is the set of economic interactions between ethnically identifiable populations (see Hechter, 1978). If these populations have markedly different and persistent economic characteristics and/or relationships with the economy, then the cultural division of labor is segmented. This segmentation may be both vertical and horizontal and may exist on both the supply- and the demand-side of an economy. Horizontal segmentation exists on the supply-side of an economy when people of particular cultures are associated with particular sectors of production--for example, when indigenous people predominate in traditional activities, such as Europeans in manufacturing and Asians in commerce. Vertical segmentation has arisen, for example, when an economy is largely owned and run by Europeans but operated by indigenous people or non-European immigrants. A related characteristic of vertical segmentation arises when people with comparable skills or education but of different ethnicity, gender, or religion receive different wages for the same work. Such a marked vertical cultural division of labor implies uneven wealth distribution and social inequalities. Orthodox theory does not explain the persistence of this segmentation (see Arrow, 1971; Atkinson, 1980). Explaining segmentation typically requires some analysis of the historical evolution of the economy (see Reich et al., 1973).

A cultural division of labor is not confined to small societies. However, the divisions often are sharper and sometimes easier to measure empirically, and some of the institutional factors are more apparent (Benedict, 1978; Henry, 1989). Indeed, culture related factors permeate a small economy. In small islands, the problems of scale (see Kuznets, 1969; Jalan, 1982; Srinivasan, 1986; Rojas, 1989) are compounded pathologically by those of the cultural division of the economy (Horowitz, 1971; Clarke, 1984; Ward, 1989). …

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