Cultural Presuppositions of Economics
(Prepared for publication by the CULTURELINK Network)
Original paper: UDC 008:330(100)
1. Methodological introduction - the irrelevance of the 'great division'
1.1. Modern western society - a traditional society
The ordinary mode of thinking generally operates with dichotomic categories (what Bruno Latour calls the 'great division'), such as nature/culture, tradition/modernity, scientific facts/beliefs, development/underdevelopment, we/ the others, etc. This division of reality is, incidentally, characteristic of the West - other cultures prefer complementarity (e.g. yin / yang) to binary opposition. Hence - always from the perspective of the ordinary mode of thinking - anthropology should devote itself to the study of 'traditional' societies, characterized by myths, religions, 'irrational' behaviour, etc., which implies - a contrario - that industrial society considers itself as rational, secularized and disillusioned (except, perhaps, on its margins constituted by the popular tradition of 'internal savages').
This arrogant approach results from the fact that the West defines itself as radically different from the rest of humanity, holder of a sort of monopoly on rationality and history (as opposed to societies based on myths). This can clearly be seen in the attitude to science: scientific procedure establishes 'a-cultural' (or transcultural) facts, which can be arrived at only when prejudices inherent in traditional beliefs are rejected. The allegory of the 'naked truth' expresses clearly that science can operate only when the cultural tinsel that conceals it has been removed. And the West alone knows how to do it.1
What we propose is that modern western society should be treated as all other societies. While recognizing its specificities, it should not be accorded exclusivity or superiority. Like all other societies, it is based on traditions and impregnated with myths and rites. All social practices can be considered in this way, but we shall limit ourselves to economics.
1.2. Is economics a science?
At first sight, there are two objections to this 'reculturization' of economics (or the reinsertion of economics into the cultural context). First of all, it seems that 'economic mechanisms' operate according to the same 'laws' in all societies; the downfall of Marxism has reinforced this impression because it has left the field to the only remaining economic model - the market model, which has apparently become global. Economics, then, would have nothing to do with a particular culture but has become universal.2 On the other hand, economics defines itself as a science. By borrowing - metaphorically - a number of concepts from physics ('mechanisms', 'flow', 'equilibrium', 'flexibility', etc.) and by taking over from mathematics its taste for quantification, formalization and equations, it presents itself as a theory which owes nothing to social contingencies, which it considers suspect.
However, the universalization of the 'laws' of market economy is merely an optical illusion. In fact, in the South, a large part of exchange escapes mercantile norms (the 'informal' sector, traditional exchange, 'affective economy', etc.); as for the North, it is common knowledge that the 'underground economy', which evades taxation, amounts to approximately 20 per cent of the GDP; on the other hand, it is estimated that the volume of exchange based on gift and counter-gift (essentially within primary communities) is equivalent to half the volume accounted for in the GDP, to which must be added all transactions regulated by a different logic (redistribution by the state, social security, etc.). The universal expansion of the market has obviously not taken place.
Furthermore, the 'scientific' nature of economics has not been established. In order to deserve to be called a science, economics should be predictive.3 However, its predictive power is weak. It either waits for events to happen to explain them (and rationalizations a posteriori abound, as can be seen by reading financial editorials), or it predicts events which do not happen (the 'end of the tunnel', growing employment, the 'development ' of the South, etc.). Which raises the question of why economic theories (or 'laws') whose predictive power is so problematic continue to be propounded and taught.
2. The historical and cultural origin of some economic presuppositions
It should be remembered that economics is a way of constructing social reality that imposed itself as an autonomous 'science' as late as the end of the 18th century. Until then economics was embedded in social relations (Polanyi), it was inseparable from ethics (Aristotle), of religion (St. Thomas, Calvin), politics (mercantilism), etc. The 'declaration of independence' of economics is recent - it can be traced to 1776, the year when Adam Smith published A Inquiry into the Nature and Causes of the Wealth of Nations, the invention of the steam engine by James Watt and the Declaration of Independence by the United States of America. Thus the market, industrial power, democracy and human rights are blended in the same historical and cultural origin.
Lionel Robbins defines economics as 'the science which studies human behaviour as a relationship between (given) ends and scarce means which have alternative uses.' Scarcity, then, lies at the heart of economics; for the economist, only goods that are considered scarce are interesting, but, paradoxically, economics proposes to eliminate scarcity by offering formulas for abundance. It is fortunate for economists that this sort of scientific suicide never actually happens thanks to the second postulate which states that human needs are unlimited. Abundance, like the horizon, gets more and more distant as we try to reach it.
This 'principle of economizing' (everything is scarce and choices have to be made, everything has a price and nothing is free of charge), an idea shared by common belief, is a figment of the western imagination. Without being able to enter in this context into all the methodological and epistemological problems inherent in the presuppositions of economic theory, I shall limit myself to two comments: Firstly, evidence of scarcity proposed by formalist economists is based on a confusion of scarcity-finitude (certain goods such as oil or great paintings exist in finite quantities and cannot be reproduced) and scarcity-poverty which is created socially. The confusion springs from the fact that the subjective experience of the two situations is similar: a person picking mushrooms and finding only a few may conclude that they are 'scarce' without taking into account that this 'scarcity' depends either on natural causes (too little rain) or on social ones (other mushroom pickers were there before him). An interesting consequence of this confusion is that something that is scarce may be taken as abundant: for example oil, whose scarcity is concealed by its falling price on the market (classical economists, for instance Ricardo, were careful to distinguish between reproducible and unreproducible goods). Thus the 'natural price', believed to reflect relative scarcity, conceals social inequalities as much as real problems of finite supply.
Secondly, anthropology shows that there are societies which do not consider themselves prisoners of scarcity. For example, M. Sahlins has shown that 'primitive' societies are also societies of abundance: their excessive and lavish spending on festivals is a way of guarding against accumulation which they regard as a danger. Hence their multiple procedures of social redistribution aimed at preventing envy and bad fortune resulting from the 'evil eye'. By contrast, in western societies it is envy and the desire for accumulation that are the driving force of growth. In order to be a good citizen one must first of all be a good consumer, hence the social exclusion of the unemployed. Social inequality and the theoretically unlimited character of human needs lie at the root of modern scarcity. It is true that 'primitive' societies also sometimes experience scarcity-finitude, resulting from, among other things, whims of nature, but in their case it does not lead to the same social consequences and is not felt in the same way.
2.2. The positive nature of exchange
All modern ideologies are marked by the positive character of exchange. In the 18th century, 'soft commerce' was considered the best antidote to violence; Adam Smith believed that each individual possesses a natural propensity to truck, barter and exchange, and Ricardo demonstrated mathematically that two countries which produce the same goods have an advantage in exchanging them even if they are produced at a lower cost in one of the two countries, on the condition that their relative prices are different (the theory of comparative advantages). We know the fate of this theory. Though its implicit and explicit hypotheses are ignored more often than not, it is the basis of GATT and the new World Trade Organization.
And yet, for a very long time and in many societies, exchange was considered dangerous. It is not unimportant to remind ourselves that the verb 'to pay' comes from Latin pacare (to appease) and that the verb 'to sell' derives from Gothic saljan ( to shed the blood of a victim as an offering to the gods). There are numerous etymological examples of this kind (cf. E. Benveniste). Incidentally, many 'traditional' societies excluded things needed for existence from commercial exchange: labour and land are classical examples (Polanyi), to which should be added water in Islamic legislation. Finally, it should be noted that commercial exchange is reserved for transactions with enemies: the practice of 'fair exchange is no robbery' allows everyone 'to be quits', to leave without owing anyone anything, whereas a situation in which gifts are exchanged, i.e. where there is reciprocity which creates or maintains social links is the privilege among the members of the same community (E. Ndione).
We see, then, that the necessity to produce in order to exchange and to exchange in order to live (the phrase 'to earn one's living' is a perfect illustration of this development) is a characteristic of modern societies. In order for this phenomenon to impose itself, all things (including labour and land) had to have a price and the use of money had to become general. Since exchange is effected by means of money and money can be accumulated indefinitely, production has increased enormously. In the process, we have passed from a society based on person-to-person relations, in which the rate of exchange (the price) was indefinite (because it was fixed in each individual transaction), to a society in which human relations are regulated by money and where the rate of exchange is 'objective', i.e. it does not depend on the qualities which the two protagonists in the exchange see in each other - they are now equal 'individuals' before the merchandise. These observations, which may appear banal, are in fact deeply rooted within a particular culture.
2.3. Growth and development
Despite all rhetorical efforts to separate growth from 'development' (the latter supposedly bringing an element of 'soul' to the former), the two notions are closely related and stem from the same biological metaphor. By identifying development with growth, it is presupposed that a continuous process is involved, directed towards an aim (teleology), that the process is 'natural', i.e. it depends neither on chance or strategy (C. Rosset) and goes through cumulative stages without the possibility of 'turning back'.
This theme of growth/development is an integral part of western intellectual history (R. Nisbet). We shall limit ourselves to a list of its main points. Aristotle defines 'nature' (physis) as 'that which grows, develops' (phuo)4; consequently, it is 'nature' that can become the subject of 'scientific' knowledge as opposed to history (we know what kind of plant or tree will develop from a seed but we cannot know what will happen to the seed if it freezes or if it is eaten by a bird). For Aristotle growth is not unlimited. Like in the agricultural myth of Persephone, whom her lover Hades, king of the underworld, allows to spend one-third of the year with her mother, Demeter, the goddess of agriculture, the seed develops, reaches maturity and then 'dies' by returning to the soil. Scientific knowledge does not contradict mythology and operates in a cycle.
Aristotelian theory was widespread in the ancient world; it was applied by St. Augustin to the history of salvation, perceived as a single cycle which starts from Adam, culminates in Jesus Christ and ends with the 'end of time'. Actually, this corresponds to the prevailing view of the world as aging (in mundo senescenti)5 in the troubled years of the decline of the Roman empire.
The metaphor of humanity seen as a man (first a child, then an adult and finally an old man) was widely exploited in the Middle Ages. It was completely modified by the victory of the Moderns (Fontenelle, Ch. Perrault) over the Ancients at the end of the 17th century. In a famous text, Fontenelle explains that the progress of humanity has no end and that 'metaphorical man' will not grow old.6 Thus the revolutionary idea of infinite growth was born; it was to take various forms in the following centuries (Condorcet, Comte, Darwin, etc.). The theory of social evolution made it possible to justify the dominant position of the western society engaged in the 'march of the progress of affluence' (A. Smith) and point to 'those that follow the image of their own future on the industrial ladder' (K. Marx).
The ancient myth has not disappeared - it has only been modified in the course of history. For established thinking there is no salvation outside growth that determines the entire international system. This, in any case, is our representation of history, which in actual fact corresponds only to the growth of entropy, i.e. to an irreversible transformation of available energy into unavailable energy.
3. Economics as belief
We should not confuse faith and belief. Faith is an intimate conviction, a subjective experience. By contrast, belief is a collective representation which seals the unity of a group, a social truth believed to be incontestable and which leads to obligatory behaviour, which, in turn, reinforce belief (E. Durkheim).
Beliefs are seen as beliefs only from the exterior - a member of a given society considers his own 'beliefs' as truths or as something that is self-evident. One believes in something because everybody else believes in it and it would be inconvenient (i.e. socially dangerous) not to do so. Tradition is always that which 'goes without saying'; the fish is least well placed to discover the existence of water. Only the agnostic asks how it is possible to believe in the existence of God; the believer does not pose the question: he believes in God (J. Pouillon). Only historical distance makes that which entire societies considered reasonable as something 'unbelievable': the Aztecs thought it necessary to sacrifice human beings to ensure the return of the sun, for the Europeans of the Middle Ages the existence of witches and witchcraft was beyond any doubt and it was justified to burn them; for the Azande it was logical to consult the oracle in all day-to-day decisions. Similar examples are legion.
If we refuse to regard the western society as different from all others, it must be admitted that a number of socially accepted 'truths' are nothing but beliefs and that what is thought to be true today may seem quite unbelievable in a century or two. But at the moment we are asked - at the risk of social exclusion - to adhere to beliefs which are shared by members of our society , beliefs which are all the more camouflaged because we believe our society to be secular and rational.
Of the numerous 'economic beliefs' that are widely shared and that determine many concrete actions the following may be listed in this context: the debt of the South will be repaid, growth will solve employment problems. exchange is mutually advantageous, growth/development can be sustainable, i.e. unlimited; development will help to bridge the gap between the North and the South, economic rationality is transcultural, etc. This is why structural adjustment programmes are set up and economies 'revitalized'; this is the reason for establishing the World Trade Organization and for mobilizing considerable human and financial resources aimed to stimulate development, for trying to make development compatible with environmental protection, for teaching the whole world the 'laws of the market', etc.
Of course, not everyone believes in these 'truths' in the same way ( not all the Azande believed in the truth of the oracle in the same way) but this is not important as long as the whole world pretends to believe in them. For example, it is well known that the generalization of 'development' for our whole planet is neither possible (because of ecological reasons) or desirable. But those who would say it would be considered enemies of the human race. One is therefore better advised to blame one's personal ignorance for such doubts and to bow to received wisdom: if all the organizations of the United Nations and most experts underline the importance and desirability of 'development' (be it 'human', 'sustainable', 'cultural' or 'social'), they must be right. For things to fall into place it is sufficient for everyone to pretend to think that this is true. The social effect of beliefs is not diminished by the fact that semblance has replaced truth.
Modern western society is much less disillusioned than Max Weber thought. Economists who scrutinize 'major economic indicators' in order to predict market trends are not far removed from the oracles of Rome or the Azandes. The witches who persisted in denying the charges brought against them only damaged their case by the denial (because only the devil could give them the strength to withstand torture); the multiple failures of 'development' - which nobody denies - do not bring into question its legitimacy but reinforce it because they make it possible to 'learn the lesson of the past' in order to do better in the future. The Aryan myth used by the Nazis to identify 'real' Aryans (and exterminate Jews and Gypsies) and racism can easily 'prove' the inferiority of others. On the other hand, theory (or belief) defines its object by means of its 'competence', i.e. with instruments that allow it to grasp or explain. Nobody has ever seen God or 'development', but both hold the belief of their faithful by producing signs of their existence (a well, a miracle, a motor cycle, an answered prayer, a dam, a cathedral, a school, etc.). and by being the subject of innumerable debates whose common denominator is the absence of a critical approach to their presuppositions.
This is why we so urgently need to get more interested in these presuppositions, in what is implicit and in what all these theorists have in common, in the very basis of our beliefs that cement the existing consensus, so that we may be able to look at our tradition from a distance and thus identify its specificity.
- For the ordinary mode of thinking there is a division between science and belief. Scientists always believe that it is the others who believe in something, whereas they themselves base their conclusions only on knowledge. They seem to forget that they too believe in science and that science is built on presuppositions of the same order as those which lead to beliefs. The fact that they are currently shared by the entire 'scientific community' and transcend the frontiers of western culture makes no difference. Scientific 'truth' is always based on a (provisional) representation of the world. Cf. Bruno Latour 'Quand les anges deviennent de bien mauvais messagers' ('When angels become bad messengers'), Terrains, no. 14, March 1990, pp. 76-91.
- More than thirty years ago, Dudley Seers ('The Limitations of the Special Case', Bulletin of the Oxford Institute of Economics and Statistics, Vol. 25, no. 2, May 1963, pp. 77-98) warned economists about the danger of trying to transfer the theories developed for the industrialized world to developing countries. The warning, based on the enormous structural difference that separates different types of economies, has never been taken seriously. It should also be remembered that economic concepts are always based on a specific culture.
- This predictive power is not quite certain even in what are called 'exact sciences'. For example, although physics allows the prediction of a large number of 'trivial' operations, it must also, at a certain level, resort to acts of faith (e.g., 'black holes' do exist) in order to explain reality. But economics is far from this level of performance even in trivial operations: what economist can foresee (if not by intuition) the next financial crash, the fall or rise of the dollar, or the size of the Japanese trade surplus? The current volatility of financial markets and the 'theological' debates of the initiated on the 'financial bubble' provide ample evidence for this statement.
- Cf. Aristotle, Metaphysics, Book V, Para 4, 1-8 (1014b and 1015a), the Politics, Book I, Para 1 (1252a) etc.
- 5 Cf. Lucretius, De natura rerum, Book II (1122) and Book I (54-57), Book II (417-418), etc.
- Bernard Le Bovier de Fontenelle, Poésies pastorales avec un Traité sur la nature de l'églogue et une Digression sur les Anciens Poètes et Modernes, Louis van Dole et Estienne Foulque, The Hague, 1688, pp. 227-228.
- Benveniste, Emile. Le Vocabulaire des institutions indo-européennes. t. 1 et 2, Coll. 'Le sens commun', Paris, Ed. de Minuit, 1969.
- Durkheim, Emile. Les Formes élémentaires de la vie religieuse. Le système totémique en Australie. Coll. 'Quadrige', Paris, PUF, 1985 (1912).
- Il faut manger pour vivre. Controverses sur les besoins fondamentaux et le développement, Cahiers de l'IUED, no. 11, Paris, PUF, Genève, IUED, 1980.
- Latour, Bruno. Nous n'avons jamais été modernes. Essai d'anthropologie symétrique, Coll. 'Armillaire', Paris, La Découverte, 1991.
- M.A.U.S.S. (Mouvement anti-utilitariste dans les sciences sociales). Ce que donner veut dire. Don et intérêt, Coll. 'Textes à l'appui', Paris, La Découverte, 1993.
- Ndione, Emmanuel Seyni. Le Don et le recours. Ressorts de l'économie urbaine, Dakar, ENDA, 1992.
- Nisbet, Robert A. Social Change and History. Aspects of the Western Theory of Development, New York, Oxford University Press, 1969.
- Perrot, Marie-Dominique, Rist, Gilbert, Sabelli, Fabrizio. La Mythologie programmée. L'économie des croyances dans la société moderne. Coll. 'Economie en liberté', Paris, PUF, 1992.
- Polanyi, Karl. La Grande Transformation. Aux origines politiques et économiques de notre temps, Coll. 'Bibliothèque des sciences humaines', Paris, Gallimard, 1983 (1944).
- Pouillon, Jean. Remarques sur le verbe 'croire'. La Fonction symbolique. Essais d'anthropologie (éd. par Michel Izard et Pierre Smith), Coll. 'Bibliothèque des sciences humaines', Paris, Gallimard, 1979, pp. 43-51.
- Rist, Gilbert, Sabelli, Fabrizio et alii. Il était une fois le développement... Coll. 'Forum du développement', Lausanne, Editions d'En Bas, 1986.
- Sahlins, Marshall. Age de pierre, âge d'abondance. L'économie des sociétés primitives, Coll. 'Bibliothèque des sciences humaines', Paris, Gallimard, 1976.
Gilbert Rist is a Professor at the Institut Universitaire d'Etudes du Développement (IUED), Genève, and author of a number of books, among which are Le Développement. Histoire d'une croyance occidentale (Paris, 1996) and La culture, otage du développement (Edited by G. Rist, Paris, 1994).
His address is the following:
d'Etudes du Développement
24, rue Rothschild, C.P. 136
CH-1211 Genève 21
Tel.: (22) 731 59 40
Fax: (22) 738 44 1