You and I live in a world of transformation. I predict that change is here to stay . . . unless something changes. My personal observations have convinced me that global transformation, national transformation, corporate transformation, domestic transformation, and even personal transformation take place at the intersection of culture and economics. Wherever the cultural factors of traditions, institutions, families, and individuals intersect with the economic production factors of land, labor, capital, and the entrepreneur, you can count on change.
It is exciting to see how the phenomenon of transformation takes place. Once you begin to recognize the function, you can better understand, and in some cases even predict, the associated behavior that results. When I was a kid, my grandfather used to tell me, “Jimmy, if you want to know why something happens . . . follow the money.” But I have discovered that if you really want to get a glimpse of why and how things happen you must follow that money trail down to the curbside of the intersection and observe what happens when the economic factors try to cross the intersection at the same time as the cultural factors.
In these next few articles, I am going to try to assume the assignment of presenting this facet of cultural economics so that we can better understand the idea of global, national, corporate, domestic, and personal transformation.
To begin, let’s establish some simple guidelines for our thoughts:
Traditional economics concerns itself with how we efficiently allocate and manage our resources—land, labor, capital, and the entrepreneur—as well as how we organize the production of goods and services. Economists collect this data and develop charts, or matrices, to project our conclusions into the future on the basic assumption that future reality will be an extension of past reality.
The subject of culture suggests an integrated set of behavior patterns learned by members in a society, but not necessarily inherited biologically. The behavior patterns, over time, become traditions that are passed on to future generations through institutions, family units, and individuals.
Cultural Economics is the branch of economics that concerns itself with the relationship of culture to economic outcomes. It studies how various aspects of human cultures interact with economic events, behaviors, and conditions. Ultimately, the study of economics is all about people with their needs, talents, abilities, propensities, and even their emotions of love, joy, surprise, anger, sadness, and fear.
A given culture will influence the political systems, traditions, religious beliefs, the formation of institutions, and even the value we ascribe to individuals. Likewise, economic philosophies and systems have the power to affect and shape our cultures.
In the year 336 B.C., a twenty-one- year- old was placed on the Greek throne following the assassination of his father, Philip. Young Alexander of Macedonia had been schooled at the feet of the Greek philosopher, Aristotle, who had made Alexander aware of a world that was fragmented economically into countless little city-states. Each dominion had its own government, money system, army, and customs.
With Aristotle’s help, Alexander began to comprehend the high cost of fragmentation, and in the next dozen years Alexander the Great “conquered” the known world for Greece. He conquered it with such interesting subtleties that more often than not the countries in his path simply threw open their gates and welcomed him in. He brought with him security, protection, and fairness, and encouraged free trade within his new world based on a dependable metallic coinage of gold and silver. The genius of that economic enterprise and availability rested in the fact that it did not cost his constituents more out of their purses for those additional benefits, but less . . . a whole lot less!
Where the citizens had been paying as much as seventy to eighty percent in taxes to operate their fragmented city-states, Alexander reduced those tax rates to around fifteen percent. Little wonder that they threw open their city gates and welcomed him with open arms!
But, alas, with no more worlds to conquer, Alexander the Great died at the early age of thirty-three as a result of a wild drinking party. His obtuse generals decided to divide up the empire and, along with the insecure propensity of the Europeans and Asians, the populaces began to move back to a model of fragmented city-states, no longer unified by protection and a stable economy. The Greek empire began to crumble, but his dream lived on.
Two hundred seventy-one years later, Julius Caesar laid claim to the dream of Alexander the Great, overhauled it, and began to implement the “great experiment,”Pax Romana.
The global economy was not nearly as fragmented as it had been prior to Alexander, and the Greek Philosophy, literature, and ideas of democracy had done much to break down the barriers between the Greeks and the barbarians. Julius Caesar, like Alexander, began building his empire, not through brutal conquest but rather through economic and political liberation.
Five years after he had taken over Gaul, Julius Caesar entered Italy, where Rome opened her gates and welcomed him as her new champion and leader. He made the stability of the Roman currency so attractive, the mildness of Roman taxation so alluring, the openness of world trade and commerce so desirable that his empire expanded by the force of demand. He treated the conquered nations with such secure leniency that even if they could have revolted, they didn’t.
The economy began to grow, trade began to flourish, and the Roman Empire was established. Julius Caesar perceived that individual initiative and creativity that was rewarded produced more individual initiative and more creativity, thus a more stable and wealthy empire. He also perceived that exorbitant taxation squelched individual initiative and creativity.
Each of those classic examples includes major global transformation taking place expressly at the intersection of culture and economics. Let’s take a closer look at the factors gathered at the curbside of that intersection of culture and economics.
Next Week: Components of production
(Research Ideas from Dr. Jackson’s new writing project on Cultural Economics)
© Dr. James W. Jackson
Permissions granted by Winston-Crown Publishing House