After the Financial Crisis, the World at Cultural Crossroads

I don’t know about you, but the year 2015 was defined for me by images of hordes of people clambering on to boats to take them across the Mediterranean. Many making it to their destination and many others meeting a watery grave.

Since then the sea has become a sort of metaphor for the European migration crisis as it has now come to be known. Hundreds of small dinghies bobbing on the ocean, each making its own journey. People helplessly clinging on to their meagre, yet precious, belongings – mostly family members – in the hope of starting a new life in a new land. It is a sad tale of what the world has come to, racked by poverty and conflict. It is also a story of fortitude, a human story of survival and endurance.

The ocean-tossed life is a metaphor in more ways than one. Think of what the 2008 financial crisis left behind as it rippled through most of the world. Think of the Arab Spring and what a storm wreck it turned out to be for most people in the Middle East and North Africa. These conflicts all have a common thread linking them but it is worth asking the question: is globalization alone to blame, as is often claimed?

The events I have just described are all connected by the fact that the world is now much more multi-polar than it has ever been. In the past couple of decades, we have also seen a groundswell of people’s aspirations bubbling to the top and making itself heard and felt much more than before. There are parts of the world that have witnessed extraordinary levels of economic growth, and thanks to globalization, we have seen the benefits of that growth accrue to many more countries and millions more people.

On the other hand, as has become apparent since Brexit and Trump’s election in 2016, many in the rich, industrialised world seem to have been left behind by the tide of globalization. It has led to waves of angry, resentful protest against globalization and more importantly, against immigrants. Politicians, quick to seize upon the growing disenchantment, have channeled this anger and frustration into a nationalistic and nativist narrative in many countries. The equally important question to consider then, is the role of sovereign nations and governments in a globalized world. And why poor, developing countries continue to tolerate bad governance, corruption and lawlessness.

Might national culture have anything to do with it? I have been fascinated with the question of culture, not as a way to explain away everything that is wrong with a country, but as a way to perhaps understand the forces at work beneath the events that make up the 24×7 news-flow. I suppose my career in advertising and brand communications had something to do with it, as well. Economists, Daron Acemoglu and James Robinson, dismiss the culture factor when considering why nations fail or succeed. They are of the view that institutions have the single largest influence on the development of a nation. In their book, Why Nations Fail, they take the rather simplistic example of a particular city, Nogales, which is divided in half by the US-Mexican border, to highlight the differences between the peoples of Nogales on either side of the border, and to argue that culture has nothing whatsoever to do with it. They also spend a lot of time telling the story of the Spanish conquest of Mexico, of Columbus’s discovery of America and the British colonization of Jamestown in the US to persuade us that the fundamental difference between US and Mexico is how their institutions were developed and not culture. Elsewhere in the book, they say:

“Is the culture hypothesis useful for understanding world inequality? Yes and no. Yes, in the sense that social norms, which are related to culture, matter and are hard to change and they also sometimes support institutional differences, this book’s explanation for world inequality. But mostly no, because those aspects of culture emphasized – religion, national ethics, African or Latin values – are just not important for understanding how we got here and why the inequalities in the world persist. Other aspects, such as the extent to which people trust each other or are able to cooperate, are important but they are mostly an outcome of institutions, not an independent cause.”

While I agree that institutions play a huge role in shaping how a country develops and functions, I do believe that the cultural aspect cannot be overlooked. Many a time, they determine how institutions themselves are built. For example, in India, our constitution safeguards our freedom to practice any religion of our choice and at the same time offers encouragement to lower castes who often find themselves outside the pale of most social and economic activity, through reservation for them in education and jobs. To Daron Acemoglu and James Robinson, our centuries-old caste system is part of our “institutionalizing” in the past, but I would say it is very much part of the dominant Hindu culture today, to the extent that people still live, work, marry and vote on the basis of caste.

As Amartya Sen says in his book, The Idea of Justice, which deals with the importance of institutions in a democracy, it is not enough to have well-meaning institutions and laws in place; they must also work for the people. He divides them conceptually into what he calls Nyaya and Niti, the former is the justice system as an institution and the latter, the way it is delivered. He says;

“There is a long tradition in economic and social analysis of identifying the realisation of justice with what is taken to be the right institutional structure. There are a great many examples of such a concentration on institutions, with powerful advocacy for alternative institutional visions of a just society, varying from the panacea of wonderfully performing free markets and free trade to the Shangri-La of socially owned means of production and magically efficient central planning. There are, however, good evidential reasons to think that none of these grand institutional formulae typically deliver what their visionary advocates hope, and that their actual success in generating good social realisations is thoroughly contingent on varying social, economic, political and cultural circumstances. Institutional fundamentalism may not only ride roughshod over the complexity of societies, but quite often the self-satisfaction that goes with alleged institutional wisdom even prevents critical examination of the actual consequences of having the recommended institutions.”

The 2008 financial crisis is testimony to the fact that all the institutions in America were not enough to prevent it or to protect people from the short-term, greedy and conspicuous consumption culture that America has suffered from for decades. I would say culture helps build institutions and institutions in turn help shape and change culture, over the long term. I also believe that neither are static, but always changing and shape-shifting over time, growing and contributing to each other. 

The economist, Edmund Phelps, too believes that culture plays a role in shaping institutions and in creating a work ethic. In his book, Mass Flourishing, Phelps says:

“Yet, as important as institutions and policies may be, we must recognize that every economy is a culture or mix of cultures, not just policies, laws and institutions. The economic culture of a nation consists of prevailing attitudes, norms, and assumptions about business, work, and other aspects of the economy. These cultural forces may affect the generation of nonmaterial rewards indirectly through their influence on the evolution of institutions and policies, but also very directly through their impact on participants’ motives and expectations.”

Francis Fukuyama in his latest book, Identity, talks of cultural values as being the most important factor in contributing to the identity politics of today, and not so much economic conditions. This tilts at the other extreme, and I believe it is the economic crisis that precipitates a cultural or identity crisis at the most fundamental level. Think of Trump’s voter base or the Brexiteers and you know it is their economic plight that is behind most of their angst.

It is in this context, that I thought of looking at the latest round of World Values Survey (Wave 6 of 2010-2014) to see what changes one could discern in the values people in different countries hold dear, in life satisfaction, gender parity, immigration, institutions, etc. The first thing that struck me was how true it is, that cultures are slow to change. Take a look at this video that WVS has created to show the changes between 1988 and 2014 in different cultural systems or groupings that they have divided the world into, along the axes of traditional/rational-secular and survival/self-expression.

I was amazed, but not surprised, to see how little South Asia had changed even though it grows in size and influence between 1999 and 2005 or so, and then contracts again. Within that, you can see how India moves ever so slightly upward on the rational-secular axis and rightward on the self-expression axes. However, you know that the change is not enough for India to completely leave the traditional underpinnings nor the survival stage just yet. There is very little change you can observe in the other cultural groupings as well.

I looked at six countries specifically, to understand the countries’ values under a set of parameters: India, China, US, Sweden, Brazil and Nigeria. Not surprisingly, India and China tend to be very similar on most parameters, except on the issue of trust; here Chinese believe everyone can be trusted, whereas for India “you have to be very careful” scores the most. Brazil and Nigeria too are similar to each other in many ways, except on gender where Brazilians disagree with men being given preference in jobs or that they make better executives than women. On most parameters they are also not very different from India and China. There is a definite deference to male power on the issue of gender and a significant preference for a “strong leader who doesn’t have to bother with parliament” in India, China and Nigeria. In all these countries, there is also not much confidence in government and police, but fairly high confidence in media, the justice system and the army. I have compiled a file with the time series for India (1989-2014) for 15 different parameters and you can view them by clicking on the link below.

As you would expect, Sweden and the US exhibit more similarities with each other than with the other countries, though trust levels are very high in Sweden but low in the US. Sweden shows a clear preference for freedom of speech as a priority and for having a say in how things are done in the country. Swedes are also the most egalitarian when it comes to women as well as immigrants. I must tell you that the WVS wave 7 survey is currently on and the results of that are expected in December 2019; in keeping with the times, there are apparently more questions in wave 7 probing issues of gender parity, immigration and inequality.

On the questions of gender parity, immigration and religion, I also looked up Pew Research Center’s Spring 2018 Global Attitudes Survey and the findings seem to suggest that broadly speaking, across 27 countries surveyed, people feel that diversity has increased and so has gender equality (though more men than women think so). While that is reassuring, they also feel that family ties are weakening. Overall, people in most countries think the importance of religion has grown and will not oppose it. There are outliers like Greece and Italy where people are not willing to accept greater diversity, a direct fallout I think from the immigration and refugee crisis of 2015. Hungary too is not in favour of greater diversity, part of Orban’s fight against immigration I suppose.

What’s interesting is that people in most countries see immigration as a strength than a burden. They are also less concerned with immigrant crime than the risk immigrants pose with terrorism, though most southern and eastern European countries don’t see immigration as a terrorism risk either. On how democracy is working in countries, most countries seem to be somewhat dissatisfied. In India, 54% seem to be satisfied with democracy but the point to note is that between 2017-18, India also saw the largest increase in dissatisfaction, of 33%. An important feature of these surveys is that the young, urban, better educated and those on the left-of-centre tend to have more liberal views than the others.

During my days in Ogilvy, I was introduced to the work of Geert Hofstede, a Dutch social psychologist, who worked for several years with IBM. He initiated research into understanding corporate culture (at IBM initially) and how they vary across countries. In the process, he got interested in exploring national cultures and the result of all his years of research can be found in his 1991 classic book, Cultures and Organisations: Software of the Mind, which many of you might have read. In the third edition (2010), he has collaborated with Michael Minkov, a Bulgarian researcher, who is associated with the World Values Survey and some of those values have also been incorporated into his 6-dimensional model of understanding national cultures. It wasn’t surprising for me to find similarities between India and China in the WVS (wave 6), because I knew that both countries are high on values like power-distance, collectivism, masculinism and restraint, while Sweden and US appear to be similar as being low on power-distance, but high on individualism and indulgence. You can compare the national cultures of different countries by visiting his site, hofstede-insights.com and creating your own set of countries to compare. As Hofstede himself says, culture is nothing if not compared, since it is what differentiates groups of people.

In the globalized world of business and trade, if there are new tensions created by forces of capitalism, easy money flows in recent years thanks to quantitative easing, changes in the power equations between countries, immigration and most importantly, technology, it is worth exploring how much culture can help smooth them out or at the very least improve our understanding, so that many more can continue to benefit from globalization.

While culture is usually slow to change – especially at the core – there is no denying that the world finds itself at the crossroads today. The financial crisis has perhaps been more epoch-changing than is at first obvious, and coming as it has, accompanied by a simultaneous technological revolution, the effects are deeper, graver and longer-lasting. There was greater global coordination and cooperation at the start of the financial crisis than there is today, more than 10 years into the economic recovery. The recovery hasn’t been even across countries and regions, either. There are millions still without jobs and millions more joining them as immigrants and refugees.

The caravan of immigrants from countries in Central and South America continues unabated, as does the flood of stateless people like the Rohingyas who have been terrorised and forced to flee from their homes. It is to those parts of the world that we must turn our attention. At a time like this, it is issues like education, healthcare, employment and climate change that need urgent and greater assistance, not building up huge defence arsenals. Because it is the former that help build human capital and the capacity of nations in the long term. Yet, we are seeing cutbacks in aid and investment, while corporate profits pile up and the wealthy in some countries even get tax breaks.

In the vast ocean of humanity, it is the 99% who make up the world and they must count.