Table of Contents

Culture and Economic Action

Culture and Economic Action

New Thinking in Political Economy series

Edited by Laura E. Grube and Virgil Henry Storr

This edited volume, a collection of both theoretical essays and empirical studies, presents an Austrian economics perspective on the role of culture in economic action. The authors illustrate that culture cannot be separated from economic action, but that it is in fact part of all decision-making.

Chapter 10: Culture as a constitution

Arielle John

Subjects: development studies, development economics, economics and finance, austrian economics, development economics


Many of the concepts economists use to explain why some countries are rich and others are poor—concepts like institutions, legal origins, ethnic fractionalization, and geography—do not have controversial definitions. The concept of ‘culture,’ however, means different things to different economists. Achieving consensus on the meaning of culture may improve our understanding of how it influences economic activity, in the same way that a shared understanding of institutions, for example, allows for advances in institutionalist economic theory. If consensus is not possible, making available to economists a strategy for modeling the effect of culture on economic activity that captures how culture shapes, determines and colors economic action could be a useful advance in cultural economy. Economists, I argue, should consider modeling culture as a constitution. Why is it useful to model culture as a constitution to explain culture’s impact on economic activity? I argue that, just as a constitution frames interactions between government and citizens, culture provides people with a shared framework of meaning in which to make their economic decisions. People with different cultural constitutions will ascribe different meanings to their experiences. As a result of culture, then, they make different decisions.

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