Studies on Firms, Markets and Networks
Chapter 9: Cultural Factors in Economic Growth
with Andrew C. Godley 9.1 INTRODUCTION Historical evidence has ﬁgured prominently throughout this book. There is a good reason for this. This book has outlined an integrated social science approach which extends the methods of economics beyond the traditional domain of that subject. An integrated social science is, in principle, a ‘theory of everything’, and therefore everything, including historical phenomena, should fall within its scope. Anthropology, which also has pretensions to provide a basis for an integrated social science (see Chapter 2), claims that it can explain almost any social phenomenon from the origins of humanity down to the present day. Any discipline that claims to form a basis for an integrated social science needs to be able to explain why institutions change – how they evolve, why they differ across time and place, and why some institutional forms survive and others do not. In contrast to conventional neoclassical economics, which takes the institutional framework as given, the integrated approach attempts to explain institutional structure along with the patterns of behaviour that go with it. If this claim is sound, then the new approach should be able to explain phenomena at any period of history, whether or not speciﬁc institutions, such as joint-stock ﬁrms or competitive markets, existed at the time. One of the ‘big issues’ in historical explanation is to account for differences in the long-term rates of economic growth of different countries. This was the issue addressed by Adam Smith in The Wealth of Nations (1776). While differences...
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