Begegnungen
Schriftenreihe des Europa Institutes Budapest, Band 22:187–194.

BÉLA CSIKÓS-NAGY

Multicultural Economics

The issue of the publication of the Hungarian Academy of Sciences (MTA) entitled Ezredforduló (No. 3, 2003), published studies about the welfare state. My own study, entitled “Contributions to the Theory of Welfare” appeared in this number. I examined this subject within the framework of;

1. the classical economic theories of the 18-19^th centuries;

2. the social implications of economics in the 20^th century;

3. and the multi-cultural economics of the 21^st century.

However, since the subject then was the welfare state, I only briefly referred to culture-determined life styles. However, several people suggested that I should present the major premises of multi-cultural economics in detail. My two-volume work, entitled Economics in a Globalizing World, published in the Strategic Studies series of the MTA in 2002, dealt with this issue; however, the description of multi-cultural economics will be the task for the 21^st century. Here I can attempt only a short summary of the relevant concepts.

We may obtain knowledge of economic science by acquiring a complex set of systematic information. In the large western universities, over 21 disciplines provide us insight into the subject. Considering them, the following summary may be offered:

Classical Economics; Western Civilization and Modernization

Traditionally economic studies were created – consciously or not – as a science valid mainly for Western Civilization. Its geographic boundaries were set within the Atlantic region. This was the economics of the 18^th-19^th centuries at the time when Great Britain was considered the centre of the world’s economy on account of her colonial empire extending over the entire globe. This natural philosophical trend was based on the philosophical trend which embraced the idea of individual selfishness as a means for personal enrichment. Building this science included the economy organizing role of the state in the 20^th century resulting in the establishment of the western state. The liberation movements brought an end to the colonial empires, and the role previously played by Great Britain has been gradually taken over by the United States.

The USA could not depend on a traditional civilization. However, its society based on mass immigration triggered attitudes that were extraordinarily receptive to industrial revolutions. Modernization thus became the driving force of science, putting an end to its territorial isolation. After all, modernization could be brought about (with a few exceptions) anywhere in the world, as this had indeed happened in Japan and in the cases of the so-called “small tigers” countries of Asia. It should be asserted that the ’rest of the world’ excluded from being the beneficiary of science-based constructions begins to shrink. Studies of the economic sciences provide relevant knowledge for societies in ever widening circles.

According to Huntington, modernization should be considered as a process that includes;

– industrialization,

– urbanization,

– literacy,

– education,

– personal enrichment,

– social mobility

– and ever more complex and variable systems of employment.¹

A tremendous expansion of scientific and technological knowledge followed the process of modernization. Humanity has subdued and transformed the environment to an ever increasing degree since the 18^th century. However, it did not dissolve differences among the many civilizations of the world. It merely created better conditions and opportunities for the intensification of relations between various civilizations. To be more explicit, the process has contributed to the modification of cultural values, but it has not reshaped these values. Modernization has, indeed, influenced cultural values, but it has not shaped these values. Neither have the cultural values of Western Civilization been created by modernization. These values had already existed in the West by the time modernization had come into full swing. However, they did provide fertile soil for the processes of modernization.

The “rest of the world” retained its specific separateness in the 21^th century. A “problem” of South versus North had appeared; a curious relationship emerged between the developed and underdeveloped worlds, between the rich and the poor nations. The process cannot be approached solely by using the value system of Western Civilization. The hegemony of the United States had not brought about a change in this sense either.

Creating a Multi-cultural Basis for Global Interests

According to one of the major hypotheses of classical economics, renewable economic resources are gifts for mankind which can be freely used. Based on this premise the period prior to the industrial revolutions of the 18^th century brought about an unprecedented economic growth for the world’s economy. At the same time, the process endangered the natural conditions of human environment. Resources that had appeared inexhaustible in the 18^th-19^th centuries, had been discovered to be rather limited. Ecologists justifiably point out that

1. ecological systems are endangered by global warming;

2. underground water resources are being depleted;

3. fishing is collapsing;

4. because of the extinction of animal and plant species, new problems are emerging, in which demographic expansions play a major role.²

The concept of the common ownership of the Earth and the necessity for central control of its use appears as being a more and more urgent task. All this is unfamiliar to classical economics. After all, the central tenets of this scientific system are based on specific national interests! Accordingly, the balance among the world’s various economic systems consists of the sum of the national interests of individual countries which, in the light of given objective economic conditions, provides for the differences existing in the living conditions among respective societies. Global interests – in an abstract sense – are not being considered. World interests have no political power. Only feelings of responsibility for the general fate of humanity may create hopes for the establishment of a balance ending economic backwardness and the equitable territorial distribution of productive resources. Such suggestions and proposals are usually raised during international discussions. However, when moving beyond national borders, selfishness and strong national interests, based on economic domination, immediately reappear and negate ethical rules. But the increasing realization of the harm caused to the environment and the overwhelming role of industrialized countries in bringing it about, may open a way in the future for establishing new bases for international cooperation.

A committee of the United Nations, led by Gro Harlem Brundtland, published a report in 1987 entitled “Our Common Future.” This committee, appropriately called “World Commission on the Environment and Development,” formulated principles and requirements for the first time which, according to its proclamation, would save the global economy for future generations. The report provided the basis for the “World Conference of the United Nations on Environment and [Sustainable] Development” in Rio de Janeiro, Brazil, resulting in the programmatic publication of recommendations with the title of “Tasks for the 21^st Century.”³

The program’s recommendations contain 27 points; these make it obvious that, for the economy of the 21^st century, the new concept of sustainable development could become one of the pillars on which to build the new science. Its significance is determined:

– first, by its propagation of a close relation between the environment and the economy;

– secondly, by its emphasis on respect for the cultures and interests of various peoples;

– thirdly, its proclamation of universal responsibility for overcoming poverty and

– its declaration of the necessity for a joint defence of the Earth.

Cultural Values East and West

The establishment of new foundations for world-wide interests including the need for recognizing the equal value of various cultures require an over-all perspective in discussing these cultures. Such a view may be based on a variety of parameters. For our purposes it will be sufficient to consider demography.

If economic studies were limited to concepts of an allegedly unified world civilization or to the generalized principle of modernization, they would lose ground for providing a globally valid explanation for the economic processes taking place in our world. And yet, science cannot avoid searching for an answer for these problems. The gradual deterioration of the natural environment for humanity is not limited by national borders. If we consider the extraordinary amounts of gases emitted into the atmosphere and creating a greenhouse effect in the industrialized countries, or the deforestation in the developing countries, the problem of the survival of mankind appears to be a common cause. The modern system of information transmission brings about the globalization of capital markets. It is imperative for economic sciences to say something of general validity in these relations. However, if we considered science of having universal validity, then we must begin with the examination of cultural values and these are fundamentally different in various civilizations.

International cooperation in a multi-cultural world presupposes toleration, recognizing the equality of all non-Western civilizations. Therefore, we must re-evaluate such concepts as “free world,” “individual rights,” “forms of property-holding” and “democracy,” etc., since these categories are the products of Western Civilization and they possess contents which will make joint thinking with Eastern Civilizations impossible.

We are witnessing in the East a revival of religious movements which are anti-secular, anti-universalist, — and with the exception of Christian movements – anti-Western in character. They oppose egotism and consumerism. They accept the necessity of science and technology and changes of life styles related to these factors, but they reject westernization. For instance, in East Asian cultures emphasis is placed on the primacy of group-interests in contrast to the interests of the individual. The value system of Confucianism, especially its component related to thriftiness, family values, work and discipline, is accepted in more and more Asian countries. Not only is individualism being rejected in such a value system, but principles of authoritarianism and democracy are recognized only to a limited extent.

In relation to the values of various cultures, the sharpest disputes concern the definition of human rights. The UN published a “Universal Declaration of Human Rights” in 1948. Corresponding to Western cultural values, the declaration stated that freedom of speech, freedom of the press and freedom of assembly and religion are all part of natural human rights. The UN also organized a conference in Vienna in 1993 in order to clarify these rights that were subject to international disputes. The conference uncovered the differences in thinking about these rights between the European and North American states on the one hand, and the Asian-Islamic blocks on the other.

Two months before the conference, the Asian countries had approved a declaration according to which human rights must be considered in the context of “national and religious characteristics reflected by the backgrounds of various historical, religious and cultural developments.” The declaration also stated that the systematic monitoring of human rights-practices in a state by outsiders is a violation of the observed state’s sovereignty. They stated that it is also discriminatory to the right for development if economic support is made dependent on human rights practices in respective countries.

However, we must also realize that it would be unrealistic to consider all this as if it represented the formation of an anti-Western coalition. Chinese and Islamic civilizations fundamentally differ from one another in many respects, including cultural values, social systems, historical traditions and general ways of thinking. Rejection of individualism and the existence of “soft” dictatorships characterize each system and democracy exists there only in very circumscribed forms.

These common elements are clearly recognizable in Eastern cultures that may be part of their anti-Western attitudes. However, all this does not explain the differences characteristic of non-Western cultures exhibited through their value systems. In an economic context, we may explore differences in life styles.

There are societies organized on the basis of religious principles and others where geographic and natural conditions determine the forms of production and the organization of community life. The first are dominated by the accumulation of spiritual wealth and not of material goods. In the second, existing natural conditions provide the framework within which production can proceed by maintaining existence.

Various cultural values may, of course, change with the evolution of production forces. However, a minimal understanding of the forces dominant in the life styles of Eastern societies will make it obvious that the promotion of ideas of the commercialization of life on an American pattern would be futile. It seems more realistic to consider the idea of changing consumer practices and attitudes in the developed world in the interest of preventing harm to the environment. It certainly appears impossible at the present time to forecast the coming transformation in production methods in the 21^st century. It is likely that the changes will not occur in the economic system (in trade and commerce, markets, prices, credits, etc.), but transformation will probably occur in the relationship among the economy, the state and the judicial systems.

The Neutrality of the World Market of Capital

The world had already embarked on an untested process of multi-cultural economic cooperation. One sign of this is the introduction of a world market for environmental pollution rights. The roots of this process may be found in the resolution of the UN of 1988, dealing with protection of the global climate in order to preserve the environment for future generations. This resolution established obligations to restore the emission of pollutant gases, (especially carbon dioxide and others) to the levels of 1990, within a determined time frame. The global market for pollutant rights makes it possible for industrialized nations to purchase such rights from sates in which pollution is much less than the determined upper limit.⁴ We must note, however, that from the point of view of multi-cultural economics, the neutralization of the world market of capital seems to be a decisive factor. Will it be possible to separate the monetary policies of the International Monetary Fund and of the World Bank from the interests of the United States? What is at issue here?

The agreement at Bretton Woods determined financial cooperation in the world in the 20^th century. The agreement provides a special position for the United States. In fact, the US provided guarantees that it would exchange US dollars for gold for foreign holders of the currency at any time they desired. However, the Vietnam war was financed by an enormous amount of printed dollars. The basis for this was provided by the accumulation of dollars at European national banks. When France declared its intention to change its dollar holdings for gold, the US president declared the right of foreigners to do so invalid.

The International Monetary Fund and the World Bank had also been created by the Bretton Woods agreement. Both have their headquarters in Washington DC and conduct their policies according to US interests. Their interpretation of human rights in the European style became part of their policies and it was incorporated in the principles of the regulation of the world wide movement of capital. This stabilized the leading economic position of the West at a time when the colonial system came to an end and the former colonies, now independent states, could organize their social systems as best suited for themselves. The UN declaration of 1948 provides a basis for the West to consider it as a determining factor in formulating its economic relations with countries of very different civilizations. The said resolution makes possible the following:

– to determine granting credit on favourable terms by the IMF

– to evaluate requests for cancelling debts

– to grant various types of financial support

– to determine preferential customs duties in export-import trade

– and to weigh the granting of similar privileges during the political evaluation of a given country

The consolidation of the world market of capital has never involved the question for a solution that would result in the neutralization of the capital market. And yet, it would be logical – if the equality of different cultures and their economic cooperation were taken into serious consideration – to disconnect the movements of capital from principles considering the primacy of Western Civilization as its basis. In the 21^st century, the increasing economic power of non-Western civilizations and the changes of power relations based on such developments will probably create a neutral capital market eventually.

Reconciliation of Interests, Compromises and Dangers of Conflict

Western economic and military supremacy and the challenges issued against them are characteristics of the turn of the 21^st century. The challenges originate mostly in Asia and the Muslim worlds. East Asian civilizations identifying with Confucianism and the Muslim world may become dynamic civilizations in the 21^st century. However, challenges issued for the West have various motive forces in their background. While the Asians gained self-confidence as the result of industrialization, the Muslims turned to Islam in ever greater numbers which they consider the source of all identity, reason, legitimacy, development, power and hope.

There are other significant differences as well. The Muslim world employs every possible form of terrorism – encouraged by the spread of fundamentalist extremism – in order to undermine the social foundations of Western Civilization. Asia did not choose such a method. There seems to be general agreement that the rapid economic development of Asia will continue in the 21^st century. According to Henry Kissinger, China may reach the level of economic development of the United States by the middle of the 21^st century.⁵ This is the soil from which Asian self confidence has grown.

No matter in what way one evaluates the relations between cultural values and economic development, one should not be surprised by the efforts of non-Western countries to increase their military potential. In many instances, an un-proportionately large part of their GDP is spent for such a purpose.

In the final count, everything will depend on whether and to what extent efforts are undertaken by countries belonging to different civilizations to prevent conflicts and find compromises. The first and most important question appears after all whether changes can be brought about in power relations in order to prevent war among civilizations and to create peaceful cooperation to further the future development of humankind?”

Notes

1

Huntington S.P. Clash of civilizations ( original title), Budapest, 1998

2

Annual report of the Worldwatch Institute entitled ”State of the World” on the ever worsening state of our environment as of 1990 (see the scripts of Brown , L.R.)

3

The decision of the UNO conference , 1992 ”Environment and Development” about the tasks for the 21st century

4

The master agreement of the UNO 1992 about the changes of the climate

5

Kissinger, H. A. Diplomacy, Budapest 1996