Why Culture Matters Most.

• Author: Bourne, Ryan

Why Culture Matters Most

David C. Rose

New York: Oxford University Press, 2019, 190 pp.

What determines whether rich and free societies arise and endure? In Why Nations Fail, Daron Acemoglu and James Robinson famously concluded that the quality of a country's political and economic institutions matter most. David Rose disagrees. Successful free-market democracies, he claims, require high trust as their essential prerequisite, both between individuals and "with the system." Without high levels of generalized trust, opportunism becomes rife and democracy is overcome with tribalism, undermining the institutions that correlate with prosperity.

To make clear his direction of causation, he concludes: "A high-trust society can easily adopt trust-dependent institutions if there is reason to do so, hut the reverse is not true." For example, the rule of law only operates successfully in the long term, he explains, if people trust the court system to be just. In Rose's view then, institutions or policies cannot effectively substitute for trust sustainably, though they can codify or complement it. Collapsing trust, as some fear today, eventually leads to institutional collapse.

If general trustworthiness is essential for prosperity, how is it achieved? Rose's answer is culture. Mass flourishing requires large-group cooperation, meaning overcoming our skepticism of strangers and forgoing opportunities to exploit them. This is achieved by transmitting through generations a moral taste against certain behaviors that "produce strong and involuntary feelings of guilt upon behaving in an untrustworthy way." Inculcating children that certain behaviors are wrong, through imitation and teaching, creates an effective constraint against our worst impulses, facilitating a societal environment of general trustworthiness. This lowers the transaction costs of exchange, allowing more trade and good institutions to operate effectively. Hence, Why Culture Matters Most.

Yet if this cultural transmission is the foundation for freedom and prosperity, Rose warns it is a fragile one. For it requires each generation to invest in maintaining such moral beliefs. Given the positive externalities, Rose worries we underinvest in them. In fact, he argues the very success of high-trust societies, generating large markets and democracy, can create dynamics that undermine trust. The returns to opportunism, he claims, are higher in a big market where others are trustworthy. Democracy...