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Bliss and misery: the co-development of culture and economic progress The organising committee of the Global Initiatives Symposium in Taiwan perceives a profound tension between economic development on the one hand and a society‟s culture on the other. In their introduction to the sub-topic “Bliss or misery?” the GIS Taiwan host team (2009) states“[t]he engagement of culture and economic progress has been a rising concern. Increasing interaction and intensifying tension between culture and economic progress, particularly sharpened by globalization, have drawn the attention of many political entities and economic organizations” [italics added by the author]. The present essay contests this view. Therefore, it examines the extent to which economic progress and culture co-develop. Also, it will put the influence of globalization on this process into perspective, by analyzing examples from two periods of the economic history of the Netherlands. Culture and economic development In order to analyze the co-development of economic progress and culture, these two phenomena need to be defined. Economic development is a process in which a certain region or population builds or reshapes its economic structure and accumulates wealth. Economic development takes place in a context of competition, selection, variation and uncertainty (Boschma et al., 2002). Culture can be defined as a shared set of meanings and values that are lived through the material and symbolic practices of everyday life by a group of people. It allows people to interpret and react to the environment by providing a structure of meanings. Groups go through a constant process of re-shaping meanings and practices, magnified by external pressures. Hence, culture is a dynamic, ever-changing phenomenon (Knox and Marston, 2003). As illustrated in figure 1 on the next page, economic progress and culture co-develop. Not only does economic development affects culture, culture also poses an influence to economic development. The influence might be beneficial, with one factor strengthening the other. However, the effect can also be detrimental, posing threats to the further development of the two factors. Economic progress entails competition between various groups, and leads to a certain dynamic in the environment of a group. Hence, this poses an external pressure on culture, in which people use and adjust their culture in order to interpret the changing environment and react to it. These alterations might be for the better, in which a culture becomes more resilient, strengthening itself in the face of other cultures. Due to the accumulation of wealth, a culture might also become more institutionalized, through various practices of art, science and philosophy. However, economic progress might also lead to less adherence to a certain culture, in which a culture might be transformed into a form more reflective of the dominant cultural force. Hence, economic progress might pose opportunities and threats to a certain culture. This external pressure will lead to an adjustment of the culture, into a form more compatible and useful to the new environment.

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Figure 1 The co-development of economic progress and culture

Culture does also influence economic development, albeit in an indirect way. Culture affects three intermediate variables, which in turn influence economic growth. Moreover, culture might facilitate opportunities and threats to economic development. Firstly, as evident from the aforementioned definition of culture, individually held attitudes and values are formed and defined by culture. According to Wennekers and Thurik (1999, 40) especially “the attitudes and values towards work, production, wealth, and saving, toward new information, invention and strangers, and finally toward risk and failure seem particularly relevant for economic growth”. Secondly, culture influences the social networks spanning the region. Social networks which encourage exchanges of all sort of forms and social bonding between partners are instrumental to economic growth. These network ties lower transaction costs, improve knowledge exchange and stimulate innovative activities, spurring economic progress (Boschma et al., 2002). Social networks are formed on the basis of trust embedded relations (Boschma et al., 2002). Cultural values define what exactly is trust, and on what basis actors can trust one another. Thirdly, culture influences the institutions in a region, in direct and indirect ways. Gertler (1997) points out that, notwithstanding language barriers, cooperation over cultural boundaries is predominantly affected by cultural-institutional differences. Also, institutions are based on the reigning cultural values in a given region. The role of these institutions in economic development is threefold (Wennekers and Thurik, 1999). Firstly, institutions determine the right to reward economic activity. Secondly, they bound the possibilities for trade and specialization; they affect the extent of the market. Thirdly, institutions determine the extent of economic freedom, and the extent to which individuals are allowed to seize economic opportunities. Culture then poses a refined influence on economic development, through the effect on institutions. This framework should not be interpreted as an argument for cultural determinism. Culture is merely one of the factors affecting economic development. Various elements, among others the presence of capital, demand conditions and the industrial base of a region also influence economic progress. For the sake of the argument, and due to the word limit, the present paper only focuses on the effect of culture on economic development.

Competition External pressure

Economic

development Culture

Individual attitudes and values Social networks

Institutions

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Golden Age and late industrialization The co-development of culture and economic development can be illustrated by two different periods in Dutch economic history. In the seventeenth century the Dutch economy experienced a prolonged period of economic growth. Dutch ships sailed to the East Indies, carrying back heavy loads of merchandise, which were sold for huge profits in Europe. Cargo from overseas areas all came to the harbors of Amsterdam, Hoorn or Enkhuizen, which the Dutch distributed to the various corners of Europe. At its heyday “Amsterdam became an international market where one could find goods from all over the world … and the price quotations on the Amsterdam market dictated the process on the other European markets” (Cipolla, 1976, 249). Dutch workers were among the most specialized manual laborers, and the industry in the Low Countries boomed. In various sectors, the Dutch worked on the innovative edge of their activities, introducing many innovations. “The scope of the industrial diversification during the Dutch Golden Age was far reaching. This period in history witnessed advances in a wide variety of sectors including agriculture, fishery, construction, manufacturing, shipping and trade as well as a remarkable development of modern services such as finance, insurance, broking and factoring” (Wennekers, 2006, p.6). In short, the Dutch Golden Age commenced, with Holland being the envy of Europe. What brought about the economic surge of the Netherlands in the seventeenth century? Firstly, the period leading to the Dutch Golden Age can be characterized by fierce political struggle. The protestant Dutch republic fought for its independence against the catholic Spanish empire. At that time, Spain was the most powerful force in Europe, which could not tolerate to have divergent religious views in its territory. Therefore, it set out to annihilate the Protestants in the Low Countries. In its bid to maintain its religious and economic freedom, and its trade positions in Europe and the Far East, the Dutch Republic mobilized all its resources to fight of the threat of Spain (Landes, 2002). This external pressure gave rise to a certain Dutch culture, beneficial for both the economic and political enterprises of the Dutch Republic. Various authors point to the importance of the working ethos and culture of the Dutch in enabling the Golden Age (cf. Cipolla, 1976; Landes, 2002; Wennekers, 2006). This ethos stressed rationality, productivity, frugality and working diligently. It gave rise to “a dynamic society with an entrepreneurial orientation, of opportunities exploited for the production and marketing of new products and processes, domestically and globally (Wennekers, 2006, 5). Landes (2002) argues that it was the Dutch working ethos of working hard for small profits which led to an enormous accumulation of wealth. This capital was not spent to satisfy one‟s private pleasures to live a life of luxury and opulence, but it was re-invested in other economic activities. Hence, the prevalent, dominant culture in the Low Countries, which came into being under the Spanish threat, is an important factor in explaining the Dutch Golden Age. Also, as Cipolla (1976) notes, the economic rise during the Dutch Golden Age also led to a flowering of the arts, culture and science, which further institutionalized the Dutch culture. Art, science, philosophy and cartography were all pushed to new heights in the Dutch Golden Age by the likes of Vermeer, Rembrandt, Huygens, Grotius, Descartes and Mercator. “The Northern Low Countries in the seventeenth century were great in shipping as well as in painting, in commercial as well as philosophical speculation, and in scientific observation” (Cipolla, 1976, 250). Hence, the Dutch Golden Age led to a rise of artistic, cultural and scientific activities; economic and cultural activities strengthened and reinforced each other.

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However, the working culture during the Dutch Golden Age also had a limiting effect on economic development in later periods (Atzema and Wever, 1999; De Vries and Van der Wouden, 1995). The 19th century was an epoch characterized by the second wave of the industrial revolution (Boschma, et al., 2002). Various European countries, most notably England, Belgium and Germany, had an advanced industrial structure focused on the production of steel. These countries constructed a railway network, reaching to the corners of their territory. Meanwhile, the Netherlands went through a phase of economic stagnation. Up until the 1860s there was virtually no industry in the Low Countries, and only a small network of railway lines was constructed. In short, the Dutch economy was emulated by all neighboring countries. The mindset and culture prevalent in the Netherlands in the 19th century can partially explain this period of economic stagnation (Atzema and Wever, 1999). The Dutch economic mind at that time was, just as in the 17th century Golden Age, oriented towards international trade and the production of tropical agricultural products in the Dutch East-Indies. Bankers invested in trade, not even considering the opportunities provided by industrial activities (De Vries and Van der Wouden, 1995). Therefore, it was unimaginable for many people that other activities would be profitable in the Netherlands. Due to the preference for international trade, so succesful in previous centuries, it was impossible to envisage an orientation towards industrial activities. Furthermore, the Dutch society lacked a culture of entrepreneurship and innovation. In 1841 this lack of entrepreneurial culture was pointed out by Potgieter, a Dutch writer (Atzema and Wever, 1999). He published a short essay about Jan and Jannetje Salie, which were rich merchants with an entrepreneurial spirit. Their youngest kid, Jan Salie, was spoiled by this wealth. Therefore, he was lazy and unable to earn a living; he depended on his father‟s savings. The parents, Jan and Jannetje Salie, represented the Dutch Golden Age. They were wealthy merchants with an industrious character. Young Jan Salie embodied the culture and spirit prevalent in the Netherlands in the 19th century; spoiled by inherited wealth, and not willing to work diligently. Conclusion The present essay argues that the interaction between culture and economic growth is a process which can best be described by co-development. As the examples made clear, economic progress provides both risks and opportunities for culture, and vice versa. Hence, the relation between culture and economic development has always been and will always be one of tension and opportunity. Since „culture‟ and „economic development‟ are both dynamic, interacting phenomena, encompassing a broad range of aspects, their adjustment to external pressures is a natural characteristic. Therefore, there can be no intensified tension between culture and economic progress. Likewise, the examples show that this has been at least the case since the 17th century. It could be argued that the period of the Dutch Golden Age was as much a globalized age as the present one. Culture and economic progress nowadays co-develop in much the same way as in the 17th and 19th century described in this essay. Hence, the era of globalization did not fundamentally alter the process of co-development between culture and economic growth.

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List of references Atzema, Oedzge A.L.C. and Egbert Wever. 1999. De Nederlandse industrie. Assen: van Gorcum. Boschma, Ron A., Koen F. Frenken and Jan G. Lambooy. 2002. Evolutionaire economie: een inleiding. Bussum: Uitgeverij Coutinho. Cipolla, Carlo M. 1976. Before the industrial revolution: European society and economiy, 1000-1700. London: Methuen & co. De Vries, Jan and Ad Van der Woude. 1995. Nederland 1500-1815: De eerste ronde van moderne economische groei. Amsterdam: uitgeverij Balans, second edition. Gertler, Meric S. 1997. The invention of regional culture. In: Geographies of economies, edited by R. Lee and J. Wills, 47-58. London: Arnold. GIS Taiwan host team. 2009. Global Initiatives Symposium in Taiwan. http://gis-taiwan.ntu.edu.tw/download/GIS_Taiwan_2009.pdf (accessed January 26, 2009). Knox, Paul L. and Sallie M. Marston. 2003. Human geography: places and region in global context. New Jersey: Pearson education, third edition. Landes, David S. 2002. Arm en rijk: Waarom werd het Westen rijk? Het opzienbarende en overtuigende antwoord van een gezaghebbend historicus. Utrecht: Uitgeverij het Spectrum, second edition. Wennekers, Sander and Roy Thurik. 1999. Linking entrepreneurship and economic growth. Small Business Economics 13, 1: 27-55. Wennekers, Sander. 2006. Entrepreneurship at country level: economic and non-economic determinants. PhD diss. Erasmus Universiteit.

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