In the five former lectures I have paid attention to different cultural values separately. But in order to understand them we have to see them in action and in their influence on each other. If for instance a society is quite top-down and traditional, non-egalitarian and collectivist, then there is high probability that there will not be much universalism and there will be a lot of particularist behavior. Everybody is dependent on the people at the top, who have to decide on everything and nobody takes an individual initiative or responsibility. If one does it may easily be punished and backfire because it is understood as a lack of loyalty and solidarity.
The value system is in many respects the neglected factor in understanding the development problem. But actually in this lecture that is precisely what I want to do: explaining how values influence institutions and how this mix of values/institutions has an enormous impact on the lagging behind of many low income economies. This is my thesis: lack of cooperation (and trust) at the bottom of society in combination with lack of universalism and the rule of law at the top is one of the central development problems. If group belongingness is most important and if there is high dependence on some big men in power, a society is likely be characterized by clientelistic and patrimonial systems. That means: trust is established according to lines of dependency and privilege, because there is no other way in which people can establish trust in each other. There is no anonymous trust, but only trust by membership of the same network, group or clientelistic system. Cooperation with another network hinges on those people who are part of to such clientelistic systems, either on the top or on the bottom. They are “the gates” of trust. Small example: if I arrive in Nairobi I may better not take just any taxi, but the one recommended to me by my host, a taxi driver he knows. I trust the taxi driver not because he is any more reliable, but because he will not let my friend down whom he is somehow related to. As a consequence this taxi may be somewhat more expensive, but that is the price I have to pay for the trust relationship. But if I cannot enforce trust in other ways (there is no law enforcement against cheating taxi drivers and I cannot reclaim my damage anywhere) I may better pay this price.
For a better understanding of this situation we have to look at it from a historical perspective. Going thousand years back, even in the West, just like elsewhere, in Imperial states or kingdoms we would see a similar system of compartmentalization of closed in-groups at the bottom of society. It wasn’t even necessary to speak the same language. Unity was created from above by the military, by the civil servants or by caste, tribal or regional leaders (“big men”) serving their constituency. It was a patriarchal system, that might function well inasmuch as those “patriarchs”, were good “fathers”, or if there were checks and balances by a council of elders or an aristocracy as a countervailing force. Big kingdoms couldn’t develop in situations in which there always was an exit option, like in the vast emptiness of Africa, apart from the valley of the Nile. I tend to think that the good humor of the Africans is a consequence of this exit option. Often Africans do admire “big man” behavior, but they also poke fun on them and and there is a tendency to stay out of the system as much as possible.
Different societies, like Egypt, China, India, Babylon tried to overcome this compartmentalization with more or less success. In the West the church made the difference, because the church was present before states and empires could originate (after the fall of the Roman Empire). As a consequence there were always two centres of power who had to deal with each other and they managed to do so gradually via a system of written law. In this way kings and emperors received legitimation from the church to rule over many tribes and by the emergence of cities and the work of monasteries already in the Middle Ages the different tribes mingled, and slowly a civil society emerged. A civil society can be defined as free association of individuals apart from family loyalty (the clan system) and apart from state authority. In such a system of more or less universalist governance, rule of law and law enforcement, an open society could emerge. Cooperative values and behavior could flourish and cheating was punished by law. This is a history of church councils, cities, parliaments, political parties, corporations, trade unions etc. etc. This leads to a paradox in relation to the state: it is the paradox of a strong state that is nevertheless accountable and universalist. That can only function as long as it is kept in check by a well-informed and well educated citizenry.
So it makes sense to distinguish three levels that mutually balance each other. First there is the level of the state. The state should establish rule of law in order to create anonymous trust among the members of a society. Second there is the level of societal organizations, interest groups, associations, trade unions, corporations etc. who have to deal with each other under the rule of law, but also by means of negotiation and cooperation. Thirdly, there is the level of individuals and individual companies and they too have to exercise trust and civil values in order to maintain the moral awareness and capacity of citizens to keep larger organizations in check. That is by and large the Western heritage. Now, what happens if this heritage interacts with societies that didn’t share this history, or in which this history only got an impact during the last 200 years? And what is the impact of that on doing business. That is the subject of the next lecture.