February 19, 2019
12:45 - 2:00pm
D 109, Place Montesquieu 3
will give a presentation on
Culture, Institutions and the Industrialization Process
Abstract: How do culture and institutions interact with the process of industrialization? To answer this question, we construct a general equilibrium model where culture and institutions are determined endogenously. In our model there are two social classes: workers and the elite. Institutions are considered to be the balance of power between these two social classes. Within the elite, there are two cultural groups: bourgeois and aristocrats. Bourgeois exhibit a higher work ethic and entrepreneurial spirit than aristocrats. Culture is defined as the distribution of these two traits within the elite. Both institutions and culture are endogenous and coevolve with the industrialization process. These interactions may give birth to multiple equilibria. An economy where the bourgeois culture is not widespread and/or workers have little power is trapped in a regime without industrialization in which institutions and culture do not evolve. A positive productivity shock makes it possible to leave this equilibrium and can generate a movement of democratization. Nevertheless, according to the initial conditions of the economy, this movement may be followed or not by the cultural transformations which is a requirement for industrialization. Our model allows for a re-interpretation of the different experiences of industrialization that took place during the nineteenth century. In particular, our theory provides a new explanation for the backwardness of Eastern European countries as compared to England or the United States. We support the idea that the backwardness of these countries is not due to institutional factors alone, neither to cultural factors alone, but by the interactions between the two.