From Poverty to Prosperity: Understanding Economic Development part 3
- Nov 15, 2017
- 3 min read
Individuals belong to different social networks. These networks provide different narratives, leading to the development of different group norms, different values and, ultimately, different identities and patterns of behaviour.
In the specific comparative case study between Tanzania and Kenya, we saw that adopting a shared national identity can be very productive. It creates bonds of trust between citizens, allowing for greater and more productive cooperation. This is important in economics, because it lowers the cost of transactions.
On the other hand, in societies where oppositional identities are formed, cooperation breaks down and social networks can become extremely dysfunctional.
Why does it help to align power and identity?
When power and identity are aligned, it becomes easier for power to turn into authority and achieve compliance. Less coercion is needed: citizens choose to obey. Compliance with authority, when the authority is benign, can be very useful and lead to greater social productivity. For example, if the state decides we want you to pay taxes, you are not very inclined to comply if you don't have shared identity with the people in power. Even if you do comply, it will be a very grudging compliance. However, if you do have shared identity with power, you might think 'I do not like paying taxes now, but it is better for all of us'. Words like us can be used when there is a match between identity and power.
It is important to remember that a shared identity is not enough on its own to turn power into authority. It depends on what is done with power, but without this base of a collective shared identity, the goal of achieving compliance with authority will be much harder to realise.
Module 3 summary
Module 3 focused primarily on exploring the social conditions that are conducive to economic growth.
We anchored our study of the ideas, attitudes and beliefs that may contribute to greater productivity to a thorough discussion of social networks. We saw that individuals are born into a particular social network, and that a host of circumstances will influence the nature (and the number) of social networks which they will be able to join throughout their lives. We studied the process whereby an individual will learn narratives from a particular social network, leading to the creation of social norms (expected patterns of behaviour). We saw that an individual might comply with these norms in order to receive peer esteem, and that when these norms become internalised as the individual’s own personal values, then self-esteem can also be derived by acting in accordance with the expectations of the group. We learnt that personal identity therefore ‘packages’ the concepts of group narratives, social norms and personal values, and looked at real-world examples of behaviour being influenced by pernicious narratives.
We then explored the intersection between the structures of power and those of identity, and concluded that it becomes exceedingly difficult for power to turn into actual authority if there is a mismatch between power and identity.
Finally, we used the applied example of tax inspectors to demonstrate the importance of social network narratives in the promotion of productive behaviour.
An economist’s understanding of human behaviour can helpfully be supplemented by insights from psychology, for example why we do things and how we learn about the world.
An individual belongs to a variety of social networks, each providing them with narratives for learning about the world. These narratives form the basis of social norms, which - if complied with - can lead to the individual gaining peer esteem. Moreover, if the individual internalises the group’s norms as their own, they will also receive self esteem by acting in accordance with the expected patterns of behaviour within the social network.
Identity is an important social phenomenon, as it ‘packages’ narratives, group norms and personal values. Real-world behaviour can be influenced by prevalent narratives in society.
The building of a national identity is often crucial in the fostering of social cooperation, as evidenced by the comparative case study between Tanzania (under Julius Nyerere) and Kenya (under Jomo Kenyatta).
As with power, identity exists in society on three levels: the national, sub-national and supra-national. If there is a misalignment of power and identity across these three levels, then it becomes very difficult for power to turn into authority.
Narratives would be crucial to any process of correcting such a misalignment - just as narratives are vital to the development of socially productive behaviours.
Organisational cultures also depend on narratives and deep-rooted patterns of expected behaviour (the group norms of that particular organisation). As such, organisational culture can be extremely slow and difficult to change, even when change is acknowledged to be necessary.
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