Individualism and Collectivism - Essay Example

? Modern societies have engendered the development of privatization, which tends to empower self rather than transcending being with ultimate ity; therefore, this stresses individualistic values of freedom and self-assertion while pre-modern approaches are associated with communal structures. The main role of culture on economic growth has been established as a very powerful force behind the growth of capitalism in its early phases since culture played an essential role in explaining industrial revolution. Culture not only influences the social norms but also economic behaviours like propensity to save or innovate, labour supply decisions investment and charitable contributions to public good. Therefore, culture directly relates to institution because cultures like the formal legal institutions impose constraints on individual behaviour; however, recent work on culture emphasizes the contrast between generalized and limited morality. Generalized morality means that individuals support various set of norms valid for all citizens in any society, without eliminating any group of people thus opportunistic and amoral behaviour is regarded as morally acceptable and justified. Recent works on individualism and collectivism cultural dimensions have essential and robust causal effect on innovation and long-term growth and found that cultural dimensions never correlate to individualism and collectivism do not have long-term effect on growth. Individualist culture rewards social status of an individual’s accomplishments like essential discoveries, humanitarian achievements, technological advances, great artistic accomplishments and other actions that make a person stand out. Collectivism emphasises collection of individuals in large groups that encourage conformity and discourage people from dissenting and standing out. Productive people are suspicious and are coaxed into sharing surplus with the community, which seems to be show collective punishment exists to punish the rich. Behind the punishment is fear that community’s cohesiveness may be undermined and that the individual who proves to be successful may leave the village or may not distribute any surplus production. Individualism emphasises that individuals ought to take care of themselves rather than being in a strongly integrated and cohesive group. Individualist and collectivist culture have various economic effects which have been under exploration both in economic and institutional influences of collectivism and individualism. In the modern society, since individualist culture offers social status reward to individual who stand out, it is essential for it to be encouraged because it gives special, culturally motivated incentive toward innovation, which stands out from the usual monetary incentive. Nevertheless, individualism can ensure collective undertakings remain difficult because individuals follow their comfort without internalising collective interests. On the other hand, collectivism makes collective action easy since individuals internalise group interests even though it encourages conformity and discourages people from standing out. Hence the frame work shows that individualism encourages innovation while collectivism has the advantage of coordinating production processes in various forms of collective actions. Thus, in an endogenous growth model the models has to have two sectors; one that is made up of final goods sector, which is competitive and produces good utilising labour and intermediate inputs. Collectivist culture is considered to offer a competitive edge in production of final products since collectivism makes coordination of activities easy and production of final goods is great when superiority of intermediate inputs is high. Nevertheless, entrepreneurs who create different and imperfectly substitutable inputs that are aimed at the manufacture of final goods dominate the intermediate goods sector. This prestige is common in strong individualist cultures than in collectivist cultures; however, superiority of intermediate inputs gets established by efforts put in research, which is considered a function of financial as well as social status remuneration to innovation (Biddle, 2012; Sakalaki, 2007). When holding other things constant, collectivism increases coordination on capacities that lead to efficacy in the economy, while individualism results in high innovation of its social rewards to innovation. Hence, high innovation rate eventually results in high levels of productivity and output in the long-term compared to collectivist culture; thus, even though advantages of collectivism influence static efficiency, the advantages of individualist culture influence dynamic efficiency, which eventually affect the long-term growth. However, it is worth noting that in Malthusian economy where resources are dedicated to survival consumption, collectivist economy may likely exhibit high level of output. This model yields an interesting relation between culture and institutions; for instance, under bad institutions, a voracious government can confiscate monetary returns of innovation. Nevertheless, social status as well as prestige cannot be taken; thus, even in societies with predatory institutions, more innovation will exist in an individualist culture because of its social status reward to innovation. According Hofstede (2001), measure of individualism in GDP per employee on individualism shows a strong and significant positive influence of individualism since increase of individualism leads to increase in the level of employee income, which is a large effect. Moreover, Hofstede (2001) indicates a strong and positive correlation that links individualism to measures of innovation, a condition that was to Schwartz’s measure of individualism (Gorodnichenko and Roland, 2012 p.6; Basabe and Ros, 2005). According to Gorodnichenko and Roland (2012), these are not mere correlations since there are causal effects of individualism on innovation as well as measures of long-term growth. They conducted instrumental variable assessment and found results that were akin to if not strong compared to estimates acquired in least square regressions thus; they have clearly managed to suggest the casual effect of individualism on growth. Moreover, Gorodnichenko and Roland looked to the broad spectrum of other available measures of culture and concluded that there were no significant or robust influences of growth from cultural dimension that were independent from individualist-collectivist cleavage. Therefore, it is clear that in findings that strong and robust causal effect of individualism affect innovation and long-term development and other cultural variables never seem to play a significant role. Moreover culture is essential in understanding long-term growth as well as differentiating individualism from collectivism, which appear to be the most essential dimensions relevant to understanding differences in the level of development (Gorodnichenko and Roland, 2012; Sakalaki, 2007). In social terms, capitalism in the past was based on structural heritage from pre-capitalist society whose values were also derived from feudal society that stressed the significance of social order and subordination of individuals. The values protected property rights and legitimized inequality as key part of social order and its simplicity and rigidity as well as its social comparison processes continually reinforced the value system and was hedged by non-economic values. Modern capitalism lacks most of the traditional legitimization since it is strongly influenced by British liberalism, a system that values individualism rather than collectivism, achievement instead of tradition and political equality as opposed to inequality. This value system obviously offers little non-economic legitimacy to social terms and conditions in market allocation; however, it imposes as a measuring rod to economic efficiency as the foundation of evaluation in economic institutions. The lack of social guidance and control of economic behaviour by non-economic values add o structural weakness of social control in modern capitalism as well as the related instability of property rights (Castles, Lehner and Schmidt, 1988, p.61; Tiessen, 1997). According to Bunnin and Yu (2004, p.27) considering Marx’s ideas as philosophy and discussing them in rigour results in rejection of Marx’s methodological collectivism in favour of methodological individualism, in an attempt to explain social arrangements and life by appeal of the rational behaviour of differently endowed people. Modern capitalist societies ought to apply individualist approach since individualist culture is associated with analytical thinking while collectivist thinking is concerned with forms of holistic thinking. Nevertheless, modern and democratic society that places ultimate value on an individual creates intrinsic and irresolvable tension regarding the individual and the society since perceived threats to individual rights may ignite extreme individualistic doctrines in economics. Moreover, theorists consider the unlimited growth of individualism as a threat to organic unity that links individuals to society; nevertheless, individualism and collectivism are not mutually exclusive opposites. Individualistic configurations of ideas as well as values that characterize modern societies are by themselves a creation of certain form of social order or form of culture where a persona develops into autonomous and self-sufficient agent. Hence, in this sense an egalitarian and secular society is an indispensable condition for the emergence as well as maintenance of individualism; therefore, implementation of individualist culture has to tolerate the society needs (Stivers, 2003). This is essential because the tension between individualist and collectivist tendencies in modern society is impossible eliminate apart from figuring ways of combining and compromising the two fundamental tendencies. The modern society emphasises on autonomy of the individual and the individual’s liberation from traditional and political authority; hence, individualism is an inevitable companion to modernization even though societies may vary in the nature, they remain basically individualistic (Allik and Realo, 2004; Gorodnichenko and Roland, 2012). In conclusion, individualist promotes a person’s goals as well as desires thus the approach values independence and self-reliance hence individualist approach to the development of an economy focuses on the individual. However, its application in modern capitalism has to consider the collectivist ideals in order to remain appropriate to the society, while at the same time ensuring that modern capitalism remains fruitful. The study indicates that the right application of individualist approach not only benefits modern capitalism than the collectivist approach used in the past but also enhances the collectivism in the society since individualism promotes communal development. References Allik, J., & Realo, A. (2004). Individualism-collectivism and social capital. Journal of Cross-Cultural Psychology, 35(1), 29-49. Biddle, C (2012). Individualism vs. Collectivism: Our Future, Our Choice. Bunnin, N., & YU, J. (2004). The Blackwell dictionary of Western philosophy. Malden, MA, Blackwell Pub. Castles, F. G., Lehner, F., & Schmidt, M. G. (1988). Managing mixed economies. Berlin, W. de Gruyter. Gorodnichenko, Y., & Roland, G. (2012). Understanding the Individualism-Collectivism Cleavage and its Effects: Lessons from Cultural Psychology. Institutions and Comparative Economic Development, 150, 213. Hofstede, G. (2001) Culture’s Consequences: Comparing Values, Behaviors, and Organizations Across Nations. 2nd edition. Sage Publications. Iyengar, S. S., & Lepper, M. R. (1999). Rethinking the value of choice: A cultural perspective on intrinsic motivation. Journal of Personality and Social Psychology, 76, 349-366. Sakalaki, M. (2007). Do individualists have a higher opportunistic propensity than collectivists? Individualism and economic cooperation. Revue internationale de psychologie sociale, (3), 59-75. Stivers, R. (2003). Ethical individualism and moral collectivism in America. Humanitas, 16(1), 57-73 Tiessen, J. H. (1997). Individualism, collectivism, and entrepreneurship: A framework for international comparative research. Journal of Business Venturing, 12(5), 367-384. Basabe, N., & Ros, M. (2005). Cultural dimensions and social behavior correlates: Individualism-Collectivism and Power Distance. International Review of Social Psychology, 18(1), 189-225. Read More