Applying Cultural Economics

My minor in college was economics not because I enjoyed crunching macro- and micro-numbers, but I was enthralled with cultural economics. The discipline is the correlation of culture to economic outcomes, a gestalt of factors, including religion, social norms, identity, fertility, and government policies.

An example is the high birth rate in Third World nations with the hope several children survive within a family and can therefore care for their aging parents.

Swivel to China’s one-child policy. Families have fewer children to support, enabling them to save and invest, allocate resources to the education and healthcare of their sole offspring, which in turn bolsters skills and capabilities, driving productivity and economic growth.

Decades later, China has negative population growth with women choosing not to have children because of the expense. The result is a strain on social support systems, such as pensions and healthcare for older populations. 

Japan’s decreasing birth rate has resulted in a generational imbalance with 30% of the population being 65 years or older. The burden of caring for aging parents (and in-laws) often falls to a single son and his wife.

Jumping to technology, another factor that influences traditional economics—the production, distribution and consumption of goods and services—and to a certain extent the cultural makeup of society. My professor and author of my cultural economics textbook, Richard L. Brinkman, viewed technology as concentric layers with hunting and gathering, a small circle at the top and the Industrial Revolution at the bottom.

In just a short period of time, the Industrial Revolution split into four circles: Industry 1.0 (mechanization), Industry 2.0 (mass production), Industry 3.0 (automation), and Industry 4.0 (cyber physical).

Now, there’s the colossal circle of Industry 5.0. Science fiction, a few decades ago, AI automates decision-making and software development, strengthens human-machine collaboration, enables real-time prediction and recommendations, and propels circular manufacturing systems.

I keep thinking of Professor Brinkman’s expanding stages of economic development spurred by technology and cultural evolution. Humankind, even if they had the intellectual horsepower of Einstein, are basically a raft in the growing ocean of knowledge amassed within AI models.