Cultural beliefs and societal organizations

Reading summary on “Cultural beliefs and the organization of society: A historical and theoretical reflection on collectivist and individualist societies” by Anver Greif

In this article, Avner Greif examined the two kinds of trade groups: the Maghribi traders of the eleventh century in the Muslim world; and the Genoese traders of twelfth century of the Latin world. He sought to gain the understanding of the relations between cultural beliefs and societal organization.

It has been established by sociologist, anthropologists and economic historians that the societal organization will affect its economic performance of its society and cultural variations account for setting up and maintaining different societal organizations. The organization of society is the reflection of its cultural beliefs, (here the author emphasized the rational cultural beliefs); diverse cultural beliefs, through the strategic social interactions happened in specific social and historical context, led to differential economic behavior towards individuals, wealth distribution and different relationship between efficiency and profitability in intrasociety and intersociety economic interactions, etc.; may imply diverse social constructs.

The cultural beliefs and the rules of games (i.e. social norms) also affect the enforcement institutions; social and economic patterns of interactions also affect moral enforcement mechanisms.

	Maghribi Trade Groups Represents the Collectivist	Genoses Trade Groups Represents the Individualist
Cultural belief	In regard to hire agent, it is commonly agreed and practiced that they shall never hire dishonest agents	Agent past behavior of being dishonest had no bearing for his future employment
Agent relation and setting up	The cost of agent is high, to keep him remain honest	The cost of agent is low
Information share and investment	Invest in information and sharing information	Not invest in information, not sharing information
Social organization pattern	Horizontal social structure where a merchant hires another merchant to be his agent. Each trader served as an agent for several merchants while receiving agency services from them. Agency relations are mostly partnership and formal friendship	Vertical social structure where a merchant doesn’t hire another merchant to be his agent. Wealthy merchants rarely function as agent Agency relations are mainly based on contract which one provides capital and others provides work in form of traveling and transacting overseas.
Wealth distribution	In Horizontal structure, the poor individuals have no opportunity to capture the rent of agent.	Vertical structure provides better opportunity for upward mobility to poor individuals.
Response to social change	Segregated manner, expand their trading employing other Maghribis as agents	Integrated manner, they established agency relationship with non Genoese.
Profitability	The more efficient agency relations, the less profit for merchants	A joint economy between merchants and agents
Efficiency	Not efficient intereconomy agency relationship	Efficient intereconomy agency relationship
Collective punishment	Exist and self-enforced through in group social network; punishment reinforced by social and moral mechanisms which of a result of frequent economic interaction within a small segregated group	Do not exist and not self-enforced with low level of communication, which hinder social and moral enforcement mechanisms, to support collective action, an individualist society needs to develop formal legal and political enforcement.

In conclusion, the author was able to show cultural beliefs are sufficient to account for their diverse social organization. According to author, the collectivist systems is more efficient in supporting intraeconomy agency relation and requires less costly legal system, but it restricts efficient of intereconomy agency relation. The individualist system does not restrict efficient intereconomy relation but is less efficient in intraeconomy agency relation, it requires costly legal systems.

Greif noticed that Maghbribis’ societal organization resembles that of contemporary developing countries, whereas the Genoese societal organization resembles the developed countries. He suggested that in the long run, the individualistic system may have been more efficient.