CULTURAL BELIEFS AND THE ORGANIZATION OF SOCIETY - A HISTORICAL AND THEORETICAL REFLECTION ON COLLECTIVIST AND INDIVIDUALIST SOCIETIES

Lacking an appropriate theoretical framework, economists and economic historians have paid little attention to the relations between culture and institutional structure. This limits the ability to address a que stion that seems to be at the heart of development failures: Why do so cieties fail to adopt the institutional structure of more economically successful ones? This paper integrates game-theoretical and sociologi cal concepts to conduct a comparative historical analysis of the relat ions between culture and institutional structure. It examines cultural factors that have led two premodern societies-one from the Muslim wor ld and the other from the Latin world-to evolve along distinct traject ories of institutional structure. It indicates the theoretical importa nce of culture in determining institutional structures, in leading to their path dependence, and in forestalling successful intersociety ado ption of institutions. Since the distinct institutional structures fou nd in the late medieval period resemble those differentiating contempo rary developing and developed economics, the paper suggests the histor ical importance of distinct cultures in economic development.