The seven Worldviews and some political and economic consequences.

Blog by Huib Wursten and Fernando Lanzer.

From “ the end of history” to seven Worldviews 

In his book, The End of History and the Last Man, Francis Fukuyama argued that with the ascendancy of Western liberal democracy and the collapse of the Soviet Union (1991)—humanity had reached the end of History. This theory, presented in his 1989 essay and expanded in his 1992 book,  stated that liberal democracy, paired with free-market capitalism, had emerged as the ultimate form of human government, with no viable alternatives remaining. This thesis was based on the idea that humanity had agreed on the best way to organize societies politically and economically.

Fukuyama stated that liberal democracy was all nations’ final form of government. According to him, liberal democracy had repeatedly proven to be a fundamentally better system (ethically, politically, and economically) than any of the alternatives. So, there could be no progression from it to an alternative system. 

Various critics have described this thesis as flawed.

One of the arguments was that it neglected Cultural and Religious factors.

Samuel P. Huntington, in his book The Clash of Civilizations and the Remaking of World Order, argued that the ancient conflict between civilizations is replacing the temporary conflict between ideologies. 

Religion is the dominant cultural issue, in his opinion, and increasingly, there will be a power struggle between religions, but especially between Christianity and Islam. 

The problem with his approach is that, if this were true, as an example, it would be difficult to explain that, in reality, in the Middle East, Sunnites are fighting Shiites and vice versa, and both are fighting Kurds. 

Indeed, a better explanation is found on the level of cultural dimensions. The cultural dimension of “Collectivism” explains why this fighting is happening. Collectivism is defined as “loyalty to your “in-group” (clan, religious faction, region, ethnic group) and, in return, expecting help and support from this in-group. Collectivist cultures put the interests of their in-group first, and some rules and values are valid for dealing with your in-group. However, these rules and values are not automatically applicable to outsiders.

Therefore, a better title for Huntington’s book would be “The Clash of Clans”.

No “end of History”: the Seven Worldviews and downward causation:

Considering the Seven World views’ preferred values and the game’s consequent rules, seven different types of liberal democracy and the consequent approach to the economy can be found.

1. Democracy:

In an earlier paper by the authors of this blog, it was shown that five of the Seven Worldviews and their rules are to be found in the European Union. Bridging these differences is, in reality, a political and intellectual challenge of unique proportions.

It sometimes leads to opposing views on centralization/decentralization, the rule of law, human rights, the separation of powers in a democracy, and, consequently, the position of the Central Bank, the definition and role of leadership, etc.

Contest. 

After Brexit, the influence of this Worldview diminished. Ireland is, however, the remaining Contest nation-state.

The democratic system is known as “the Westminster model”. whereby 

a limited number of political parties (preferably just two) compete with each other in a polarising manner and allow “the winner to take all” after the elections. This includes appointing top-level civil servants so that the top layers of government organizations are all changed and aligned with the election winner.

Network

Democracy, as perceived by the network system, assumes that multiple societal stakeholders organized in political parties are willing and able to participate in political decision-making. After elections, a government is installed consisting of coalitions of parties that have a negotiated consensus about the country’s desired political direction. Leading principles in the political field of Network cultures are known as “the four C’s”:

Consensus seeking, Coalition governments, Collegial administration (no hierarchy), and Co-optation (trying to get the enemy aboard).

Pyramid countries:

There is a strong need for centralization. A frequent reference point for legitimating actions is “common interest,” as formulated by the people at the top. There is also a strong need to formalize communication between the various levels and the mandating between levels.

The mandate is top-down. The lower levels are only supposed to do what the official mandate allows them to do. If something happens that is not foreseen in the mandate, people have to go back all the way up in the hierarchical system to ask for instructions. 

Collectivism also leads to a “must” in terms of the profile of effective leaders. They are supposed to behave like the father/mother of the family. In return for loyalty, the “boss” is supposed to take care of people. This means that clientelism is a common feature. 

Solar System

The main difference with the Pyramid system is the tension between, on the one hand, high acceptance of hierarchy and, on the other hand, a high degree of Individualism.

This leads to a tendency for citizens to accept top-down decision-making but with a strong emphasis on individual rights. 

Because of Individualism, the pyramid’s “moral” approach is replaced by a more rationalistic functional approach. Rewarding loyalty is replaced by an attitude of “right person and right place.” 

Political leadership is not so much connected to being a “parent of the family” as it is to being a highly visible intellectual technocrat.

Delegation and control are the same as in the Pyramid system.

The combination of high PDI and high IDV led to an important issue for democracy: the separation of powers. It originated from a representative of this type of culture: Montesquieu. In social reality, this is frequently problematic; because of hierarchical thinking, there is a tendency to see the political level as the top of the hierarchy. The controlling and executive levels are supposed to follow the lead of the politicians. 

The Well-Oiled Machine

The core issue of democracy in these cultures is a high internalized need for structure.

In principle, people feel autonomous and want to perform tasks independently. However, the condition is that all obscurities around task completion and task description are reduced. Clarity in the structure and explicit procedures form the core of the internal discussion about the organization. Decentralization within clear, “unshakeable” agreements is the natural form of leadership and management.

Example: the autonomous position of the “States” in Germany with respect to the central authority in Berlin. The reference point for evaluation is: have all the parties involved observed the previously formalized planning?

For a full analysis of the consequences in reality, see an earlier article on how it works in the EU: 

http://www.clubofamsterdam.com/contentarticles/86%20Europe/itim%20eu%20report.pdf

2. Economy

Next to the types of democracy, the “market” approach found in nation-states differs. To illustrate this observation, we’ll exemplify this with some countries representing the Seven Worldviews: the US, Germany, France, the Netherlands, China, South Korea, and Japan. They differ significantly due to their unique historical, cultural, and political contexts. Here is a brief overview:

United States: Liberal Market Economy 

• General description: The US economy is characterized by its entrepreneurial spirit, strong emphasis on innovation, and relatively free market system. It excels in technology, finance, and services, with a regulatory environment that encourages competition and business growth.
• Characteristics: The US exemplifies a liberal market economy characterized by a strong emphasis on free markets, deregulation, minimal government intervention, and a high degree of labor market flexibility. Financial markets predominantly drive capital allocation.
• Key Features: Competitive markets, shareholder value orientation, decentralized decision-making, flexible labor markets, and a significant role for venture capital in fostering innovation.

Germany: Coordinated Market Economy

• General description: Germany’s economy is known for its strong industrial base, particularly in manufacturing and engineering. The country adopts a “social market economy” model, balancing free-market capitalism with social policies. Germany emphasizes vocational training, research and development, and a high level of worker participation in management.
• Characteristics: Germany represents a coordinated market economy, where economic activities are coordinated through various non-market mechanisms, including industry associations, strong labor unions, and extensive vocational training systems.
• Key Features: Strong collaboration between firms, labor, and government; significant role of vocational education; long-term employment relationships; significant worker representation in corporate governance (co-determination).

France: Centralized Mixed Economy 

• General description: France combines a robust social welfare system with a mixed economy, where both the public and private sectors play significant roles. The French approach emphasizes social equity, strong labor rights, and public investment in infrastructure and education.
• Characteristics: France has a mixed economy that blends elements of both liberal and coordinated market economies. The government plays a substantial role in economic planning and regulation.
• Key Features: State intervention in strategic industries, significant welfare state, centralized industrial policy, and a hybrid approach combining market mechanisms with social protections.

Netherlands: Consensus-based Market Economy

• General description: The Dutch economy is open and trade-oriented, with a strong emphasis on logistics, agriculture, and financial services. The Netherlands is noted for its consensus-based economic policies, known as the “Polder Model,” which emphasizes cooperation among government, employers, and unions.
• Characteristics: The Netherlands features a coordinated market economy with a strong tradition of consensus-building among labor, employers, and government.
• Key Features: Social partnership models, strong social safety nets, a significant role for employer associations and trade unions, and extensive public-private cooperation.

China: State Capitalism

• General description: China’s economic model blends state-led development and market reforms. The Chinese government is crucial in directing economic growth, investing in infrastructure, and fostering key industries. The focus is on rapid industrialization, technological advancement, and expanding global trade.
• Characteristics: China is characterized by state capitalism, where the government exerts a significant influence over the economy, including through state-owned enterprises (SOEs) and state-directed investment.
• Key Features: Predominance of SOEs in key sectors, strategic planning by the state, mixed ownership structures, and significant state intervention in the economy.

South Korea: Developmental State Model

• General description: South Korea’s economy is driven by large conglomerates (chaebols), significant government investment in technology and education, and an export-oriented industrial strategy. The Korean model emphasizes rapid economic development, innovation, and global competitiveness.
• Characteristics: South Korea exemplifies the developmental state model, where the government plays a central role in economic development through strategic planning, industrial policy, and fostering key industries.
• Key Features: Strong government-business collaboration, focus on export-led growth, chaebols (large family-owned business conglomerates), and substantial investment in education and technology.

Japan: Government-Business Market Economy 

• General description: Japan’s economy is characterized by technological innovation, high-quality manufacturing, and a cooperative relationship between government and industry. The Japanese model focuses on long-term corporate planning, lifetime employment, and continuous improvement (kaizen).
• Characteristics: Japan also represents a coordinated market economy, with strong government-business relationships, lifetime employment practices, and a focus on consensus decision-making.
• Key Features: Long-term employment, keiretsu (business group networks), strong role of MITI (Ministry of International Trade and Industry), and significant coordination between firms and banks.