Economic Transition as a Social Cognitive Process Cognitive Aspects of Economic Development

Economic Transition as a Social Cognitive Process: Cognitive Aspects of Economic Development in Slovenia

Jeffrey David Turk, PhD Scientific Research Centre of the Slovenian Academy of Sciences and Arts Novi trg 2, Ljubljana, Slovenia jeffrey.turk@zrc-sazu.si

Abstract: This paper is an investigation of buyer-supplier relations in Slovenia. The purpose is to understand the role of social interaction between domestic and foreign economic actors in promoting economic and social development. I stress the importance of human cognitive abilities in allowing human societies to develop, as well as in enabling people to study them. Scientists live in our own socially enacted world. Social scientists frequently study phenomena that are socially enacted. The advantage of studying socially enacted phenomena is that they are understandable to the social scientists through the same cognitive capabilities that we use in enacting our own social world. The downside is that by its nature social enactment implies that there are few underlying universal laws to be determined through ‘scientific’ study. Instead at best we expect to gain an understanding of how a given social phenomenon is locally enacted. Extrapolating the local to societal dimensions is somewhat risky; and transplantation of the lessons learned here to other social systems is admittedly not entirely appropriate. Nevertheless I craft a partial explanation of how human cognitive interaction has been an important factor in the trajectory of Slovene social and economic development. The main part of the paper considers socio-economic development in Slovenia. My methodology goes as follows: First I construct a general overall picture of Slovenia, including the historical development of the economy. The purpose is to give an indication of how Slovene business people might see their business environment, including their own understanding of how that environment has functioned in the past. Then I discuss the interviews with business managers regarding their relations with buyers and suppliers. I place great emphasis on trying to understand how they understand their business environment and how they function within it. Thus I employ a technique of using extensive quotes, placing them into context. Lastly I enlarge the context, using explanations from the local level to 2

show how meaningful communication with foreign business partners has been an important factor in Slovene development. The outcome is that Slovenia emerged from a social system virtually without private ownership of productive capital, avoiding forms of ‘shock transition’, maintaining arguably the best-developed economy (in terms of GDP per capita) of the post communist countries, while also maintaining the highest life expectancy – as an indicator of general societal well-being. This has been linked with a history of maintaining business links with the developed countries while retaining domestic strategic control of production.

1. Overview The outline of this paper is as follows: First I elaborate the general context for why social scientists are cognitively capable of practicing their trade. Here I simply take as plausible that the modern form of the human mind emerged somewhere around 50,000 years ago, about the time of beginning of the human cultural explosion. I argue that about that time the capability of social construction emerged, allowing human groups to construct knowledge. This further allowed human societies to develop through cultural accretion as opposed to the relatively slow process of biological evolution. I contend that the basic cognitive abilities that allow contemporary social scientists to construct theories about what we now might see as market driven socio-economic systems are essentially the same abilities as those that have allowed those systems to develop in the first place: The theories and the systems have been socially constructed/enacted concurrently by people living in the same general social contexts. (I prefer the word ‘enacting’ to ‘constructing’ since the former suggests that this social reality exists only through the agency of the people enacting it, rather than as something that might stand independently upon its construction.) To be clear about my stance on reality: I assume that there is a universe with physical properties upon which people have been enacting an additional and increasingly intricate social reality for about 50,000 years. An important characteristic of human social cognition relevant to this paper is the ability to harmonize our understandings of our shared reality through complex communication – in addition to raw physical perception. We are furthermore capable of believing that our shared understanding of the world is objectively the way things are. Thus I stress the importance of enacting shared understandings of the world through communication. The picture I have in mind about how human social systems function is that each individual is self-aware and able to place herself and operate in a socially enacted world, which is more or less harmonized with the enacted social worlds of others through communication. This harmonized