This is an edited text of Christopher DeMuth’s weekend speech at Consilium, the Centre for Independent Studies public policy conference.

The populations of the advanced economies are today the richest and freest people the world has known. The problems of obtaining and securing prosperity and freedom--humankind’s central problems from the dawn through the 20th century--have essentially been solved by science and technology, and improvements in social, legal and economic institutions.

Today, average income is so high that the necessities have become practically universal. Many one-time luxuries--good food, clothing, cars, homes, advanced communications, art and entertainment, foreign travel--have become mass-market commodities. That so many ordinary citizens can even contemplate life as a style and calibrate time according to its quality is one of the greatest blessings of living in such a free and abundant era.

Our growing wealth and equality is transforming politics. Many of the central issues of public finance, social welfare and class contention that dominated 20th-century politics are evaporating. In the US, today’s frontburner economic policy problems are those of abundance not scarcity--what to do with huge surpluses and how monetary policy should adjust for the staggering increases in household wealth.

Today’s most talked about problems of public resource allocation--such as reducing pollution, relieving traffic congestion, conserving more open space, and properly equipping our police and military forces--are hardly resource problems at all. We possess the means to improve them to about any degree we want. We would need to give up a share of other good things, but the trade-offs would not involve serious sacrifice. The constraints on their solution are not material but political.

In today’s highly affluent and mass middle-class societies, the truly serious, overarching policy problems have become cultural and ethical. It encompasses a variety of phenomena: the profusion of obscene and violent entertainment, family breakdown, the spread of drugs and drug culture, pornography on the internet, incidents of mass violence and terrorism, and anxiety over the social consequences of new biological and information technologies. All derive from the tremendous power and freedom of action that wealth and technology have placed at the disposal of every individual.

The challenge they present is learning to live in a world where wealth and freedom have amplified man’s capacities for vice along with his capacities for virtue. From time immemorial the good, the bad and the ugly have coexisted and competed for human allegiance, but now the tasks of containment and rollback of vice and ugliness have become more daunting. The culture wars are, in these respects, like the Cold War.

Within each of the advanced nations, there remains sizeable impoverished sub-populations that, although receiving free medical care, schooling and other services, have missed out on prosperity. It is generally acknowledged that income-transfer programs have failed to address the problem of poverty and, in many respects, have made them worse by encouraging illegitimacy and long-term welfare. Parties of both left and right are heavily focused on strategies aimed at revitalising the family, strengthening church and community institutions and improving schools.

The problems of absolute and relative poverty have an important global dimension as well. These, too, are increasingly understood in cultural terms. Since the beginning of the scientific and industrial revolution in the early 19th century and continuing to the present, economic welfare in the nations of Western civilisation--western Europe, Britain, the US, Canada, Australia, and New Zealand--has improved at greater rates than in any other nations, with the exception of Japan and the small Asian tigers since the 1960s.

At the time of the collapse of communism, it seemed natural to believe that the spread of free markets and democratic government, combined with the spread of modern medical, public health, information and other technologies, would produce convergence in productivity, economic output and individual welfare between the West and the rest. But so far it is not happening. We are seeing not convergence but continuing divergence.

It is unnerving for advocates of free markets and the rule of law to observe nations with tolerably honest governments and sensible economic policies, such as the former East Germany, which has imported Western economic policies and legal institutions wholesale, but where there is nevertheless little domestic entrepreneurship and economic growth and where cities teem with unemployed. Something universal must be at work that goes beyond technology, economic policies and institutions.

These developments are inspiring a new development literature, epitomised by David S. Landes’s historical tour de force, The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor, suggesting that that something is culture.

A culture conducive to economic growth is not only necessary but also antecedent. The unique prosperity of Western civilisation is due not so much to its economic policies and political institutions as to the culture that fashioned and sustained them--along with complementary private institutions of education and science, religion and philanthropy, commerce and industry, and art and literature.

Ours is a culture where the sheer pleasures of striving and self-realisation, and the hope of winning and fear of losing, keep many of us at the office long after our material needs have been abundantly provided for. It is a culture where scientific research and intellectual life are as ferociously competitive as business and finance. It is a culture where government misconduct is pitilessly exposed and punished rather than left to fester and grow.

Generally, as growing prosperity, freedom and equality within the mainstream of Western society increasingly reveals the cultural roots of material success, and strips away the old ideological explanations for lack of success, we may discover that our political institutions are poorly equipped to handle the more delicate issues of culture and human capital.