Economic systems do not stand alone: they are influenced by, and have an impact on, other aspects of society. Although economists often pay attention to political factors, they usually take little notice of culture. This chapter attempts to correct that oversight.

As we saw in Chapter 3, the cultural characteristics of a nation do not tell us anything about its degree of capitalism. Nevertheless, in this chapter I show that culture has a strong correlation with the type of capitalism. Of course, correlation does not mean causality, but by comparing the cultural and economic systems of communist East Germany and capitalist West Germany, we will see that in democratic nations, culture influences the economic system more strongly than the economic system influences culture. On the other hand, in nondemocratic nations this generalization does not necessarily hold.

The first step is to delineate cultural systems and to show a strong parallelism between cultural and economic systems. Then I examine some aspects of change in cultural systems over time and explore how the experience of the two Germanies yields insights into the direction of causality between the economic and cultural systems.

Cultural Systems: The Basic Approach

The concept of culture is vague and protean. A. L. Kroeber and Clyde Kluckholm found over 150 definitions of culture in the literature of the social sciences and argued that the many definitions emphasize quite different characteristics, ranging from artifacts and material traits to social structures and behaviors, beliefs, psychological orientations, symbols, and values and norms.