Philosophy of Economics

The Essence of the Theory of Cultural Determination and Its Significance in Explaining and Resolving Economic Issues

The economic environment encompasses thinking and acting individuals, as well as a considerable array of values and behavioral norms. The economic behavior of individuals necessarily presupposes the existence of value-based worldview orientations that shape and define it. Economics cannot overlook the cultural-psychological factor, as today’s homo economicus gives way to the real human being, with her motivations, thoughts, value orientations, and aspirations. The modern market economy emerges as a network of interacting individuals pursuing their individual goals. Therefore, it is essential to carefully analyze the process of determining the social actions of subjects within a market economy, the relationship between economic efficiency and moral values, ethical norms, and standards. The advantages, goals, and motivations of individuals participating in market relations are reflected in the market model. Each economic decision, in addition to its purely “economic” component, has other aspects: psychological, political, geographical, demographic, sociocultural, and more. The cultural factor plays a crucial role in determining the decisions and actions of economic subjects since these decisions and actions possess a social nature, conditioned by upbringing, education, social status, habits, traditions, systems of life values, religious norms, and ideals—all of which pertain to the realm of culture.

In contemporary scholarly literature, culture is defined as a system of values, beliefs, patterns, and norms of behavior that are collectively recognized and accepted by a specific group of people. It is hard to disagree with the notion that “culture is the collective programming of the human mind that distinguishes the members of one group from another.” Culture is created and functions as a vital mechanism of social interaction that stabilizes society, helping it maintain unity and integrity in contact with other cultural communities, including within the economic sphere.

The theory of cultural determination in economics analyzes economic phenomena and processes from the perspective of their dependence on cultural factors, asserting that the economic development of society is determined by the system of values, norms, prescriptions, ideals, and so forth, characteristic of that society or community.

The question of culture's role in the determination of the socio-economic sphere was pertinent to many distinguished European scholars of the 19th and 20th centuries. For instance, the renowned French philosopher and sociologist Émile Durkheim (1858-1917) examined religion as a social institution and its impact on social life. The German scholar and sociologist Max Weber investigated the influence of religious attitudes and norms on lifestyle, economic activity, and labor. He concluded that it was the Protestant ethic, as a new ideology of Western Europeans, which endowed secular, rationally organized endeavors aimed at wealth accumulation with religious significance, thus creating the foundation for capitalism and playing a vital role in the formation of a new European type of personality. Another notable German sociologist and philosopher, Karl Mannheim (1893-1947), focused on the problem of the place and role of ideology in societal life.

Culture, as a “key” to understanding social processes, is also analyzed in the works of the classics of Russian and American sociology, such as Pitirim Sorokin (1889-1968), and American sociologists of the 20th century, like Talcott Parsons (1902-1979) and Robert Merton (1910-2003).

Components of culture, such as theoretical knowledge and norms of scientific research that have become paradigms of scientific thought, are essential for future achievements in science and technology; social utopias and societal ideals for reconstructing society that have or have not become dominant state ideologies; and new moral and worldview principles and values being developed in philosophical and religious-ethical teachings, can serve as foundations for future socio-economic transformations, explaining and resolving economic issues. The dynamics of industrially developed countries, characterized precisely by the cultural potential of the Renaissance and Reformation, the Age of Enlightenment, and the political philosophy of liberalism in the 17th and 18th centuries, illustrate this point. By influencing economic processes in society, the cultural system simultaneously serves as the foundation for its stability and sustainability in development, as well as a basis for social harmony. Every society requires a necessary minimum of common norms and values; without them, it is doomed to disintegration and decline. For societies with developed economies, such cultural norms, values, and principles include, among others, economic freedom, fair competition, trust in contracts, legal protection of private property, a focus on societal interests in entrepreneurial activities, moderate state regulation of the economy, legal support of economic activities by the state, and principles of business ethics.

There exists a direct relationship between adherence to the aforementioned norms and principles and socio-economic stability. For example, violations of the principle of fair, “healthy” competition and corruption among some entrepreneurs, judges, and officials can quickly and inevitably lead to a decline in the investment attractiveness of a country’s economy. Consequently, this results in a slowdown in the pace of economic growth. The overregulation of the economy by the state and active governmental interference in business activities stifles entrepreneurial initiative, monopolizes the economy, and consequently lowers the quality of goods and services produced in the market. This leads to a decline in the quality of life for individuals, serving as a source of social tension. The legal unprotection of the institution of private property results in increased corruption, abuses, a reduction in the scale of business activity, and crisis phenomena within the country's economy.

Thus, there are grounds to assert that the economic order depends on the cultural sphere. “There is no independent economy; there is always only an economy within institutional and cultural limits,” notes contemporary German philosopher and economist, expert in management philosophy, Peter Koslowski (1952-2012). The “fathers” of the social market economy, such as Walter Eucken, Alfred Müller-Armack, and Wilhelm Röpke, consistently emphasized that the market economy requires anthropological and sociological boundaries. In the postmodern economy, alongside state and socio-political components that establish the boundaries of the social market economy, new ethical, cultural, and ecological elements emerge, transforming it into a broader social, ethical, and ecological market economy. The expansion of social boundaries, supplemented by ethical, cultural, and ecological components, corresponds, in sociological terms, to the transition from an industrial to a cultural society, signifying significant progress in the cultural domain overall and the cultural aspect of economics in particular.