Effects of the cultural and ethical system on the economy.
By: Sukhman Kaur
Tags: Economy Of Things, Ethical, Cultural, Economy, Social

Photo by Kyle Glenn on Unsplash

The cultural system involves family patterns, social class, language, religion, art, and literature. Every family follows its own set of cultures and works according to it. People belonging to the elite classes may tend to buy and demand luxurious goods whereas, those belonging to the lower class may buy and demand goods of necessities. Every country has a diverse range of people from different backgrounds, who have their own customs and traditions. For example, the Indian mass has different marriage traditions than compared to that of the U.S.A. Different festivals are celebrated in different parts of the world. The type of clothes people wear, the food they eat, the way they act are all related to the cultural system, which directly affects the demand of the people according to their cultural backgrounds. Therefore, culture has a very strong influence on the economy.

There is an intimate relationship between belief systems and the institutional framework. To quote Ward Goodenough in this regard: “A society’s culture consists of whatever it is one has to know or believe in order to operate in a manner acceptable to its members. Culture is not a material phenomenon; it does not consist of things, people, behavior, or emotions. It is rather the organization of these things. It is the form of things that people have in mind, their models for perceiving, relating, and otherwise interpreting them.” For example, many observers have wondered why America has an economic system based on low taxes and private initiative while Europe has a system with a large government sector and high taxes. The best explanation we have is that there are differences in the beliefs Americans and Europeans have.

Ethical systems help in the development of the economic society it motivates people to do good deeds, increases the willingness to work hard, takes care of the environment, works honestly, and sincerely. Ethical conduct reduces transaction costs, enhances productivity, and creates the social capital that lubricates exchange. Why do strangers return lost wallets? Why are doctors concerned about their clients’ best interests? Why does fairness seem to produce higher economic returns than greed? Ethical values and moral frameworks permeate exchange.

The international trade, globalization is also affected by cultural and ethical systems, in a positive way. We also have greater contact with different cultures, with which we often live side-by-side. Cultural mixing can be immensely enriching for the human spirit. It can also be a powerful source of innovation. Many people think globalization is causing oneself to forget their own culture but, cultures are the core values that cannot be disappeared just because of globalization. Globalization is a system that helps us learn and explore different social culture by not forgetting our own culture because the mainstream of any culture of any society is not weak that it can be affected by any globalization.

In the age of capitalism, the cultural and ethical factors are being promoted as capitalism intends to encourage all people to participate in activities that appear beneficial to them. Thus, it leads to, more construction of educational institutes, churches, temples, and also provided products of different cultures to promote sales.

Therefore, cultural and ethical systems are the backbone on the basis of economic development. It is important for a person to live one’s own culture and pass it to further generations as every culture directly or indirectly contributes to the economic structure.