With reference to China, the impact of culture on economic development has been discussed for many decades, both by Western researchers and the Chinese. In fact, after 1949 the Chinese Communist Party started out from the assumption that ‘feudal’ culture had impeded economic growth and so has recurrently launched initiatives to transform culture and economy simultaneously, for instance, during the collectivization movement in the 1950s. Even today, expanding the scope of the market is regarded as being part and parcel of modernization efforts and so is seen as a cultural transformation.
I have studied the relationship between culture and economy in China since my student times. This is a complicated question both theoretically and empirically. From the viewpoint of institutional economics, culture works through institutions, in different contexts, such as institutions of the family or institutions of government. This is different from the view mostly adopted by economic research on culture, which emphasizes ‘values’. This view is very influential also in management science, for example, receiving Hofstede’s approach. I am deeply sceptical of value research, because it seems to suggest that people have a sort of ‘quasi-genetic’ endowment of values that directs their behaviour and is close to immutable (‘mental programming’ in Hofstede’s words). I think that culture works via institutions, and hence if institutions change, values will also change. However, there is, of course, a strong interdependence between values and institutions, and after all, individuals who change institutions also carry values with them. We can resolve these difficulties in the naturalistic approach to institutions: Performativity of institutions means that culture has to be conceived in externalist terms, and values are not a given, but aspects of performative actions of individuals. In my ‘Foundations’, I call this ‘institutionally guided behavioural patterns’.
In my recent research on culture and economy in China, I mainly did three different kinds of work.

  • Firstly, I applied the modified Aoki model on this question and developed an additional set of theoretical tools which allows understanding the dynamics of cultural change. The basic idea is that culture is a pattern, and not a simple causal factor. For example, many people think that ‘the Chinese are collectivistic’. But we see many behavioural phenomena in China that are also strongly individualistic. This is not where culture comes into play, but in the patterns of various kinds of behaviours, say, in business organizations interacting with local government. These patterns are not inherited ‘from the past’, but they may manifest strong path-dependencies. I developed this analytical framework in two contributions to IEA conference volumes:
    • Making Sense of Institutional Change in China: The Cultural Dimension of Economic Growth and Modernization, in: Masahiko Aoki, Timur Kuran and Gérard Roland, eds., Institutions and Comparative Economic Development, IEA Conference Volume 150/1, Palgrave Macmillan, 2012, pp. 254-280. penultimate version: http://ssrn.com/abstract=1958496
    • China’s Path-dependent Transition: Culture Mediating Between Market and Socialism, in: Janos Kornai and Qian Yingyi, ed., Market and Socialism in the Light of the Experiences of China and Vietnam, International Economic Association conference volume 146, London: Palgrave, 2009, 110-134.penultimate version:  http://ssrn.com/abstract=950698
  • Secondly, I developed a triangulation approach to behavioural and value analysis. This means, that I combine results from Chinese studies, sociology and psychology/cognitive sciences in order to reconstruct fundamental value dimensions of Chinese culture. In anthropology, this is called a combination of ‘emic’ and ‘etic’ methods. My favourite workhorse is the individualism/collectivism dichotomy. Most people believe that the Chinese are collectivists, but I can show that this is wrong. Following recent contributions to value research, I characterize the Chinese as relational and vertical collectivists, and argue that individualism is an independent dimension, hence the Chinese are also individualists (‘collectivism’ is about values, ‘individualism’ is about ascription to agency). This combination of psychological characteristics can be illustrated in analysing the phenomenon of ‘guanxi’, i.e. networking in Chinese society, which is a culturally specific form of creating and maintaining social capital. I present this argument in my paper:
    • Social Capital, Chinese Style: Individualism, Relational Collectivism and the Cultural Embeddedness of the Institutions-Performance Link, in: The China Economic Journal, Volume 2(3), 2009, 325 - 350. penultimale version: http://ssrn.com/abstract=1481192
  • Thirdly, I try to identify patterns in historical developments and Chinese philosophy and religion that undergird the aforementioned analysis. One important topic is the role of Confucianism in shaping Chinese society. Again, it is close to commonplace to describe Chinese culture as ‘Confucian’, but this is very misleading, if you consider popular culture. Confucianism was an elite ideology which was certainly imposed on society by many means, but popular culture always proved resilient and manifested many deviating phenomena. Since economics today also recognizes that religion is a powerful force in shaping economic behaviour, I study popular religion and its fate today, and try to identify more general cultural patterns. I started this work more than 15 years ago, see my paper:
    • Strange Notes on Modern Statistics and Traditional Popular Religion in China: Further Reflections on the Importance of Sinology for Social Science as Applied to China, in: Mende, L. von/Siebert, M., Hrsg., Ad Seres et Tungusos – Festschrift für Martin Grimm, Wiesbaden: Harrassowitz Verlag, 171-189. http://ssrn.com/abstract=953001

I continued with this work in my book in German that has been published in 2015: Wachstum, Macht und Ordnung: Eine wirtschaftsphilosophische Auseinandersetzung mit China (Growth, Power and Order: Approaching China from the Angle of Economic Philosophy), Metropolis. In this book, I came up with the idea that 'ritual' is a central notion for understanding old and new China. I devote an entire book on this topic that has been published in October 2016 with Routledge: China's Economic Culture: The Ritual Order of State and Markets.This book is a comprehensive analysis of the Chinese political economy from the angle of cultural analysis combined with modern approaches to economic institutions.