One of the classical questions of political economy, going back at least to Marx and Weber, is how culture and economy interact. Different aspects of culture have been studied in terms of how they affect economic development (Weber''s protestant ethics), and are in turn affected, by the economic situation and development (Marx). Recent research on social capital and economic development, also research on institutions and economic development, has found strong effects of both factors on economic development. Complementary, attitude research has found effects of institutions and economic developments on a range of social and political attitudes. Research on the determinants of economic development has long put a focus on institutions (such as property rights) and government policies (such as market distortions) but more recently also included other elements of a country''s culture, namely ideology, asking: does the predominant political ideology in a country affect its economy, notably economic development and policies with economic impact? Less well studied is the complement to this direction of research, i.e. is the predominant ideology among citizens affected by the economy, notably by economic developments and government policies with economic impact? In this paper, I will analyze the complex interaction between individual level values, political demands, government policies and economic development. I argue, that institutions and policies on the one hand, and individual values on the other, affect each other over time, and this may well account for long-term-trends observable in the economic and political domains of industrialized countries. My findings indicate that that citizens shift to the left in ideological terms, government policy follows suit, and both individual level ideology and governmental policy lower economic performance. The stronger role for the state in economic affairs, as demanded by the citizens, shifts individual level ideology even more to the left.
