In existing theory, wealth is no more valuable than its implied consumption rewards. In reality, investors acquire wealth not just for its implied consumption but for the resulting social status. Max M. Weber (1958) refers to this desire for wealth as the spirit of capitalism. The authors examine, both analytically and empirically, implications of Weber's hypothesis for consumption, savings, and stock prices. When investors care about relative social status, propensity to consume and risk-taking behavior will depend on social standards and stock prices will be volatile. The spirit of capitalism seems to be a driving force behind stock-market volatility and economic growth. Copyright 1996 by American Economic Association.