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Sigmund Freud was a proudly assertive adherent of the Western cultural tradition, specifically that of the German tradition associated with Goethe. However, from the first rude shock of the anti-Semitism he experienced at university until the moment of exile after the Anschluss, Freud was always aware of the profound discrepancy between this “Germany of the mind” and the reality of the Germanic society in which he actually lived. Yerushalmi (1991) notes,
Certainly a vital part of him lived in a Germanic universe of thought, but this Germany of the mind and the imagination that he, like so many Central European Jews, cherished was that of the German Enlightenment…of literature and philosophy, of nineteenth-century German science. Unlike so many of his contemporaries, Freud rarely confused this with the real Germany or Austria, even if part of him may have strongly wanted to do so. And this long before Nazism and Hitler. (p. 40)
It may be that Freud's allegiance to his Jewish identity helped him maintain the acerbic and somewhat distant attitude toward the reality of German culture that went along with his admiration for its highest values; that is, not being fully part of it, he could love it without being infatuated by it. Such an approach is arguably a psychoanalytic value in itself: One can admire beauty without being taken in by it; there must always be some space left over for analysis. The Jew outside the beckoning culture might, if he or she is to remain sober and realistically cautious, do well also to retain this ironic stance.
In any case, Freud's Jewish identity seems without doubt to have had a massive influence on the form and content of his psychoanalytic discoveries and on the formation of the movement