The dictionary of cultural & cultural theory (Michael Payne, ’96) does not mention folklore but it does describe Folk culture. According to this dictionary folk culture is the culture of preindustrial (premarket, precommodity) communities. It was therefore taken to be organized around a number of characteristics: the oral transmission of songs, tales and history: aesthetic authorization by tradition, the integration of nature and culture, body and mind, expression through ritual in the collective deployment of symbols.
Folk is not an antropological term. It is an ideological construct; it necessarity includes a critique of ‘modern’ societies. As an aspect of nationalist ideology, folk culture is taken to be expressive of the true spirit of the nation, of it’s underlying beliefs and values, as articulated in specific forms of dress, speech, music, story telling, cookery and design.
The Idea of folk culture was taken up by Marxists, in the construction of working class consciousness (folk=serfs+peasants). Folk culture could be presented as the ‘pure’ form of working class culture untouched by the seductions of commerce.
A lot of comtemporary designers are inspired by this so called ‘pure’ form of working class culture. Remarkable designers worldwide (from Iceland to Denmark to Holland and Afghanistan) are interested in folklore, local crafts and methods. You will find this in the designs by ao Viktor & Rolf, Alexander van Slobbe and Claudy Jongstra, see a short documentary ‘Felt fabric and furniture’ where she shows the traditional techniques she’s working with: http://www.dutchprofiles.com/video/. This site also shows a film ‘African Beauty in Dutch design’ on the textile manufacturer Vlisco.
The most common idea of folk culture today is as a tourist attraction, a way of signaling what makes a country or locale different. But it’s definitely more then that. Folk culture is more then a kind of domesticated exotica, artificially preserved by the state. It seems to have noteworthy relations with design, its concepts, meaning and ideals.