Summary
What does the term "the spirit of capitalism" mean? This term can only
be applied to something that is "a complex of elements associated in historical
reality which we unite into a conceptual whole from the standpoint of their
cultural significance." The final concept can only come out at the end of an
investigation into its nature. There are many ways to conceptualize the spirit
of capitalism. We must work out the best formulation based on what about that
spirit interests us; this, however, is not the only possible point of view.
To come up with a formulation, Weber presents a long excerpt from the writings
of
Benjamin Franklin. He says that Franklin's attitudes illustrate capitalism's
ethos.
Franklin writes that time is money, that credit is money, and that money can
beget money. He encourages people to pay all of their debts on time, because it
encourages the confidence of others. He also encourages people to present
themselves as industrious and trustworthy at all times. Weber says that this
"philosophy of avarice" sees increasing capital as an end in itself. It is an
ethic, and the individual is seen as having a duty to prosper. This is the
spirit of modern capitalism. While capitalism existed in places like
China and India, and in the Middle Ages, it did not have this spirit.
All of Franklin's moral beliefs relate to their usefulness in promoting profit.
They are virtues for this reason, and Franklin does not object to substitutes
for these virtues that accomplish the same ends. However, this is not simply
egocentrism. The capitalist ethic does not embrace a hedonistic life-style.
Earning more and more money is seen completely as an end in itself, and is not
simply the means for purchasing other goods.
This seemingly irrational attitude towards money is a leading principle of
capitalism, and it expresses a type of feeling closely associated with certain
religious ideas. Earning money reflects virtue and proficiency in a calling.
This idea of one's duty in a calling is the basis of the capitalist ethic. It's
an obligation that the individual should and does feel toward his professional
activity. Now, this does not mean that this idea has only appeared under
capitalistic conditions, or that this ethic must continue in order for
capitalism to continue. Capitalism is a vast system that forces the individual
to play by its rules, in a kind of economic survival of the fittest.
However, Weber argues that in order for a manner of life so conducive to
capitalism to become dominant, it had to originate somewhere, as a way of life
common to a large number of people. It is this origin that must be explained.
He rejects the idea that this ethic originated as a reflection or superstructure
of economic situations. In
Massachusetts, the spirit of capitalism was present before the capitalistic
order took shape, as complaints of profit-seeking emerged as early as 1632.
Furthermore, the capitalistic spirit took stronger hold in places like
Massachusetts that were founded with religious motives than in the American
South, which was settled for business motives.
Furthermore, the spirit of capitalism actually had to fight its way to dominance
against hostile forces. In ancient times and during the Middle Ages, Franklin's
attitude would have been denounced as greed. It is not the case that greed was
less pronounced then, or in other places that lack the capitalist ethic.
The biggest opponent the capitalist ethic has had in gaining dominance has been
traditionalism. Weber says that he will try to make a provisional definition of
"traditionalism" by looking at a few cases. First, there is the laborer. One
way in which the modern employer encourages work is through piece-rates, for
example paying an agricultural worker by the amount harvested. In order to
increase productivity, the employer raises the rate of pay. However, a frequent
problem is that rather than work harder, the workers actually work less when pay
increases. They do this because they can reduce their workload and still make
the same amount of money. "He did not ask: how much can I earn in a day if I do
as much work as possible? but: how much must I work in order to earn the wage,
2 1/2 marks, which I earned before and which takes care of my traditional
needs?" This reflects traditionalism, and shows that "by nature" man simply
wants to live as he is used to living, and earn as much as is necessary to do
this.
This is the leading trait of pre-capitalistic labor, and we still encounter this
among more backward peoples. Weber then addresses the opposite policy, of
reducing wages to increase productivity. He says that this effectiveness of
this has its limits, as wages can become insufficient for life. To be effective
for capitalism, labor must be performed as an end in itself. This requires
education, and is not simply natural.
Weber then considers the entrepreneur in terms of the meaning of traditionalism.
He observes that capitalistic enterprises can still have a traditionalistic
character. The spirit of modern capitalism implies an attitude of rational and
systematic pursuit of profit.
Such an attitude finds its most suitable expression through capitalism, and has
most effectively motivated capitalistic activities. However, the spirit of
capitalism and capitalistic activities can occur separately. For example,
consider the "putting-out system."
This represented a rational capitalistic organization, but it was still
traditional in spirit. It reflected a traditional way of life, a traditional
relationship with labor, and traditional interactions with customers. At some
point, this traditionalism was shattered, but not by changes in organization.
Rather, some young man went into the country, carefully chose weavers whom he
closely supervised, and made them into laborers. He also changed his
relationship with his customers by making it more personal and eliminating the
middleman, and he introduced the idea of low prices and large turnover. Those
who could not compete went out of business. A leisurely attitude towards life
was replaced by frugality.
Most importantly, it was usually not new money that brought about this change,
but a new spirit.
