Weber’s Last Theory of Capitalism

We have seen two Facets (periods) of Weber Early work Emphasis on refuting “Marxist” thesis that the economy determined everything else Focus on showing that “culture” (protestant ethic) determined the opposite This was never a one sided analysis of how “culture” determines the “economy,” but rather an attempt to open a two way street Late Weber (General Economic History) Emphasis on “historical individual” as a constellation of conditions Attempt to locate the specificities which led to the rise of capitalism in the West (Europe) Multi-causal explanation A bit “Eurocentric” Resembles and extends the work of Marx

Place of “Weber thesis” Debate about the validity of Weber’s protestant ethic has occupied a lot of attention This “Weber thesis” (protestant ethic) has been isolated and presented as his distinctive, although flawed, contribution, a “contribution to the manner in which ideas become effective forces in history.”

Not just the protestant ethic His main theme in religious studies was that transforming ideas made a contribution to the world-transforming capitalism of the Christian West, rather than elsewhere in the world Extension of the role of ideas backward from Protestantism more generally to Christianity to ancient Judaism

GEH Neglected General Economic History is widely neglected Lectures delivered in the Winter of , Weber’s last before his death in the summer of 1920 The only place where he pulls together his overall theory of the origins of capitalism

Shift from the role of ideas Weber reduces ideal factors to a relatively small place in his overall scheme Instead, what we find is a general emphasis on INSTITUTIONS, in which religious ORGANIZATION plays a role in conjunction with specific political forms of organization

Importance “This model[…] is the most comprehensive general theory of the origins of capitalism that is yet available. It continues to stand up well in comparison with recent theories, including Wallerstein’s (1974) historical theory of the capitalist and world system.” (Collier, Weber’s Last Theory of Capitalism,” 21).

Capitalism is the provision of human needs by the method of enterprise, which is to say, private businesses seeking profit “capitalism” is an abstract concept, dating back many centuries, with embryonic form in ancient societies, but key to the modern form are “rational enterprise” and “rational capital accounting.”

“Rationality”” Broad debate on what it meant General upgrading of human cognitive and organizational capacity Master trend in world history “rational capitalistic establishment is one with capital accounting, that is, an establishment which determines its income yielding power by calculation according to methods of modern bookkeeping and the striking of a balance.” CALCULABILITY is what is important

Rational Methodical and predictable Extended to production and distribution This is why bureaucracy is the most rational form of organization Method of inquiry: if calculability and predictability are the key, what obstacles to it were present in other societies but not in the West?

Conditions 1) private appropriation of the means of production, and their concentration under the control of the entrepreneur All factors must be available for sale in the market, better if in fragmented form (instruments such as stock)

Within enterprise Capital accounting is optimized by technology which is ‘reduced to calculation to the largest possible degree.” Mechanizations thus significant for the rise of large scale capitalism

Free labor Labor must be free to move about in response to demand Must be free also in the second send of “free from ownership of means of production” (Marx) Weber says propertyless stratum compelled to work “under the compulsion of the whip of hunger”

Trading must not be limited by irrational restrictions Monopolies of traditions which impede consumption or production or exchange by one group or another

Calculable law, both in adjudication and in public administration Applicable to all persons Administered so that economic life is predictable Such legal system is implicated in most of the conditions mentioned before

Institutional Foundations of Market Society Weber’s view is thus a view of the institutional underpinnings of a market society “He sees the market as providing the maximum amount of calculability for the individual entrepreneur. Goods, labor, and capital flow continuously to the areas of maximal return; at the same time, competition in all markets reduces costs to their minimum. Thus, prices serve to summarize all the necessary information about the optimal allocation of resources for maximizing profit; on this basis, entrepreneurs can most reliably make calculations for long-term production of large amounts of goods.

“To sum up, it must be possible to conduct the provision for needs exclusively on the basis of market opportunities and the calculation of net income.” (GEH 209). This is an idealized version of the market and an extreme one (i.e. exclusively on the market???)

Not technological determinist For Weber, mechanization is more the product than the cause of rationalization Other forms of rationalization preceded it and made it possible

Back to “constellation” Weber notes that the specific factors that contributed to capitalism, by themselves (i.e., not in combination with the others) sometimes produced results that did not foment rationalization Thus, the pattern of relation among the various factors matters

Factors by themselves For example, For example, self-supplied military coalitions produce civic organization and legal systems which are favorable to capitalism. But if the self-armed civic groups are too strong, the result is a series of guild monopolies which stifle capitalism by controlling markets. (Collier 34)

Factors by Themselves Cities have to be balanced by bureaucratic state. But when the state is too strong by itself, it too tends to stifle capitalism. This can happen by bolstering the immobility of labor (as in the case of the second serfdom in Eastern Europe) or by controlling division of labor through forced contributions instead of allowing a market to develop. (Collier 34)

Factors by themselves In the areas of the world where bureaucratization was relatively easy, as in ancient Egypt or China, or the Byzantine empire, the unrestrained power of the state molded economic life and did not allow the dynamics of capitalism to unfold (Collier, 34)

Constellation as historical accident Capitalism the result of a combination of factors that had to occur together “This makes world history look like the result of configurations of events so rare as to appear accidental.” (Collier 35) Is the constellation which produced capitalism a historical accident?

Weber’s Last Theory of Capitalism Entrepreneurial organization of capital Rationalized technology Free labor Unrestricted Markets Calculable law Methodical economic ethic Bureaucratic state Citizenship Expert officials Rational Law Arms bearing association Greek civic cults Judaic prophecy Christian proselytization Reformation sects Presupositions of rationalized Capitalism Intermediate conditions Ultimate conditions Adapted from Collins 1980:931.