The Development And Growth Of Capitalism

The Development And Growth Of Capitalism I will look in particular at the works of Max Weber regarding his Protestant Ethic Theory and Karl Marx alternative theories to explain how capitalism came about in Europe. I will first look at the historical background of both theorists and the actual historical events which influenced central Europe during the 19th century. These events such as the industrial revolution are important to understand how capitalistic modes of economic and societal arrangements developed and what were the contributing factors to this development. It is important to also look at the present Modern Capitalism of contemporary society, and compare it to the past to see how capitalism actually developed and expanded, touching the important, often interlinked concept of Globalisation. Modern capitalist society is described as: The expansion of international commerce on a large scale, also the flowering of a large scale industry, the triumph of machinery, and the growing power of the great financial houses. In a word, it is the present day union of all these phenomena which really constitutes modern capitalism. Capitalism is the rational development of capital, commodities and means of production in a network of an interconnected markets. Both Weber and Marx offer valid explanations for how capitalism came about, they base their works on historical references and suggest different theories to explain this phenomena. To create a more clear picture I will also compare the works of other theorists such as Emile Durkheim and Simmel. These will be useful as they will offer alternative approaches and different points of view which can help to understand the main mechanisms which lead to capitalism development. I will conclude by giving my own opinion based on the constructed evidence from various theorists on how Capitalism came about in Europe. I will try to asses what have been the most influential factors that brought to this development in this specific part of the world. Weber Max Weber was a sociologist, he offered a theory which basically seeks to describe Capitalism. This theory is based on the process of Rationalization which Weber believes to be at the roots of Capitalism development. In order to understand Webers Protestant Ethic Theory, it is useful to have a quick look at his family background: Weber was born in a middle class family, his father was a business man and embraced liberal values, described as a man who enjoyed earthly pleasures. On the other hand, Webers Mother appeared to have contrasting ideologies with the husband. She was a strong Calvinist who embraced puritan values and absolutist ideas. While Webers father was the typical image of the capitalist entrepreneur which invested and indulged in the luxuries of life, Webers mother reflected the conservative, minimalist puritan Calvinist spirit. It is no doubt that Weber was thorn between these to views and much of his work is influenced by the discrepancies between his parents. Weber was also interested in how religion influenced identities and values in central Europe. This interest could be linked to his mother strong religious values and how Weber saw a connection between Protestantism and Capitalism. Weber constructed his idea of the Protestant ethic to explain how capitalism came about. He bases his work on the question :Why did Capitalism begin in Western Europe rather than Asia?. He argued that the Protestant religion, among with its branches such as Calvinism, created the perfect ideals and behaviours which helped spread and promote capitalism. And suggested that the existence and development of Protestantism in Western Europe, together with the development of Capitalism in Western Europe were two interlinked events. Weberss therefore describes religion as the core process which brought to capitalism development in Western Europe. Weber used his rationalization theory to compare religions around the world and found that the most rational religious system was Calvinism. He believed other world religions such as Hinduism, Confucianism and Taoism were more irrational and therefore inhibited capitalism development. The nature of Protestantism and Calvinism does actually reflect possible rational behaviours; this is shown in the ideal of predestination which is embedded in Protestants, this means that ones position in society has been decided by a higher authority (God) and therefore individuals should not complain for their position in society. This merged very well with the development of capitalism as the process of industrial revolution in capitalist development involved large amount of property-less labourers which worked for the few rich property owners. While the concept of predestination helped to suggest an explaination for ones position in society, rationalization was manifested in Protestantism by the puritan minimalist ideology. Most protestants were afraid of divine judgement, unable to be forgiven by the priest like catholics, protestants searched for an answer in their behaviour. Many protestants lived minimalist lives to escape from lifes luxuries and therefore behaved in a rational manner by accumulating, working hard and creating wealth to prove to themselves and others that they were predestined to have success and go to heaven. A difficulty in using Webers works to understand capitalism is that his expalinations are very specific to the historical periods that he studied. Because of this it becomes more difficult to compare and place the protestant ethic theory into context with the capitalism of future periods. While the protestant ethic theory might serve an explanation for capitalism development at the time, it is harder to believe of Protestantism development as the driving factor for capitalism. Webers theory acknowledges that culture is therefore the driving factor for economic development and not vice versa. In my opinion Webers explanations are highly specific to particular historical periods and cannot be used to compare and describe capitalism at a later period in time. This is because ethical values and ideas are under constant change and evolve to fit with the contemporary society. More criticism on Webers theory is that capitalism began much earlier in history and that Calvinism alone did not serve in developing economic growth and capitalistic modes of production and consumption. Joseph Schumpeter argues that capitalism began much before the industrial revolution. Italy in the 14th century was composed of many small independent city states like Florence, Milan and Venice and these were the first forms of capitalistic societies which appeared; Through trade and high accumulation of capital these Italian city states represent the first capitalistic modes of economic organisation. Other empirical evidence shows how countries with a relative popular Calvinist religion did not always score high economically and in developing capitalism. For example Scotland and the Netherlands although predominantly Calvinist states, did not develop at the same speed of England or the mainly Catholic state of Belgium. Recent works have shown how Protestantism influenced capitalism not because of the protestant ethics and values, but more so because of the promotion of education and literacy that Protestantism brought in Europe. As capitalism was a process which had already begun before the religious Reformation, it is difficult to imagine that capitalism would not have developed under a Catholic religion. Contemporary empirical evidence shows how capitalism modes can be applied to almost any country disregarding religious differences. The spread of capitalism throughout the world does not need the protestant values in order to be ethically tolerable for people, therefore it is hard to believe that Protestant culture influenced the economy. Rather more plausible is Karl Marxs approach which describes how economical development and growth shapes cultures and values in society. Marx Karl Marx offers us a different approach than Webers which is useful in understanding capitalistic development in Western Europe. Marx was born in a middle class family, he was strongly influenced by Hegel. Unlike Weber, Marx sought to influence the masses rather than the elites of power. His ideas offer a theory of a capitalist society based on the simplistic nature of human beings. He believed that it is in the nature of human beings to be productive in order to survive, provide for themselves and live life. Marx argues that it is only in capitalistic society where the breakdown of human actions becomes so acute and rational that it creates negative effects. Marxs describes the process of Alienation as the crux of the problems with capitalist society. By Alienation he means the process where the worker feels alienated/foreign to his labour. He contrasts how previously workers were in close contact with their costumers and to a fuller part of business experience which supplied more gratifying incentives and values for the worker. Capitalism brought the alienation of the worked as with the industrial revolution masses of people became employed in jobs where producers do not have contact with consumers, therefore creating a dehumanising effect. Marx in the fetishism of commodities describes how the worker is alienated from his product because he no longer owns that product. This shift in ownership from the individual producer to a single individual (boss) who controls the production creates the alienation of the worker. Marx focus was directed more at the individual rather than to culture in understanding capitalism. He believed that economic development shaped culture and that religion was merely an epiphenomenon. The general Marxist view is that of a capitalistic boss which is lazy, tyrannical and demanding. This had a negative influence on the workers which were abused and largely exploited by capitalistic owners which benefited from this mode of production. This can be interpreted as a process of rationalization, this is shown in the way that it is more rational to have mass production instead of individual production. Workers required abilities were reduced and their tasks became more and more simple, repetitive and uniform, leaving most of the benefits of rationalization to the property owners, while negatively affecting the low class workers which were alienated from their labour and society. Simmel Simmel in his works touches what Marx had achieved with his works on alienation. Providing a micro point of view Simmel suggests that the Urbanization of society ( movement of masses from countryside to cities) which began with the industrial revolution, created capitalistic centres for finance, business and trade. This offers a theory which is based on the topic of migration. In my opinion it offers a more plausible explanation than Weber as it analyses broader events such as the industrial revolution and population density shifts which more strongly than religion influenced economys need for rationalization and more efficient modes of production in order to provide for all. The focus of Simmel on individual interactions rather than Weber and Marx preoccupation with large scale issues such as Capitalist Development and Rationalization of society, helped to actually create a broader point of view which stems from the individual to represent the reality of an entire society which is becoming more Blasà ©. This means that individuals, overwhelmed by the large amounts of commodities and stimuli present in urban environments are becoming more unaffected by society and the world around us. Basically it describes a process of increased individualisation where everything has become commoditised and capital is used in almost every relation in our life, making society blasà ©. This blasà © theory finds similarities with Marx theory of alienation. Both describe a problem of individuals relations in a capitalist society where feelings and ethics are given up for greater rationality, calculability and uniformity. These are the negatives of the process of capitalism which is growing more and more in contemporary society. Émile Durkheim Born from a high class background, Durkheim theories of Durkheim developed a theory of individual behaviour. He divided social facts in material and non material facts. Durkheim described non-material social facts such as institutions and culture and material social facts such as bureaucracy and law. In his work the division of labour in society Conclusion Looking at the four theorists which seek to understand capitalism development in Western Europe I have came up with critiques and praises for various theories. I find it hard to support Webers protestant ethic theory as it assumes that cultural development shapes economic development. There is a lot of empirical evidence which suggest that economic development was already running in West Europe under a capitalistic mode of production prior to the religious reformation which brought the rise of Protestantism, Calvinism and other branches. Weber fails to address the importance of migration, urbanization and the increase of rationalization as the main factors for capitalistic development, instead he seeks to find the origins of capitalism in a set of values and ethics belonging only to a section of society. Evidence shows that not always Protestant states dominated economically compared to Catholic states. The origins of capitalism date back to much earlier historical periods and can be explained by Webers theory of rationalization, but the empirical importance on religion in capitalism development is overstated and perhaps a broader view taking into account religion, economic development and rationalization is perhaps more useful. Marx theory of alienation is also useful in understanding capitalism development, indeed the increased rationalization brought by capitalism had a strong influence in workers alienation and in a increase of productivity in exchange for a loss in creativity and lead to the development of a mass production mass consumption system which laid out the foundations for a labour-capital intensive economic system that we call capitalism. Marx focuses on universal ethical values that clash with capitalism, these are Justice, Liberty and Equality, and sees capitalism as the process that undermines these ethical values. Marx solution involves the eventual rebellion of the masses against their capitalist employers, this phenomenon has not happened in most of the capitalist world and it seems that capitalism as we know today is the most Just system that is available today. Marxism perhaps gives too much importance to economic development failing to broaden itself to include cultural development and transformation in society during capitalism development, this cultural development is linked to increased rationalism which is embedded in human nature and the increased individualization of the individual which is a process which greatly influenced the development of capitalism together with economic development and profit maximisation.