Weber, General Economic History, part IVOrigins of Capitalism

According to Weber A) Mariano Rivera of the New York Yankees is the best

closing pitcher of all time B) it is impossible to study society scientifically C) the distinction between “values” and “facts’ makes sense

in the natural, but not in the social sciences D) human beings have an innate propensity to barter and

trade E) The distinction between “values” and “facts” must be

strictly observed in social science research

Characteristics and pre-requisites of capitalist enterprise1. Appropriation of the physical means of

production by the entrepreneur2. Freedom of the market3. Rational technology4. Rational law5. Free labor6. Commercialization of economic life p. 268

Capitalism as a “whole epoch” A whole epoch is designated as capitalistic

only as the provision for wants is capitalistically organized to such a predominant degree that if we imagine this form of organization taken away the whole economic system must collapse. P. 276

FREE LABOR Persons must be present who are not only legally in the

position, but are also economically compelled to sell their labor on the market without restriction. It is in contradiction to the essence of capitalism, and the development of capitalism is impossible, if such property less stratum is absent, a class compelled to sell its labor services to live; and it is likewise impossible if only unfree labor is at hand. Rationalistic capitalist calculation is possible only on the basis of free labor; only where in consequence of the existence of workers who in the formal sense voluntarily, but actually under the compulsion of the whip of hunger, offer themselves, the costs of products may be unambiguously determined by agreement in advance.

Joint Stock Company Weber states that they are descended from the

State Corporations such as Dutch East India Company and so forth.

This is probably true, but there is a great discontinuity in the history of the corporate form of organization, see what Adam Smith says

Adam Smith on Joint Stock Companies The directors of such companies, being the managers rather of other people’s

money than of their own, it cannot be well expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master’s honor, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company. It is upon this account that joint stock companies for foreign trade have seldom been able to maintain the competition against the private adventurers. They have, accordingly, very seldom succeeded without an exclusive privilege; and frequently have not succeeded with one. Without an exclusive privilege they have commonly mismanaged the trade. With an exclusive privilege, they have both mismanaged it and confined it.

Adam Smith, The Wealth of Nations (Chicago: Chicago University Press, 1976) (1776), vol. II, pp. 264-265

Comments on Weber What is peculiar is that large corporation had

become the dominant form of enterprise in Germany but there is little reflection on it here.

Section on speculative crises, really no theory of the capitalist crises here, except that Weber notices that in capitalism crisis are not of a natural order, but social, that is, it is the social order that produces them:

Crisis But there is a great difference between the fact that a

Chinese or Japanese peasant is hungry and knows the while that the Deity is unfavorable to him or the spirits are disturbed and consequently nature does not give rain or sunshine at the right time, and the fact that the social order itself may be held responsible for the crisis, even to the poorest laborer. P. 291

WHOLESALE TRADE Evolved from 1. see the goods2. sale by sample3. standardization and specification of grades The first objects subject to futures trading

were money, especially paper money and bank notes, state annuities, and colonial paper.

Railroads “the most revolutionary instrumentality

known to history, for economic life in general and not merely for commerce, but the railway was dependent on the age of iron […]

COLONIAL POLICY

“The accumulation of wealth through colonial trade has been of little significance for the development of modern capitalism—a fact which must be emphasized in opposition to Werner Sombart. It is true that the colonial trade made possible the accumulation of wealth to an enormous extent, but this did not further the specifically occidental form of the organization of labor, since colonial trade itself rested on the principle of the exploitation and not that of securing an income through market operations.” P. 300

Importance of slavery to Wealth and to Organization of Labor

In the period from the 16th to the 18th century, slavery signified as little for the economic organization of Europe as it did much for the accumulation of wealth in Europe. It produced large number of annuitants, but contributed in very small degree toward bringing about the development of the capitalistic organization of industry and of economic life. (301)

Respectfully differ from Weber on importance of colonies “Britain's industrial development was in no

small way a process of diversification around her export-base in the Caribbean plantations.”

Sheridan, Richard B. “The Plantation Revolution and the Industrial Revolution.” Caribbean

Studies 9(3) (1969): 5-25 (quote from p 25)

Respectfully differ from Weber on importance of colonies The labours of the people settled in those islands, are

the sole basis of the African trade: they extend the fisheries and cultures of North America, afford a good market for the manufactures of Asia, and double, perhaps treble, the activity of all Europe. They may be considered the principal cause of the rapid motion which now agitates the universe. Abbé Raynal, A Philosophical History of the East and West Indies,vol. 6, 412-414, quoted in Sheridan, “The Plantation Revolution,” 22.

Respectfully differ from Weber on importance of colonies “plantations were among the first industrial

organizations in which the workers were separated from the means of production and subjected to something like factory discipline,”

Smith, Raymond T. “Social Stratification, Cultural Pluralism, and Integration in West indian Societies.” In S. Lewis & T. G. Matthews. Caribbean Integration. Río Piedras, Puerto Rico: Institute for Caribbean Studies of the University of Puerto Rico, 1967. (quote from p. 232)

MODERN FACTORY PRODUCTION “The real distinguishing characteristic of the

modern factory is in general, however, not the implements of work applied, but the concentration of ownership of workplace, means of work, source of power and raw material in one and the same hand, that of the entrepreneur. This combination was only exceptionally met with before the 18th century.”

Weber on “primitive accumulation” The recruiting of the labor force for the new form of production, ad it developed

in England in the 18th century, resting upon the concentration of all the means of production in the hands of the entrepreneur, was carried out by means of compulsion, though of an indirect sort. Under this head belong especially the Poor Law, and the Statute of Apprentices of Queen Elizabeth. These measures had become necessary on consequence of the large number of people wandering about the country who had been rendered destitute by the revolution in the agricultural system. Its displacement of the small dependent peasant by large renters and the transformation of arable land into sheep pastures—although the latter has occasionally been overestimated—worked together constantly to reduce the amount of labor force required on the land and to bring into being a surplus population, which was subjected to compulsory labor. Anyone who did not take a job voluntarily was thrust into the workhouse with its strict discipline; and anyone who left a position without a certificate from the master or entrepreneur was treated as a vagabond. No unemployed person was supported except under the compulsion of entering the workhouse.

WHY ARMS PRODUCTION IS NOT THE SOURCE OF CAPITALISM But we also find that outside the western world, as in

the Mogul Empire and in China, enormous armies equipped with artillery (although not yet with uniforms), yet no impulse forward to a capitalistic development followed from the fact. Moreover, even in the west the army needs were met to an increasing extent , developing in parallelism with capitalism itself, by the military administration on its own account, in its own workshops and arms and munitions factories, that is, it proceeded along non-capitalistic lines.

Specificities of West that led to rise of capitalism there Nowhere else do we find the entrepreneur

organization of labor as it is known in the western world.

Specificities of West that led to rise of capitalism there If this development took place only in the occident the reason

is to be found in the special features of its general cultural evolution which are peculiar to it. Only the occident knows the state in the modern sense, with a professional administration, specialized officialdom, and law based on the concept of citizenship. Beginnings of this institution in antiquity and in the orient were never able to develop. Only the occident knows rational law, made by jurists and rationally interpreted and applied, and only in the occident is found the concept of citizen (civis Romanus, citizen, bourgeois) because only in the occident again are there cities in the specific sense.

Specificities of West that led to rise of capitalism there Furthermore, only the occident possesses science in the

present-day sense of the word. Theology, philosophy, reflection on the ultimate problems of life, were known to the Chinese and the Hindu, perhaps even of a depth unreached by the European; but a rational science and in connection with it a rational technology remained unknown to those civilizations. Finally, western civilization is further distinguished from every other by the presence of men with a rational ethic for the conduct of life. Magic and religion are found everywhere, but a religious basis for the ordering of life which consistently followed out must lead to explicit rationalism is again peculiar to western civilization alone.

According to Weber A) workers in capitalist society are actually

unfree B) capitalist society requires free labor C) a propertyless stratum is required for

capitalism to function D) completely rational calculation of profit is

only possible on the basis of free labor E) B, C and D