WEBER: The Spirit of Capitalism

Benjamin Franklin once wrote that “time is money.” That statement expresses a certain outlook on life that is not uniquely American, but Ben Franklin has often been thought of as a good example of what the solid American citizen should be: practical, straightforward, economical. Max Weber has this observation: All Franklin’s moral attitudes are colored with utilitarianism. Honesty is useful because it assures credit; so are punctuality, industry, frugality, and that is the reason they are virtues. Weber doesn’t approve or disapprove. He merely looks at the facts and tries to explain them as objectively as he can.

What are the facts? Weber’s main concern is with the modern economic system we call capitalism. He’s not so much interested in the nuts and bolts of what makes economics work. Adam Smith had already done that when he wrote his monumental Wealth of Nations. What Weber wants to do is look at why this particular system evolved and what effect it has on people AS PEOPLE and not as mere workers. He puts it this way: What is here preached is not simply a means of making one’s way in the world, but a peculiar ethic…it is an ethos. This is the quality which interests us. The ethic mentioned here is the “spirit” of capitalism. It’s the spiritual and psychological foundation on which the economy stands. Weber noticed some peculiar facts about capitalistic economies as practiced in the West. It’s a mathematical equation that goes like this: Limitation of consumption + Acquisitive activity = Accumulation of capital.

The “accumulation of capital” leads to the type of economy we call capitalism. So? Who cares? We all should care. Why? Because The capitalistic economy of the present day is an immense cosmos into which the individual is born, and which presents itself to him, at least as an individual, as an unalterable order of things in which he must live. It forces the individual, insofar as he is involved in the system of market relationships, to conform to capitalistic rules of action…Thus the capitalism of today which has come to dominate economic life, educates and selects the economic subjects which it needs through a process of economic survival of the fittest. Whether we like it or not, you and I are both involved in a system of market relationships over which we have little control. We’re all engaged in an “economic survival of the fittest.” Is this a good thing, or a bad thing?

That depends on what you want out of life. Capitalism isn’t the only economic game in town. Weber says that The most important opponent with which the spirit of capitalism…has had to struggle…is Traditionalism. What’s that? Weber goes on to explain that traditionalism is an economic system where a man does not by nature wish to earn more and more money, but simply to live as he is accustomed to live and to earn as much as is necessary for that purpose. In other words, under traditionalism if you pay an employee more money, he’s happy to stay where he is financially and just works fewer hours. What does traditionalism mean in practical terms? Historically under traditionalist economies The number of business hours was very moderate, perhaps five to six hours a day…earnings were moderate, enough to lead a respectable life…relations among competitors were relatively good…A long daily visit to the tavern, often with plenty to drink, and a congenial circle of friends, made life comfortable and leisurely. So if you’re willing to work less to have more leisure time but less money, you want a traditionalist economy. If you want a boat, a bigger house, a college education for the kids, and you’re willing to work longer hours to get what you want, then you tend to want a capitalist economy so you can get ahead in life. In either case, Ben Franklin was right. Time is money.