Capitalism

One of the central issues in the conceptualization of capitalism has been the explanation of its emergence in the first place. Both classical political economists and orthodox Marxists provide essentially materialistic accounts rooted internally in the economic realm, whether arising from technological innovation, class conflict, urbanization, or demographic pressures. In the late nineteenth century, the endogenous position was challenged by the German sociologist Max Weber (1864–1920), who, in a series of studies ultimately published as The Protestant Ethic and the Spirit of Capitalism, argued against the validity of all such internal explanations for the growth of capitalism. Rather, Weber proposed that the emergence of a Calvinist version of Reformed Christian theology during the sixteenth and seventeenth centuries constituted the necessary and sufficient condition for capitalism's origins. According to Weber, the Calvinist Protestant was impelled to demonstrate to his community his worthiness for salvation (the certainty of which was by no means earned by external merit, as in Catholicism) by working hard and leading an ascetic life. Such hard work, however, produced economic gains and the temptation for leisure and luxury. What was the Calvinist to do with the deserved profits of his labors? The answer was to rid himself of his riches by investing them in further economic enterprises, which in turn yielded additional wealth. As an unintended consequence of the Calvinist renunciation of worldliness, the circulation of capital was born and with it the pattern of capitalist development. Weber's antimaterialistic explanation of capitalism directly challenged the primacy of the economic realm upheld by classical political economists and Marxists alike.

The response to Weber's thesis was loud and shrill on all sides, and there is good reason to believe that in its initial statement it misrepresents history. Yet the question of why capitalism emerged when and where it did—or indeed at all—remains a widely debated topic. One dimension of this discussion has been a debate raging since the 1940s, centered mainly within differing schools of economic history, concerning the transition from feudalism to capitalism. Scholars such as Paul Sweezy and Immanuel Wallerstein, elaborating on the earlier work of Henri Pirenne (1862–1935), postulated that a commercially stimulated push toward exchange relations, centered in the growing late medieval towns, undermined feudalism and introduced the basic principles of economic rationality. Other historians, such as J. A. Raftis, considering the radical depopulation of Europe at the end of the Middle Ages caused by recurrent and severe plagues, point to purely demographic factors among the laboring masses to account for disruptions in long-established patterns of land tenure that occasioned the decline of feudalism. Still another body of literature, represented by the research of R. H. Hilton and Robert Brenner, places local political factors arising from conflicts between peasant producers and seigneurial appropriators at the center of the transition to capitalist social relations. All of these views, however, share the conviction that material factors endogenous to economic life are adequate to explain the decline of feudalism and the emergence of capitalism.

By contrast, some later scholars, mindful of the pitfalls of the Weberian analysis, have nonetheless sought to proffer an "exogamous" account of the origins of capitalism. For example, Liah Greenfeld has posited a certain version of "nationalism" as the explanatory metric for the spread of the "spirit of capitalism." According to Greenfeld, England in the sixteenth and seventeenth centuries generated a form of nationalism that promoted the common wealth through the pursuit of individual profit, hence leading to the accumulation and circulation of private capital. In turn, the initial success of this nationalism pushed other European countries and regions to pursue similar nationalistic programs, with varied rates of success. As with Weber, Greenfeld maintains that "cultural" or "ideological" factors are required to explain the expansion of the capitalist economy.