Source : The Times of India Date : 06.07.2009
Lost Spirit Of Capitalism
Revive ethical meaning of economic pursuits
In an article, ‘Capitalism beyond the Crisis’, Amartya Sen has argued that the present economic crisis demands a new understanding of older ideas, such as those of Adam Smith and Arthur Cecil Pigou. He draws attention to the fact that, while Smith showed the market economy’s usefulness, his analysis went beyond leaving everything to the market’s invisible hand. He viewed the usefulness of capital and markets within their own sphere and at the same time saw, contrary to the popular perception, the need for other institutions, such as sound mechanisms for financial regulations. He was aware, for example, of the need for state regulation to protect citizens from what he called “prodigals and projectors” who took excessive risks in their pursuit of profit.
This is a useful line of inquiry. The current crisis presents not only an immediate challenge but also an opportunity to reconsider established convictions. Max Weber (1864-1920), the noted German sociologist, is relevant. He wrote The Protestant Ethic and the Spirit of Capitalism that established him as a canonical figure in the social sciences since its publication more than 100 years ago.
Weber equates “the spirit of (modern) capitalism” not with the reign of unscrupulousness in the pursuit of material interests. He sees it instead in the ethos of industry, frugality, punctuality and honest dealings in the pursuit of increasing one’s capital. He does it in line with the thinking of Benjamin Franklin (1706-90), one of the US’s founding fathers. The capitalist entrepreneur is a person who avoids ostentation and unnecessary expenditure. His life appears to be distinguished by “a certain ascetic tendency”: what he gets from his wealth is above all the satisfaction of having done his job well and of being the recipient of God’s grace.
Weber traces this attitude of making money to the idea of a “calling”, an idea that defines a life-task in a given field of activity. Such an idea was, he argues, present predominantly among the Protestant people. The religious foundation of this idea is to be found in ascetic Protestantism. The emphasis on work is best expressed by the idea that not leisure and enjoyment but activity serves to increase the glory of God. For the saints, as argued by Richard Baxter (1615-91), a leading English puritan minister, the everlasting rest belongs not to this world but to the next. On earth, man must “do the work of him who sent him, as long as it is yet day”.
While Weber’s thesis is widely known, it is not as well-known that he was to arrive in his own lifetime at an assessment of capitalism for which he used the metaphor of “an iron age”. In the last pages of The Protestant Ethic, he notes: “The idea of duty in one’s calling prowls about in our lives like the ghost of dead religious beliefs.” He adds: “In the field of its highest development, in the United States, the pursuit of wealth, stripped of its religious and ethical meaning, tends to become associated with truly mundane passions, which often actually gives it the character of sport.”
The full fury of these mundane passions has been visible recently as the Madoffs of the financial world have indulged in frauds of staggering magnitude, putting Charles Ponzi – whose name is associated with fraudulent investment operations – to shame. This calls for, as Sen has shown, the revival of Smith’s idea of financial regulations to protect against “prodigals and projectors”. It also calls for, following Weber, an ethical meaning in
economic pursuits.
Has the spirit about which Weber wrote escaped the cage forever? Did it ever exist? Weber came from a family of entrepreneurs. He had personal knowledge of what he was to write about later. Not far from Oerlinghausen where his uncle, Karl Weber, owned a textile mill, there is a town in Westphalia known as Guetersloh. This is where Reinhard Mohn took over his family business of printing soon after World War II, making Bertelsmann AG one of the world’s leading media houses over the years since then. I had the privilege of meeting him recently. In his late 80s, Mohn received me punctually in his office. In describing his daily routine, he said that while he was not killing himself with work at his age, he was doing his duty and would continue to do so as long as he lived. Known for hard work, self-discipline and a sense of social responsibility, Mohn is aware that his upbringing in a Protestant family has played an important role in the formation of his character. He seemed a living model of the capitalist entrepreneur of Weber’s conception.
Will the value of an ethical meaning in one’s work that exists in other cultures as well yet find an important place in the lives of human beings, especially of the coming generation? Or will our mundane passions end up reducing our lives to the “nullity” that Weber feared?
The writer is a social commentator.
Mundane passions and bear necessities
