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Did the Protestant work ethic create capitalism?

New research has shown that Max Weber's famous theory linking the two is quite wrong.
Samuel Gregg | 21 January 2014
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Max Weber is justly famous for many things, but especially for having developed a theory about the relationship between capitalism and religion. The influence of The Protestant Ethic and the Spirit of Capitalism remains considerable, not least because it has become a staple of sociological literature on the subject.

Based on lectures he gave during a visit to America in 1904, Weber’s Protestant Ethic maintained that capitalism’s nature had to be understood as more than just producing and exchanging goods in a particular way (e.g., free exchange) within a particular institutional setting (limited government, etc.). At its heart, Weber insisted, capitalism was a state of mind: an outlook that involved, among other things, the subordination of emotion, custom, tradition, folklore, and myth to the workings of instrumental reason.

The real controversy begins with Weber’s argument that the decisive linkage of this form of rationality with economic practices occurred primarily in Europe’s predominantly Protestant areas. He was particularly thinking of countries such as England and the Netherlands, which were home to large numbers of Puritans and Calvinists, many of whom migrated to North America in the seventeenth century. These forms of Protestantism, Weber posited, ingrained the belief among their adherents that they should avoid superficial hobbies, games, and entertainment. Instead, Christians should commit themselves totally to whatever calling to which God had summoned them. Weber believed that these forms of Protestantism, especially their central doctrine of predestination, helped to foster the type of focused minds and disciplined work habits that are essential for market economies.

According to Weber, these ascetic Protestants didn’t believe it was possible to do good works to attain heaven in the next world. Either you were among the elect, or you weren’t. Weber interpreted Calvin as suggesting that one indication of election was the acquisition of wealth. It followed—or so Weber’s theory went—that the accumulation of wealth encouraged people to see themselves as destined to be saved. This, in turn, fostered a spirit that encouraged believers to grow ever-greater amounts of wealth.

On the surface, Weber’s proposition makes considerable sense. After all, many culturally Catholic countries such as Portugal and Spain—not to mention almost all Latin American nations—have lagged behind other Western nations in terms of economic development. More careful analysis of Weber’s claims, however, soon reveals them as less-than-adequate.

The accuracy, for instance, of Weber’s interpretation of Calvinist theology is open to question. The Westminster Confession—the profession of faith that dominated Calvinist and Presbyterian theology from the sixteenth century onward, and on which Weber drew in developing his ideas—indicates that the notion of “calling” in Puritan and Calvinist thinking is difficult to reconcile with the meaning given to it by Weber. The Confession clearly distinguishes between each person’s worldly vocation and his ultimate calling. Moreover, the earthly calling of each individual is not considered to constitute a positive or negative contribution to that person’s salvation.

The Westminster Confession also stresses that believers must ensure that their earthly vocation does not distract them from pursuing their heavenly calling. Weber, by contrast, seems to conflate the two. And on the subject of vocation itself, the Confession insists that Christians follow that calling in which they would be most serviceable to God rather than that which brought them “the most honor” in the world. Nothing in the text suggests any particular emphasis on commerce, let alone the idea that acquiring material wealth was somehow a sign of being among the elect.

Second, the empirical evidence disproving Weber’s connection between Protestantism and the emergence of capitalism is considerable. Even Catholic critics of modern capitalism have had to concede that “the commercial spirit” preceded the Reformation by at least two hundred years. From the eleventh century onward, the words Deus enim et proficuum (“For God and Profit”) began to appear in the ledgers of Italian and Flemish merchants. This was not a medieval version of some type of prosperity gospel. Rather, it symbolized just how naturally intertwined were the realms of faith and commerce throughout the world of medieval Europe. The pursuit of profit, trade, and commercial success dominated the life of the city-states of medieval and Renaissance Northern Italy and the towns of Flanders, not to mention the Venetian republic that exerted tremendous influence on merchant activity throughout the Mediterranean long before 1517.

Since Weber’s time, much scholarly work has been done to illustrate the advanced state of market-driven economic development in the Middle Ages. Throughout the 1940s and 1950s, the Belgian scholar Raymond de Roover penned numerous articles illustrating that, during the Middle Ages, financial transactions and banking started to take on the degree of sophistication that is commonplace today. Likewise, The Commercial Revolution of the Middle Ages, by the Italian-American historian of medieval European economic history, the late Robert S. Lopez, shattered the historical claims that formed much of the background of Weber’s argument. Lopez demonstrated in great detail the way in which the Middle Ages “created the indispensable material and moral conditions for a thousand years of virtually uninterrupted growth.”

In recent decades, the historians Edwin Hunt and James Murray have illustrated just how much the medieval period was characterized by remarkable innovation in methods of business organization. They also suggest that the advent of modernity actually heralded the expansion of state economic intervention and regulation in an effort to constrain economic freedom. In a similar fashion, the sociologist Rodney Stark has gathered together disparate sources of historical and economic analysis to illustrate the origins of capitalism and major breakthroughs in the theory and practice of wealth creation in the medieval period. Central to Stark’s analysis is his highlighting of the way pre-Reformation Western Christianity saw the world as one in which humans were called upon to use their reason and innate creativity to develop its resources—including economically.

Here one could add that, before Adam Smith, some of the most elaborate thinking about the nature of contracts, free markets, interest, wages, and banking that developed after the Reformation was articulated in the writings of Spanish Catholic scholastic thinkers of the sixteenth and seventeenth centuries. Theologians such as Francisco de Vitoria OP, Martín de Azpilcueta, Juan de Mariana SJ, and Tomás de Mercado OP, anticipated many of the claims made by Smith two centuries later.

To be sure, much of this thinking occurred by way of side-effect rather than as a result of the systematic analysis undertaken by Smith. For as commercial relationships expanded throughout Europe in the centuries preceding and following the Reformation, there was a marked increase in the number of penitents asking their confessors for guidance about moral questions with a strong economic dimension. What was the just price? When was a person no longer obliged to adhere to a contract? When was charging interest legitimate? When did it become usurious? As a result, priests looked to theologians for guidance on how to respond to their penitents’ questions. Thus, as Jürg Niehans stressed in his History of Economic Theory:

“The scholastics thus found it necessary to descend from theology into the everyday world of economic reality, of early capitalism, foreign trade, monopoly, banking, foreign exchange and public finance. What one knew about these things in the School of Salamanca was hardly less than Adam Smith knew two hundred years later, and more than most students know today.”

Even when we consider modern capitalism’s emergence, a direct connection between this event and Protestantism is very open to question. The economic historian Jacques Delacroix, for instance, has highlighted many facts about this period that Weber’s theory simply cannot account for. “Amsterdam’s wealth,” Delacroix writes, “was centered on Catholic families; the economically advanced German Rhineland is more Catholic than Protestant; all-Catholic Belgium was the second country to industrialize, ahead of a good half-dozen Protestant entities.”

A better explanation for why some parts of Europe lagged behind others is to be found in the influence of absolutism and mercantilism. To our ears, “absolutism” is a word that contains echoes of despotic government. Yet the age of absolutism, which lasted throughout most of Europe from about 1600 until 1800, was a rather different phenomenon. Drawing heavily on the Divine Right of Kings (a theological doctrine always disputed by the Catholic Church) for legitimacy, absolutism was also associated with the rise of the nation-state that began before the Reformation, but which accelerated after 1517.

Absolutism’s underlying motif was the conviction that centralizing state power was the path to stronger and wealthier societies. In terms of commercial life, absolutism manifested itself in countries such as Lutheran Prussia, Catholic France, and Orthodox Russia in the form of ever-increasing restrictions on economic freedom. Governments began assuming more top-down direction of economic activity through subsidizing exports, imposing tariffs on imports, and mandating government monopolies of particular trade or products that were then sold or leased to groups of merchants. Adam Smith famously called this set of economic arrangements the mercantile system.

It is difficult to downplay mercantilism’s effect on modern economic development. From the Age of Discovery to the late nineteenth century (and in many cases beyond), Catholic Latin America was largely dominated by an absolutist, mercantilist economic culture. Therein, Stark contends, lie some of the fundamental causes of Latin America’s slower economic development as compared to the United States. Even the dominant eighteenth-century Protestant power, Britain, engaged in mercantilist economic practices despite having rejected a drift toward absolutism in the previous century. And as every student of the American Revolution knows, Britain’s mercantilist economic policies contributed mightily to the outbreak of the War of Independence.

Much more could be said about these historical observations. The point, however, is that the widespread association of one form of Protestantism with capitalism is theologically dubious, empirically disprovable, and largely incidental. To make these observations is not to propose that modern capitalism was somehow constructed upon a “Catholic ethic.” That would be equally false. It is simply to note that much of Weber’s particular analysis is very questionable and that this should be acknowledged by economists, historians, and above all, by Catholics. How ironic it would be if the last people to believe in Weber’s Protestant ethic thesis were Catholics!

Samuel Gregg is Research Director at the Acton Institute. He has authored several books, including Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future and most recently Tea Party Catholic: The Catholic Case for Limited Government, a Free Economy, and Human Flourishing. This article has been republished with permission from Public Discourse

MORE ON THESE TOPICS | capitalism, economic history, economics
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