Chapter One
SOURCES OF CAPITALISM'S
REMARKABLE PRODUCTIVITY
Advanced industrial capitalism has generated, and continues to
generate, the highest material standard of living for large masses of
people in human history.
Peter L. Berger, The Capitalist Revolution
As recently as a couple of hundred years ago life expectancy at birth
was only between 30 and 40 years, and prior to the year 1400 it
was only between 20 and 30 years. In large part this was because
only every other child prior to the year 1400, and only three or
four out of five prior to the year 1800, lived to celebrate their fifth
birthday. But, of course, they probably did not have much to celebrate
with, for as recently as 200 years ago the vast majority of people
in the world went hungry most of the time. In pre-industrial
Britain, for example, one harvest in six was a complete failure, and
even when there happened to be food most people were still crippled
by a variety of dietary deficiencies, as well as by constant outbreaks
of bacterial stomach infections from the consumption of
rotten or poorly prepared foodstuffs. Personal and public hygiene
were execrable; chronic and wasting diseases such as malaria and
tuberculosis were endemic; and the relatively short lives of our
ancestors were often cut even shorter by viral or bacterial infections
such as cholera, smallpox, diphtheria and plague. There were
almost no medicines and few effective cures for even the most elementary
of medical conditions.
In short it was not that long ago - indeed, just a couple hundred
years - that our ancestors lived amid conditions that we
would consider appalling today. 'If we take the long view of human
history,' Nathan Rosenberg and LE Birdzell, Jr observe in How the
West Grew Rich: the economic transformation of the industrial world,
'and judge the economic lives of our ancestors by modern standards,
it is a story of almost unrelieved wretchedness.' The typical
human society, Rosenberg and Birdzell note, has provided only a
relatively small number of people with a humane existence, while
most people lived in the abysmal poverty that has been the normal
condition of most people throughout human history. We tend to
forget the dominating misery of other times, they write, 'in part by
the grace of literature, poetry, romance, and legend, which celebrate
those who have lived well and forget those who lived in the
silence of poverty'. The past is often mythologised and bygone
eras are often remembered as golden ages of pastoral simplicity, but
in fact they were not. Most of us would not have survived long
enough to become interested in a book like this, and the few of us
who might have survived would, in all likelihood, not have enjoyed
the leisure time to read it - and we probably would have been
unable to read in any case.
We have come a very long way. As of the year 2000 most people
in the world could expect to live into their mid-60s and many
even into their 70s and 80s. Astonishing advances have been made
both medically and in terms of public and private hygiene. Infant
mortality has fallen by more than 50 per cent in both developed
and developing countries. Incomes have tripled in both industrialised
and developing nations over the last 50 years. Many more
people around the world have much more to eat, are better educated,
enjoy more leisure, and possess more consumer goods
than ever before. In particular, those of us in the West are, for the
most part, prosperous, well-fed, healthy, well-educated, and quite
astonishingly, comfortable relative to our ancestors. As Rosenberg
and Birdzell go on to observe:
[D]uring the last two hundred years there has come to Western
Europe, the United States, Canada, Australia, Japan, and a few
other places one of 'history's infrequent periods when progress
and prosperity have touched the lives of somewhat more than
the upper tenth of the population . In England, the United
States, and parts of Western Europe, it became evident early in
the 19th century (and later in other countries of the West) that
an unusually high proportion of people were becoming better
fed, healthier, and more secure than in the ancient Middle
Eastern, Indian, Chinese, Greek, Roman, and Islamic civilizations
- that is, than at any other time in human history.
And in spite of a few notable exceptions, western-style prosperity
and security continue to spread around the world today, lengthening
life spans, reducing the incidence of fatal or disabling diseases,
improving living conditions, expanding literacy and education,
and enhancing privacy and personal choice.
It is true, as Rosenberg and Birdzell point out, that this
remarkable transition from widespread poverty to generalised
affluence did not occur overnight but developed gradually over a
period of several centuries, basically as economic growth just managed
to exceed population growth. And it is also true that this
transition has yet to occur for many of the world's poorest. Yet considered
over the long span of human history, the transition from
poverty to generalised prosperity has been sudden and dramatic,
and it calls for an explanation. After literally millennia of almost
universal poverty, western - and more recently a number of non-western
- nations have managed to break free from it. How have
they managed to do this?
A number of hypotheses have been forwarded to explain this
remarkable transition to generalised affluence, some attributing
western-style prosperity to various kinds of misconduct, such as
slavery, colonialism, imperialism and the exploitation of labour.
Yet as Rosenberg and Birdzell observe, all such hypotheses are
plagued by rather significant empirical difficulties. They simply do
not explain the facts of western development. In the first instance,
all human societies have been characterised by the inequality of
wealth and income but only a very few of them by sustained economic
growth. It is the latter, then, that begs for the explanation
and not the former. And western economic development has not
been nearly as labour-intensive as theories emphasising the
exploitation of labour suggest. Similarly, theories emphasising
colonial exploitation fail to explain why certain colonies - notably
the United States, Canada, Australia, New Zealand, Hong Kong,
Singapore, etc. - seem actually to have benefited from the arrangement,
while others - notably those in Africa - did not. Such theories
also fail to explain why a number of nations - most
significantly the United States - have managed to grow without
colonies. For those nations that did hold colonies, furthermore,
there does not appear to be any empirical correlation between the
periods of colonisation and those of economic growth. In short,
theories attributing western prosperity to misconduct of various
kinds - as attractive as they perhaps are for other reasons - have
simply not been able to explain the economic data.
Other theories seeking to explain western development have
emphasised the importance of western science and technology. Yet
while science and technology have obviously played, and continue
to play, an extremely important role in western economic development,
scientific and technological progress cannot, in and of itself,
explain how and why the West managed to grow so rich relative to
other civilisations. After all, China and the Islamic nations were
actually far more advanced scientifically and technologically at the
beginning of the modern era. And the simple transfer of advanced
technology from the First to the Third World more recently has
not, in and of itself, led to sustained economic growth.
Perhaps those of us in the West have simply been lucky.
Perhaps we have simply been the beneficiaries of a series of historical
accidents. Although we are undoubtedly fortunate, theories
attempting to explain western economic growth in terms of chance
events fail to explain why the West has been so consistently lucky,
particularly over such a long period of time. As Rosenberg and
Birdzell point out, the West has experienced one economic 'revolution'
after another, e.g. the Mercantile Revolution from the 15th
to 17th centuries, the Industrial Revolution of the 18th century, a
second Industrial Revolution at the end of the 19th century with
the introduction of electricity and the internal combustion engine
and, most recently, the revolution in communications and information.
The odds against such revolutionary developments happening
in the same places and to the same people by mere
happenstance are long indeed.
Some other dynamic has obviously been at work in the West - and
increasingly in the East as well - that has somehow led to a significant
increase in sustained economic productivity. Rosenberg
and Birdzell's contention along this line is that the West grew rich
because political pluralism and the relative flexibility of western
institutional life created the social 'space' requisite for entrepreneurial
activity to emerge and flourish. 'Our general conclusion,'
they write, 'is that the underlying source of the West's ability to
attract the lightning of economic revolutions was a unique use of
experiment in technology and organization to harness resources to
the satisfaction of human wants.' Rosenberg and Birdzell call this
potent synthesis of experimental technology and economic organisation
geared towards enhancing material welfare the West's
'growth system'. The key elements of this system were the broad
distribution of the authority and resources necessary for innovation;
the lessening of political and religious restrictions upon innovation;
and the simple incentive in the fact that the widespread
economic use of a particular invention had the potential to make
its inventors quite wealthy. The West's growth system yielded
innovations in trade and in the discovery of new resources, in production
techniques, in organisation, as well as to the introduction
of new products, particularly products intended for mass consumption.
'In the three-cornered relations of technology, the
experimental economy, and growth of material welfare,' Rosenberg
and Birdzell write, 'the experimental economy served as a more
efficient link between science and growth than any other society
had achieved, and the economy was itself the source of much of its
own technology.'
However normal the practical pursuit of improving our material
circumstances may seem to us today, it is important to stress that
such pragmatic practicality has historically almost always been subject
to some kind of religious discipline, for the harnessing of
resources 'to the satisfaction of human wants' has almost always been
- as, indeed, it still is - subversive of social order. Hence Rosenberg
and Birdzell's conclusion begs the question of why the social 'space'
that seems to have opened up in the West beginning in the 15th century
was allowed to fill so quickly with inventors, entrepreneurs, and
other practical people who appear to have been principally concerned
with material life, or - as Rosenberg and Birdzell put it - 'a
social class with the capacity to effect innovations, with incentives or
motives for innovation, with a source of ideas for innovation, and
with immunity from interference by the formidable social forces
opposed to change, growth, and innovation'. Where did these early
'movers and shakers' come from? How is it that they were allowed to
so revolutionise European society and culture?
WEBER'S THESIS
This, of course, is the question Max Weber sought to explicate in
his celebrated essay 'The Protestant Ethic and the Spirit of
Capitalism'. Weber saw that the West's growth system could
not be explained simply in terms of technical or organisational
developments - as important as both were - but that the modern
system was animated by an unusual spirit, a disciplined yet
supremely practical disposition towards material life. The practical
disposition, Weber noted along this line, had historically only
managed to surface sporadically during periods of religious 'disenchantment',
that is, during relatively brief interludes when religious
understanding temporarily lost its ability to police the
pragmatic pursuit of material interests. The fact that so much of
modern social life - and particularly modern economic life - is
shaped by practical and pragmatic concerns, then, would seem to
indicate that something is shielding it from religious criticism.
Either practicality has somehow received the sanction of modern
religious understanding, so that what appears to be purely pragmatic
and egoistic behaviour is actually religiously motivated in
some way; or religious understanding has somehow been debunked
within modern culture in such a way as to give a free reign to practicality
and pragmatism. Weber's intriguing contention was that
both are, in fact, true of modern economic culture, and that the
former gave rise to the latter.
Weber argued that, at a particular juncture in western history,
practicality became ethically significant within a fundamentallyreligious conception of the world. Indeed, Weber's central thesis
was that it was the ethical rationalisation of the world wrought
within Calvinist Protestantism - that is, the belief that the worldshould be actively reshaped to conform to the revealed will of God
- that gave rise to an essentially new kind of practical outlook, one
that was profoundly inquisitive and acquisitive, and yet that was
also disciplined and rational and suspicious, as he put it, of 'the
spontaneous enjoyment of possessions'.
Weber attempted to capture the gist of this new and supremely
practical spirit in the term 'worldly asceticism'. It was, he
stressed, the combination of limited consumption with the release
of aquisitive activity that first gave rise to practical and rational
capital accumulation. And Calvinism's - and particularly
Puritanism's - uniquely practical, disciplined, and this-worldly
spirit would not simply animate early capitalistic economic development,
but it would also stimulate early modern scientific development.
Indeed, it would eventually result in the practical
rationalisation of all of modern life. 'As far as the influence of the
Puritan outlook extended .', Weber insisted, 'it favoured the
development of a rational bourgeois economic life It stood at
the cradle of the modern economic life.'
Calvinism's powerful synthesis of ethical duty and practicality
appears to have been both intentional and unintentional. It was
intended to the extent that it followed from the Protestant repudiation
of the medieval distinction between 'sacred' and 'secular'
work in the world. This meant that Protestants were more comfortable
in affirming everyday work in the world than their Roman
Catholic counterparts who tended, theologically speaking, to view
work only as a kind of necessary evil.
Continues.
